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Because the population has grown more than supply in most of the western world, leading the existing housing supply as a shortfall situation versus demand that
by Macha 4y ago
Because the population has grown more than supply in most of the western world, leading the existing housing supply as a shortfall situation versus demand that exists. Therefore by subsidising purchases and thereby increasing the purchasing power of each buyer, you just end up removing one limiting factor on sellers increasing prices, and most of the subsidy ends up pocketed by the sellers in the form of increased house prices, which is both inflationary and not the policy goal of these programs.
- jwarden 4y ago> most of the subsidy ends up pocketed by the sellers in the form of increased house prices This is true if the housing supply is inelastic. But the long-run supply of housing services is very elastic[^1]. Also spending money to build housing is inflationary. [^1]: https://www.rand.org/content/dam/rand/pubs/reports/2009/R2846.pdf https://www.rand.org/content/dam/rand/pubs/reports/2009/R284...