6 ms·

The affordable housing crisis, explained

• api 7y ago
  Everything here is right but one factor is not mentioned: the use of housing as a pure investment vehicle and financial instrument. Cash buyers with no interest but speculation (or sometimes money laundering) are a huge factor in "hot" markets.
  • closeparen 7y ago
    If the fundamentals aren't there, then prospective homebuyers can simply keep renting and saving while they wait for the market to rationalize. You wouldn't want to be a long term buyer in a market that you believe is experiencing a speculative bubble. The people locking you out of it are (perversely) doing you a favor, by saving you from being one of their "greater fools." I suspect that capping supply in the face of immense demand is what makes urban housing such a great investment. If we allowed enough supply growth to make urban housing markets underperform equity markets (while still rising!) much of that capital would lose interest. You speculate on things that are going up, after all.
    • subpixel 7y ago
      > prospective homebuyers can simply keep renting and saving Or more likely just one of those things.
    • api 7y ago
      You just described how bubbles work. Real estate is still in a bubble, and there are still fools.