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The market working would be supply matching the demand to keep prices relatively steady. But supply is artificially restricted leading to stupid price increase

by treis 5y ago

The market working would be supply matching the demand to keep prices relatively steady. But supply is artificially restricted leading to stupid price increases.

sudosysgen 5y ago
The GP alluded to housing being a scarce good. Yes, you can increase housing density, but you eventually hit a wall where infrastructure is limiting and expensive to build meaning that you can't drop the price of housing. At which point the only solution is to build more cities or enter a death spiral. It's why China had to start building cities, eventually density stops being economically feasible either.
- treis 5y ago
  Sure, but the wall is not a million bucks for a 3/2 home.
  - sudosysgen 5y ago
    For now it's not, but even when supply meets demand housing prices tend to increase, so it could very well happen in not too long.
jfrunyon 5y ago
That's a bit strange to say. Supply is restricted largely by capital required to compete. Because that results in more profits, it's the default tendency of capitalism/"free market" policies. So in a sense, it's naturally restricted, not artificially.
TimPC 5y ago
Supply is also naturally restricted because there is only so much land in an area. Especially when we are talking about people interested in their own dwelling/home where building a condo just means they look elsewhere. People forget this basic fact a lot when talking about housing.
- reducesuffering 5y ago
  Luckily humanity learned to build skyscrapers eons ago. You're forgetting about the many people who would easily shift to condo housing if it was 2x cheaper, but aren't because it's marginally cheaper than a SFH, and they don't want to put 3x their net worth into a condo that will probably end up financially worse than a SFH. So you still have a huge population that would live in condo's if it was more affordable. And housing pricing is all about the margins of the market, so you fix that imbalance and you make the housing market a whole lot more healthy.
  - sudosysgen 5y ago
    Skyscrapers get expensive quick and can rapidly max out the infrastructure.

by treis 5y ago

The market working would be supply matching the demand to keep prices relatively steady. But supply is artificially restricted leading to stupid price increases.

sudosysgen 5y ago

The GP alluded to housing being a scarce good. Yes, you can increase housing density, but you eventually hit a wall where infrastructure is limiting and expensive to build meaning that you can't drop the price of housing. At which point the only solution is to build more cities or enter a death spiral. It's why China had to start building cities, eventually density stops being economically feasible either.

treis 5y ago
Sure, but the wall is not a million bucks for a 3/2 home.
- sudosysgen 5y ago
  For now it's not, but even when supply meets demand housing prices tend to increase, so it could very well happen in not too long.

jfrunyon 5y ago

That's a bit strange to say. Supply is restricted largely by capital required to compete. Because that results in more profits, it's the default tendency of capitalism/"free market" policies. So in a sense, it's naturally restricted, not artificially.

TimPC 5y ago

Supply is also naturally restricted because there is only so much land in an area. Especially when we are talking about people interested in their own dwelling/home where building a condo just means they look elsewhere. People forget this basic fact a lot when talking about housing.

reducesuffering 5y ago
Luckily humanity learned to build skyscrapers eons ago. You're forgetting about the many people who would easily shift to condo housing if it was 2x cheaper, but aren't because it's marginally cheaper than a SFH, and they don't want to put 3x their net worth into a condo that will probably end up financially worse than a SFH. So you still have a huge population that would live in condo's if it was more affordable. And housing pricing is all about the margins of the market, so you fix that imbalance and you make the housing market a whole lot more healthy.
- sudosysgen 5y ago
  Skyscrapers get expensive quick and can rapidly max out the infrastructure.