3 ms·

Induced demand in housing would require people to buy second or third homes because they were affordable. So long as people are only buying or renting one home,

• toomuchtodo 10y ago
  Perhaps its because those who can afford to buy due to their socioeconomic status can vacuum up properties at cheap interest rates, and then profit by renting to those who can't afford to buy? One part of the solution is to drastically curtail subsidies for landlords (depreciation/mortgage interest deduction)
• bkeroack 10y ago
  The induced demand does not come from those who already live in the area buying/renting multiple units but from new people migrating in (that's why I included the "...otherwise desirable areas like [LA/SoCal]" in my original comment). For areas like LA, you can assume that there is a very large pool of people with at least some desire to migrate in (just like NYC, Chicago, etc). One of the primary throttling influences on this migration is the cost of housing, just like one of the primary throttling influences on "Will I drive to location X" is "how bad is traffic between here and there?" (what is the cost of driving). Increase the housing stock (build more roads) and it will almost immediately be soaked up by those eager to migrate in (drive), before it has the chance to sit on the market for a while and exert downward pressure on prices.