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>Assuming they're sold to owner-occupiers who were previously renting, you've increased housing supply in that segment of the market, but you've reduced supply
by SantalBlush 4y ago
>Assuming they're sold to owner-occupiers who were previously renting, you've increased housing supply in that segment of the market, but you've reduced supply in the letting market, so the net effect will be zero.
Not really. The net effect would be a distribution of wealth across a broader number of people (former renters, now owners) instead of one person (landlord who is accumulating wealth by charging rents from a number of people).
- Gunax 4y agoBut the purchaser exchanged money for property. The transaction did not alter their wealth. I understand that we typically think of owning property as a means of increasing wealth, more so than renting. But this is only true because we let home values increase. And it might not even be true now, if renters places their savings other investments.
- SantalBlush 4y agoEven if home prices stay flat, it would increase the would-be-renters' wealth. Their payments would not only build equity which can transfer to another purchase, but once they pay off a home, the payments are finished. That means more net-positive cash flows to their own pockets. The notion that home prices need to rise for wealth building is completely and unequivocally false.
- ac29 4y ago> once they pay off a home, the payments are finished Property taxes and maintenance costs continue forever.