But what's to stop wealthy people from buying the newly built houses as yet another asset to their real estate portfolio to the exclusion of first time homeowners?
If we remove the regulatory barriers to building more housing, the rich and the less rich can buy as much housing as they want.
Think about this in the context of any other good. No one worries that if we build more cars, they'll all be purchased by rich car collectors. Yes, when more cars are built, a few very rich people with many cars will buy more. But the increased supply also make it more economical for everyone to buy more cars.
First of all I do not care if people rent or buy homes. Under my economic policies when I become god-king of America, owning a house will be the worst investment anyone has ever heard of and people will run screaming from the small-time flipper game. I will Make Landlords Poor Again. Vote Jeffbee.
Secondly if a person owns a home and rents it to a second person, I'm fine with it.
In a perfect world, I would agree. But in reality that will never happen, and young people continue to suffer in the meantime. Housing should have never been allowed to become an investment.
There was a large drop in the price of housing just 15 years ago. Granted, other factors were involved, but that's part of what the article is about. It is possible.
This is that heart to what the problem is. Instead of letting the housing market, collapse and state collapsed the federal reserve started printing money nonstop to inflate assets, including housing. And they haven’t stopped since then. This is what causes separation of wealth in the United States, and the increase in homelessness.
And now the Fed can’t even get the guts to lower inflation by raising interest rates because of what it’s done to the housing market.
When I go to city council meetings to support housing, the problem is NIMBYs. Not macroeconomic conditions, but ordinary people who show up at an evening meeting to complain about - I kid you not - some code removing a number for garage heights. They wanted to use this to block some apartments in their neighborhood.
This kind of thing happens over and over and over again, all across the US and it adds up.
I don't live in your city but in my city we just got finished pushing a project approval through a 7-year political process. The project will build 1000 new apartments on the parking lot of an existing subway station. Most of the new apartments will be deed-restricted affordable housing. At the most recent and final hearing there were still Boomers showing up to demand the project be scrapped because they prefer free parking.
> I am a YIMBY and still understand that these forms of housing are nowhere near as valuable as the SFH.
Well, ok then - we want affordable housing, let's build affordable housing. Nothing's perfect. Some people prefer denser housing in a more desirable place, and some prefer more space in Cyanide Springs, Oklahoma. Both should be a choice, but currently, we limit the denser housing options way too much.
Do you not see the contradiction in your statement?
Houses are built by developers whom by definition only build a project when it's a sound investment. They immediately stop building when this isn't the case.
Different kinds of 'investment'. You're correct that if they can't turn a profit, they won't build. Same as with cars or bicycles or any other good. But that's not a long term thing - they want to sell the goods they have produced, turn their profit, and move on to the next project.
What people who buy homes are told, though, is to essentially 'buy and hold' because it's a "good investment" that will gain value over time, even if they are not building anything or adding any value to the dwelling they inhabit.
Where I live, during the recent runup in prices, the median home gained something like $100,000 of value in a year, which is significantly more than the median household income.
I'd say that most people do not buy a house for the investment. They actually live in it and any value appreciation is a side-effect. A pleasant one, but not the primary goal of the purchase.
Here's a chart of homeowner gains vs developer profits. It's a bit apples to oranges, but it gives you an idea of the scale of who benefits (at least on paper) from the housing crisis:
Ideally, I think, home prices would be fairly stable - neither appreciating a lot, nor dropping in value. Boring. That would also make them a 'bad' investment for corporations looking to make a buck by buying and holding.
> What people who buy homes are told, though, is to essentially 'buy and hold' because it's a "good investment" that will gain value over time, even if they are not building anything or adding any value to the dwelling they inhabit.
Do you expect people to buy and sell their home? It’s their home, why would selling (in the short term measured in decades) be the goal?
People primarily buy homes to live in. Any benefits of price appreciation, and/or political interests of those nearing their end of life and want to downsize/die are secondary.
They would only buy it they felt the return was higher than other investments
If the capital appreciation is zero, then it's just the rental income, which is offset against the cost of maintaining the property and the opportunity cost from the capital outlay on the property. That's not a major problem though, as the rental price won't be able to get too high as people will simply rent or buy elsewhere (as you've reduced the other barriers to building more property)
Of course you can get rid of the appreciation by simply taxing the land (which is the thing that mainly appreciates -- the building itself typically depreciates), and get most of the way there.
It doesn’t matter. The goal should be to build enough housing to make it a marginal investment, at which point it won’t be attractive to real estate investors. Of course, a house is still attractive to someone who wants to live in it.
Oh, yes. Nothing frustrates me more than seeing all these “luxury apartments“ being built everywhere. I never gave a crap about luxury. I just would like a stable, clean place to live. I even love studios more than a one bedroom apartment. But now even the studios are all “luxury“.
As I said, at other times in this thread, the only incentive we have as an and an economy in the United States, is agreed.
As I said, at other times in this thread, the only incentive we have in this economy and in the United States, is greed.
Yes, this is exactly my point. The fundamental issue is greed, not housing. If we don’t get rid of the greed, these houses will be either bought up by investment corporations or the wealthy people that didn’t get second houses the first time around.
People will always be greedy. Theres nothing we can do to solve that problem. We can solve the housing shortage though. Investors wont buy homes when theyre easy to build because their value wont increase unless supply is constrained.
Think about this in the context of any other good. No one worries that if we build more cars, they'll all be purchased by rich car collectors. Yes, when more cars are built, a few very rich people with many cars will buy more. But the increased supply also make it more economical for everyone to buy more cars.