> Naively, you would expect this to be fixed via basic economics: high demand and low supply lead to high prices, which should lead to MORE supply, which should

> Naively, you would expect this to be fixed via basic economics: high demand and low supply lead to high prices, which should lead to MORE supply, which should lower prices Classical economics says only half the real estate asset price corresponds to actual capital. The land-fraction of real estate value is a monopoly price. The capitalized ground-rent increases the scarcer land becomes. Investors maximize asset gains by holding out for high prices as possible. > The system isn't self-healing anymore. It's jammed up The fictitious capitalization of ground-rent into asset prices has caused problems since classical antiquity. This is business as usual and everyone should know how this works by now. > but the trend has been happening for years, maybe a full decade now North American land speculation goes back to 1600-1700s and John Law's Mississippi company. It caused lots of problems during westward expansion. There is typically a real estate bubble and crash every 18 years since 1840s. Cycle can be interrupted with financial regulation, central bank window guidance to discourage credit creation for speculative asset purchases, and special taxes. Ideally we'd want state governments to appoint commissioners to chair equalization boards to redo land valuations at state level, introduce a federal direct land tax on comparable sales price of estates less replacement cost of improvements, increase realization of real estate asset gains taxes, requires brokers to appraise replacement cost of improvements separately from comparable sales price, and cap mortgage guarantees by federal GSEs at 200% of replacement cost of non-obsolete fixed capital improvements whenever that is lower than comparable sales price.