Definitely not that simple. To use your same argument though, it’s not just homeowners - it’s homeowners and aspiring homeowners. Which is nearly everyone.
The longer I live the more I am finding the universe is working on extremely simple few principles; their relations create complexity.
Aspiring homeowners will never become homeowners if the price is exclusionary.
Take SF: with average salary of 75-79K, the apartment cost starts from 1.1M. Only 8% has salary > than 100K, that makes the remaining 92% the "aspiring" homeowners.
They will stay "aspiring" for the rest of their life. The only think they (or rather, "we") can do - make sure that post-zoomer generation don't have to be "aspiring" for their entire lives.
It's a laudable goal but I have serious doubts about its achievability in cities that are already overpriced. Every single incentive leans in the direction of keeping prices high since not only would lower prices cost homeowners money but would also possibly cut into tax revenues and could financial ruin people who purchased under these high price regimes.
It's a bit of a ratchet. Once the prices go high, it's very hard to turn back. The only way out is probably to inflate the currency until a loaf of bread is $15 but housing is reasonable again, or for the state or federal government to offer some kind of huge tax write-off for depreciating home values. The latter is unlikely given the financial crunch faced by governments.
>Every single incentive leans in the direction of keeping prices high since not only would lower prices cost homeowners money but would also possibly cut into tax revenues and could financial ruin people who purchased under these high price regimes.
Not really. The way out is higher density. What we care about isn't land price, it's housing price - in other words, how much does it cost for people to get as much housing as they need. Lowering housing costs and rising land costs are perfectly compatible if you don't artificially restrict lots to 1 unit as most of the country has done.
Or raise rates. That's actually affecting housing prices. No one can sell at the price they wanted because no one wants a loan this crazy. Unfortunately this will have other consequences.
Perhaps it would be more accurate to say that they managed to crumble their economy which brought the value of housing down with it? They had a massive housing boom before the "Lost Decades". Japan is no stranger to asset prices rising out of control.
That said, when I have looked at Tokyo pricing it has always been in line with high priced North American cities, only configured differently. The difference in configuration means that the sticker price is often lower, but you are getting less for that lower price. Apples to apples the prices have always shown to be in the same ballpark.
I know I’m just ranting into the wind, but I wish it was illegal/ban-able to bring up the Bay Area (and NYC and Austin) in high-level discussions of the American real estate market.
It just kills the discussion because it’s such an outlier.
I would not be a popular king, but it’s better to be feared than loved, I guess. I do understand what site I’m on.
> They will stay "aspiring" for the rest of their life.
They have a very viable option, which is to leave SF and go somewhere else where they can stop aspiring and afford to actually become homeowners if that's what they want.
I speak from first-hand experience, although in my case it was Manhattan not SF. I very badly wanted to live in Manhattan but no matter how I sliced the numbers, there was no way. Too expensive.
I didn't remain "aspiring" for the rest of my life though. I gave up on that dream and moved and bought a house elsewhere. It's worked just fine.
Aspiring homeowners will never become homeowners if the price is exclusionary.
Take SF: with average salary of 75-79K, the apartment cost starts from 1.1M. Only 8% has salary > than 100K, that makes the remaining 92% the "aspiring" homeowners.
They will stay "aspiring" for the rest of their life. The only think they (or rather, "we") can do - make sure that post-zoomer generation don't have to be "aspiring" for their entire lives.