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Can't be cheaper than the materials and labor costs to build it. If house prices get too cheap house builders / contractors will stop building. This will pinch
by subroutine 4y ago
Can't be cheaper than the materials and labor costs to build it. If house prices get too cheap house builders / contractors will stop building. This will pinch supply and keep house prices high enough that only cash rich (corps and banks) can afford them. Most people will have no choice but to rent indefinitely. Those who manage to save up some $400k may finally afford to buy a house just in time for retirement.
- diordiderot 4y agoBut if house prices (and therefore rents) go down, people will need lower salaries for an equally comfortable life, pushing labour costs down, making housing cheaper. Man economics is easy
- subroutine 4y agoWhy would rent go down if a large part of the market is owned by a monolith (banks/institutional investors) who can impose price control? This is already slowly happening. Also the median price of rent in a market is not so much a function of house ticket prices, but rather house affordability. A $400k house in a cash-only market is not more affordable than a $600k house in a market with loans. That is, in a cash market, few people will be able to say ya know, with these rent prices it actually makes more sense to buy than rent - let's go buy a house in full with cash. That all said, I'm not trying to be a lending market lobbyist. I personally avoid borrowing whenever possible, and don't even have a credit card. My contention is simply that current lending practices are the cause a lot of societal issues, but if lending did not exist whatsoever things would be substantially worse.