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Obviously, the supply of new housing is not enough to meet the demand, or prices would have fallen to affordable levels.
by e15ctr0n 11y ago
Obviously, the supply of new housing is not enough to meet the demand, or prices would have fallen to affordable levels.
- mapt 11y agoPrices don't have to fall immediately for the principle to hold, and they're also not immune from the effects of rich people looking to bid up arbitrary assets with shorter-term bubble investment. Prices in Beijing are actively propelling development of all the smallest properties, to the point that historical hutongs are now endangered historical relics. https://psuchina.wordpress.com/2014/07/24/endangered-places-exploring-the-hutong-in-beijing/ https://psuchina.wordpress.com/2014/07/24/endangered-places-... That releases pressure on prices, one way or another. Prices would be much higher if Beijing banned new development. "demand being met" is not a boolean condition with commodities, much less something as complex as housing, with its constantly repriced financial assets, varying quality of good, and varying amounts of fluidity & cycles of construction. In San Francisco, they're just rising and rising without driving any new development. The government funds single-family-homeownership to an extraordinary degree with the mortgage system we've set up, and this distortion has created an odd body politic where nobody favors permitting property rights to be exercised, where the population has a veto on the proper functioning of the real estate market. So new development is functionally banned. Broken city, too much democracy. Why would one want to move there from one's small hometown in Kansas? In a functioning economy, one tends to move to where one's talents have the highest price, and everyone, in the end, benefits.