Yes, it does. Money preferentially flows to its most profitable use, where there’s the biggest demand for it. > Less-profitable than hypothetically possible (i

Yes, it does. Money preferentially flows to its most profitable use, where there’s the biggest demand for it. > Less-profitable than hypothetically possible (in a totally unregulated market/resources) does not necessarily mean unprofitable This is true but the less profitable it is the less investment there will be. Less investment in housing either means less housing or worse housing. > nor does it necessarily mean less-profitable than investment options elsewhere. This is not. Whether within a domestic market or internationally there are a plethora of options for where to invest money, from equities and bonds to venture capital to commercial and presidential real estate. If you artificially reduce the profitability of residential real estate you’ll get less of it unless you subsidise it. That’s just the government paying money to solve a problem the government created.