Housing prices are only partially controlled by supply and demand for HOUSING. They have been financialized into speculative assets to a ridiculous extreme that is highly destructive to their primary function. The price is driven up by investors which have access to huge amounts of freshly created money loaned into existence, such that as long as there is the expectation that the price can go up, speculative demand is almost literally infinite and prices are driven above the ability of those who need housing and lack access to that sort of financing to pay. The situation is highly untenable in the long term.
I agree the housing market is deeply broken in many places, but would explain this purely in supply and demand terms. There is large demand, and laws severely restrict supply. Thus, prices go up. We expect additional restrictions on supply, so prices are expected to go up more, so they go up now, expectations set in, and so on. Then in part to protect those expectations, restrictions are increased.
If we ban/tax renting that won’t solve the problem, that will force renters to buy instead, and destroy the ability of the poor (who don’t hit a lottery where they’re given a house for free) to find places to live even more than we already do. This is already happening of course. Rent control is known to be the best way to destroy a city’s housing stock short of aerial bombing—and eviction bans are the most extreme form of rent control.
The solution is obvious. Get rid of the restrictions on building more housing and on how one rents out housing, and supply will increase, as will expected future supply, driving prices down to not much more than cost of construction. To help more, also work to make us able to build things cheaper.
(OK, tagging out on further discussions here to avoid getting into politics and things that have nothing to do with Covid-19)
Housing prices are only partially controlled by supply and demand for HOUSING. They have been financialized into speculative assets to a ridiculous extreme that is highly destructive to their primary function. The price is driven up by investors which have access to huge amounts of freshly created money loaned into existence, such that as long as there is the expectation that the price can go up, speculative demand is almost literally infinite and prices are driven above the ability of those who need housing and lack access to that sort of financing to pay. The situation is highly untenable in the long term.
I agree the housing market is deeply broken in many places, but would explain this purely in supply and demand terms. There is large demand, and laws severely restrict supply. Thus, prices go up. We expect additional restrictions on supply, so prices are expected to go up more, so they go up now, expectations set in, and so on. Then in part to protect those expectations, restrictions are increased.
If we ban/tax renting that won’t solve the problem, that will force renters to buy instead, and destroy the ability of the poor (who don’t hit a lottery where they’re given a house for free) to find places to live even more than we already do. This is already happening of course. Rent control is known to be the best way to destroy a city’s housing stock short of aerial bombing—and eviction bans are the most extreme form of rent control.
The solution is obvious. Get rid of the restrictions on building more housing and on how one rents out housing, and supply will increase, as will expected future supply, driving prices down to not much more than cost of construction. To help more, also work to make us able to build things cheaper.
(OK, tagging out on further discussions here to avoid getting into politics and things that have nothing to do with Covid-19)