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the problem is there is market failure. The Housing Asset is more valuable as a financial instrument than the actual utility it provides. This is why you see ho
by supercanuck 8y ago
the problem is there is market failure. The Housing Asset is more valuable as a financial instrument than the actual utility it provides. This is why you see homes sitting empty in Manhattan.
- refurb 8y agoThe market is failing because of the distortions introduced by things like mortgage tax deduction, 30-year term mortgages, restrictions on new housing, etc.
- onemoresoop 8y agoCould you please elaborate on that? Thanks
- refurb 8y agoThere are gov't policies that make it much easier to get money to purchase a home. 30 year mortgages were created by the gov't which locks in low payments. Mortgage tax deduction lowers the effective cost of a mortgage. Easier to get money to buy a home -> price of homes go up. Normally when prices go up, supplier (homebuilders) have an incentive to produce more housing, countering the increase in price. However, many cities (SF is a great example) make it very hard to build new housing. Restriction on supply with increasing demand -> price of homes go up.
- deepakhj 8y ago85% of SF bans apartment buildings. Projects take years to get approved. All of those costs get rolled into the final amount.
- growlist 8y ago> restrictions on new housing Unfortunately they are not making any more land.
- deepakhj 8y agoWhen land is scarce, the only thing left to do is build up!
- supercanuck 8y agoDemand for Empty Condo’s has never been higher!