| >House becomes a cheap commodity, Houses can't become a "cheap commodity" unless there are revolutionary new construction methods and/or alternative materials. E.g. something like cheap 3D printing of structural walls, ubiquitous robots, pre-fab modular rooms and roofs, etc and cheaper material alternatives to wood, concrete, tile, asphalt shingles. Without a technological leap, traditional construction techniques will always have the baseline costs of paying expensive humans to rebuild the property. The labor costs of carpenters, plumbers, electricians, HVAC installers, roofers is ~50% or more of a house construction budget. This means houses will always be "expensive" in relation to the average Starbuck's barista paycheck because of Baumol's "Cost Disease":
https://en.wikipedia.org/wiki/Baumol_effect Put another way, we've known for several hundred years in math that the derivative of x^2 is 2x. Disseminating that knowledge should be cheap. And yet the cost(salaries) of calculus teachers and math professors (and the associated textbooks) keep going up instead of down. That's the "cost disease" similar with building houses. That's why a bunch of insurers abandoning the market doesn't won't change the economics enough for houses to become cheap commodities. Houses prices may adjust with lower sales prices but it still won't drop to "cheap commodities" level pricing. e.g. Florida condos' prices drastically fall because the Surfside collapse triggers law requiring millions in maintenance and rising hurricane insurance rates ... Starbucks baristas still can't afford those discounted condos. However, to your point about "market forces" creating a new equilibrium in prices... you can buy houses in Detroit for $1 but that does come with other issues: https://old.reddit.com/r/explainlikeimfive/comments/1ja3lm/e... https://www.quora.com/Is-there-a-catch-to-buying-the-1-homes... |
What neither of your links mention is that these are tax foreclosures or similar transaction and you are typically also buying the liability of back taxes owed on top of all the downsides that the links mention.