[stego-tech]

Except those firms currently have enough money to lobby politicians to oppose any changes that would meaningfully increase supply, and also hold outsized stakes in the companies and suppliers who would build said stock.

It’s a rigged game top to bottom. A free market would’ve fixed this years ago, but this is not a free market anymore. The difference is I advocate control of necessity markets returning to government regulations around availability and affordability, while luxury markets remain relatively untouched.

Housing is a necessity. No market god is going to fix it.

[lokar]

The political system is particularly susceptible to capture and unfair policy when the public is disengaged and poorly informed (as the paper describes). It makes it very easy to business to get their way.

The solution is the (hard and slow) work to engage and educate voters.

[stego-tech]

Yup, but I also take the tact of educating the current winners of the increasing cost of their inevitable loss when the pendulum swings the other way. Pre-pandemic, the “loss” of home valuations might’ve been 10-15% in many areas once supply was increased and made available to homebuyers; post-pandemic, that loss could be as much as 50% depending on where you bought and what the actual local demand is. That results in fiercer resistance against change that would improve the problem even a modest amount, because now they have more to lose.

As I learned watching Union vs Non-Union labor interactions, it’s exponentially cheaper to do the right thing sooner than being forced to do a compromise thing later. The fact the crisis has gotten so bad that there’s campaigns for national rent control schemes and “homeownership as a human right” legislation means they have already lost by not doing the right thing sooner. Once organization happens, you’ve lost the game.

The rest is just time.

[lokar]

I agree, any change that causes sharp drops in real (inflation adjusted) prices will be a problem. I think the best we could hope for is a long period of gradual decline (when including inflation, so perhaps a slight increase in nominal prices).

This problem took (in some places) 30+ years to create, it won't be fixed quickly.

[dkarl]

> The solution is the (hard and slow) work to engage and educate voters.

It is indeed hard work, especially if you want to influence people who aren't engaged in politics to vote. I find that people who aren't engaged with politics are most receptive to extreme messages that discourage them further. They're all ears if you tell them that the system is rigged and it's impossible for people to defeat the corporations or the elite. It's much harder to convince them that voting matters.

[lokar]

IMO, the best long term strategy is to improve the basic infrastructure of democracy. Non-partisan districting, single election rank choose voting, etc.

[BobaFloutist]

>and also hold outsized stakes in the companies and suppliers who would build said stock.

Wouldn't that motivate them to build more?

[jeremyjh]

Do you realize your argument boils down to “increasing supply doesn’t reduce housing cost because we don’t increase the supply”?

[stego-tech]

Yes, because unlike every single detractor here I’m not distilling a complex argument full of nuance into a “1+1=2” baby-splaining session.

Let me put it into simple numbers the detractors can understand:

I build ten homes in a market that needs a hundred. I price them affordably because I’m not an asshole and understand there’s a crisis.

* Statistically speaking, 25% of those homes will be bought by PE or REITs. I cannot deny them the sale because the law says so. Let’s round that up to three homes out of ten. Those homes may be rented out at market rate rent, which is far higher than the mortgage would have been, which doesn’t reduce pricing or improve supply - rent remains high because these groups have data to keep rent that high, and supply remains constrained because a fourth of my inventory just got sold to profiteers instead of people.

* Of the remaining seven homes, all are likely sold to actual people. Due to bidding wars and my obligations to shareholders however, I have to take the highest bids. Because of anti-discrimination laws, I can’t sell to underserved minority groups because that’s considered discrimination. So a plurality of owners will be higher net worth individuals, many of whom likely already own property.

* Because we’re in a housing crisis and everyone wants money for doing nothing, it’s likely that about half of the new homeowners won’t outright sell their existing home, but instead rent it out at or near market rates set by PE/REITs. They want that cash after all, and know there’s a lack of supply. Because their old homes aren’t being added to the market for sale, this doesn’t apply negative pressure on housing prices since a home for rent is not a home for sale

* So now we have just three homebuyers left who bought their only home, aren’t renting it out, didn’t have prior equity, and almost certainly overpaid for what was on offer. This places them in a precarious environment where a job loss could lead to eviction or having to sell the home - but because they’re in the midst of a crisis, they can likely get a quick cash offer from a PE/REIT without actually putting the home on the market, making their problems disappear and putting them back as renters. Maybe one to two homeowners are affected by this.

So out of ten homes built, only three go to people not already on the property ladder in some form, and of which as many as five are likely to end up in the hands of an investor at some point anyway. Ten homes for a net gain of five purchasable properties is not a meaningful increase because the market, government, and tax incentives value less supply and more demand.

[amanaplanacanal]

Don't those other five now become more rental stock though? This is still 10 homes that didn't exist before, as 5 owner occupied, and 5 new rental properties.

Sounds like a great outcome! Let's do that some more.