| This all points to a huge undersupply of housing. If prices are set by the maximum that people can pay, rather than what the costs are to provide housing, then there's an easy solution: allow more housing to be built. Nearly everybody can afford to pay for the costs of providing housing: the maintenance, the amortized cost of construction over the lifetime of the house. What people can't afford to pay for are the increases in land prices due to the housing shortage. This sets up a two class system: those that own the land and see benefit from appreciating land prices, and continue to have the flexibility to move and own land becuase they bought early, and the unlanded, who are doomed to pay ever increasing land costs in their monthly rents, with all the benefit going to landlords and homeowners who reap the land rents. It's a gigantic unproductive transfer of wealth from those with less to those with more. In addition to the human misery and poverty that this causes among working people, this also greatly increases inequality, which further reduced economic output of society. And there's a simple solution to it all: allow people to pay to build housing rather than forcing them to bid up limited supply and pass off their stored labor to idle land owners. However, the homeowners who benefit from this system are the ones with the political power to keep their rentierism enforced by law... |
Check out this website: https://www.cheapoldhouses.com/ there are many houses on there for not much money but they are obviously not in desirable locations. Some need some repairs but that is just time & materials not buying expensive land. So there is lots of cheap land and cheap houses.
Increasing density by tearing down some single family homes and replacing with townhomes is probably a workable compromise - now there are three dwellings where before there was 1, and everybody still gets a garage and a yard, but each of those townhomes will still be priced up to what the market will bear because there will not be an infinite supply of them.
In my town of 20,000 about 1000 dwellings are coming online significantly increasing the supply - potentially increasing the populatiog by 2000-4000 people, (up to 20%!) but they were all snapped up for $800-900k and now there is only one available for $1.2M.
People want to live in desirable places, and will pay more to do so. Nice places are always going to be expensive.
If you don't have a house you can hack the system by moving to a place with cheap dwellings and making it desirable, which is a normal pattern: Artists and musicians move to cheap neighborhood, it becomes cool & desirable