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>>I guess my question is in what way in this situation is investment in real estate a positive thing for the average person? A higher volume of investment into
by CryptoPunk 6y ago
>>I guess my question is in what way in this situation is investment in real estate a positive thing for the average person?
A higher volume of investment into real estate will increase the value of land, so land-consuming real estate like Single Family Houses will go up in price.
In contrast, the cost of units in very dense developments, like high rises, will be dominated by building costs, not land prices, so their price would mostly stay constant as real estate investment increases, if all other factors were controlled for, and assuming no major market-freedom-inhibiting distortions of the construction industry via government regulations or organized crime.
Anyway, what goes down in price with rising supply is not the cost of buying real estate. It's the cost of renting it. If a real estate market has regulations that discourage investment, and suddenly those were repealed, and the market saw a flurry of construction, you'd also expect the purchase price of units in dense developments (where land is a minor cost input) to come down, as units available for purchase become less scarce, and that scarcity premium disappears.
- msrenee 6y agoI and most people my age in my area are trying to purchase our living space. When you rent, you don't have to pay for maintenance, but you also don't get any return from the money you put into it. It's a fee you pay for a place to sleep, rather than an investment. There being more rental space in my area isn't beneficial to me or most people in my generation and socioeconomic class. It's beneficial to those who own the rental homes. You'd think the price of rent would at least go down with all these new apartment buildings coming in, but it's risen much faster than inflation even for my no frills, poorly maintained apartment.