|
|
|
|
|
|
by adreamingsoul
2266 days ago
|
|
|
I’ve been hearing people say this for years, and it is certainly an easy and nice line to say. But supply for new housing is not the solution or the issue. 1. When new housing enters the market it is priced at “fair market value”. That fair market value is inflated by numerous known and unknown factors. Such as foreign investors, short-term rentals, etc... 2. Cost of construction follows the trend and what used to cost X to build is now 2x, 3x. 3. Numerous cities have reduced pricing of permits and have even simplified the planning approval process for homes in an effort to attract imvestors and developers. 4. Cost of land is at an all time high. Which again is a factor of the fair market value. Land owners are wanting to sell to large development projects that have investors. Developers are bidding against each other to secure land. Those and more are compounded into a complex relationship that has created a market that very few people can afford to live in. Is it possible that the fear of being priced out is driving a lot of these motivations? |
|
|
I've never understood this focus on rental pricing. The problem has never been the price, how can prices constantly go up if nobody can afford them? Well, the answer is that someone can actually afford the price and for some reason you are competing with that person that is far more richer than you. Remember one of the core causes of inflation? Too much money chasing too few goods? It's not just printing an excessive amount of money that is necessary to cause inflation. You also need a shortage of goods. You need to have more people than housing to cause inflation of rental prices. If there are 10 houses but 15 people then you can be assured that landlords will only care about renters with high incomes and construction companies will focus on building for these high income people first and only after there is enough housing will they build housing for the less wealthy residents.