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They are not the problem directly. There's however just no intrinsic reason for the valuation to go up unless: * investors bought out most of the housing and m

They are not the problem directly. There's however just no intrinsic reason for the valuation to go up unless: * investors bought out most of the housing and made it "scarce" or otherwise inflated prices - tacit cartel is common * the area has been restructured to make it impossible for non-rich people to live there even if they get the housing for free (gentrification) * people cannot inherit property as they cannot pay the inheritance tax on the inflated valuation * there is an external scarcity factor like well paid jobs or at least opportunity for them Note that lack of space to live or overloaded services actually tends to depress prices. The statement already implies the people live there for a long time and have focused on the valuation for some reason. They will give their inheritors a problem they cannot pay off and have to try to sell. The ones being able to buy such property are likely to be investors. Now multiply that times a lot and you have the shape of the problem.

sokoloff 4y ago
> people cannot inherit property as they cannot pay the inheritance tax on the inflated valuation I don't understand the mechanism by which this would represent a driver for the valuation to go up. This effect would seem to be small in any case, but also tend to reduce (not increase) prices in its small effect, all else being equal. Unless I'm misunderstanding your point somehow.
- AstralStorm 4y ago
  The valuation is always extrinsic, and as such, a tacit cartel. Property should depreciate. If you hear that it doesn't, there's a massive structural problem, likely one of the described above. And these people using the property thinking they're gaining something are not doing anything about it, dooming their heritors.
  - sokoloff 4y ago
    Buildings should depreciate with wear (in real [after inflation] terms). Land should not, at least not land used for residential purposes.
  - nemo44x 4y ago
    Land goes up in value. We have more people and more demand. Structures get repaired and renovated. My house is over 100 years old but I just pumped 700k into it. Does its value not increase? Homes are expensive to maintain.

sokoloff 4y ago

> people cannot inherit property as they cannot pay the inheritance tax on the inflated valuation I don't understand the mechanism by which this would represent a driver for the valuation to go up. This effect would seem to be small in any case, but also tend to reduce (not increase) prices in its small effect, all else being equal. Unless I'm misunderstanding your point somehow.

AstralStorm 4y ago
The valuation is always extrinsic, and as such, a tacit cartel. Property should depreciate. If you hear that it doesn't, there's a massive structural problem, likely one of the described above. And these people using the property thinking they're gaining something are not doing anything about it, dooming their heritors.
- sokoloff 4y ago
  Buildings should depreciate with wear (in real [after inflation] terms). Land should not, at least not land used for residential purposes.
- nemo44x 4y ago
  Land goes up in value. We have more people and more demand. Structures get repaired and renovated. My house is over 100 years old but I just pumped 700k into it. Does its value not increase? Homes are expensive to maintain.