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I think you make a good point about places in the US seeing falling prices. It is obviously incorrect to say that prices are guaranteed to rise but I don’t thi

I think you make a good point about places in the US seeing falling prices. It is obviously incorrect to say that prices are guaranteed to rise but I don’t think that’s what anyone claims. I think the general claim is that policies around housing tend to prop prices up by restricting supply (zoning, permitting, higher building costs due to various regulations like stricter codes or safety standards as well as stuff like parking requirements, giving old properties lower taxes) or subsidising demand (loan guarantees, buyer assistance, etc). That is, governments choose housing policies that keep prices high at cost to taxpayers instead of policies that reduce house prices, which is what is meant about governments not wanting them to fall. Also, if house prices fall and the people think the government is responsible, the government probably gets voted out. The reason that loan assistance for people (ie not including companies) causes house prices to go up is that it means for a given house price, mortgage payments will be lower so more people will be able to afford that price. Instead people tend to pay for the most they can afford and (for a non-silly definition of afford) and so they end up paying more because they are competing for the same houses.

fnordpiglet 4y ago
On the loans, if you make loans less liquid and less accessible then fewer people will own homes because they can’t leverage into a house the can afford over 30 years but not this year. It likely won’t decrease the cost of housing because people still need housing, and will instead have to rent. There is enough capital on earth that those with capital will want that cash flow. See my point on rent : mortgage cash flow arbitrage. This would not lead to cheaper housing, just less people owning housing vs renting and more housing owned by fewer people - mostly corporations that have vast access to leverage at rates considerably more favorable. That seems like lose lose to me. Zoning IMO is a red herring. Developers have no interest in driving property prices down with their marginal developments. They will develop in a way that sees prices stable or rise, which is favorable to them as property investors. People betting zoning law repeals will magically result in vast Soviet style SRO arcologies housing everyone affordably will be disappointed that the Victorian single family home torn down and redeveloped as a duplex is developed as a four story duplex with twice as much space, with each duplex roughly the same price as the original single family home. There also won’t be a massive selling of existing property because, well, NIMBYs like where they live. Ultimately we will just have less Victorians that will never be rebuilt and a handful more luxury duplexes.

fnordpiglet 4y ago

On the loans, if you make loans less liquid and less accessible then fewer people will own homes because they can’t leverage into a house the can afford over 30 years but not this year. It likely won’t decrease the cost of housing because people still need housing, and will instead have to rent. There is enough capital on earth that those with capital will want that cash flow. See my point on rent : mortgage cash flow arbitrage. This would not lead to cheaper housing, just less people owning housing vs renting and more housing owned by fewer people - mostly corporations that have vast access to leverage at rates considerably more favorable. That seems like lose lose to me. Zoning IMO is a red herring. Developers have no interest in driving property prices down with their marginal developments. They will develop in a way that sees prices stable or rise, which is favorable to them as property investors. People betting zoning law repeals will magically result in vast Soviet style SRO arcologies housing everyone affordably will be disappointed that the Victorian single family home torn down and redeveloped as a duplex is developed as a four story duplex with twice as much space, with each duplex roughly the same price as the original single family home. There also won’t be a massive selling of existing property because, well, NIMBYs like where they live. Ultimately we will just have less Victorians that will never be rebuilt and a handful more luxury duplexes.