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Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored

Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored because always a million reasons come up against it, mostly being just NIMBYsm in disguise. Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to shortages down the road and only the lucky few with money or connections will be able to afford. We had that in communism, except ironically, not with housing but with food and goods. Now the west has the opposite problem, everyone has plenty of food and iPhones, but no housing. Have Swedes never learned about this and the functioning of supply/demand in their excellent school system?

varispeed 4y ago
> but for some reason that route is never explored. The reason you are looking for is called corruption. There is a very strong lobby of landlords and the rich treating residential housing as a store of value. It offers better returns than keeping money in the bank and it is safer, especially if you are from a country where your assets could be in danger - it's much harder for foreign states to take control of the property, sell it and recover the monies. Here in the UK we have the same problem. Good percentage of the ruling party (and opposition) are landlords, there is a ton of foreign money coming in buying up properties left and right and they don't even care if they are rented out, because empty property gives good enough return. We even have banks start to move in this business as well. It has gone completely mad. But since big money is all over it and our security services are not interested in looking into it, nothing is going to change it will only get worse.
- joshuaissac 4y ago
  > The reason you are looking for is called corruption. It could just be democracy. Homeowners are an important vote bank and they generally want house prices to rise. A government that substantially increased housing supply would cause house prices to drop, which would make homeowners unhappy.
  - im_down_w_otp 4y ago
    I try to remind people in the US that there’s exactly one constituency that wants affordable houses. People who don’t have houses yet. Everybody else wants housing to continue to be a growth investment, and thus increasingly unaffordable. Developers want to make & sell more expensive things. Lenders want to make more & bigger loans. Existing owners want the value of their most valuable asset to go “up & to the right”. That’s a very big hurdle to overcome politically. Even worse in the US where real estate investments are a central pillar of the broader economy, and if the “growth investment” patina of it starts to fade, then a cascading catastrophe will likely follow. The situation might be untenable as prices keep going up, but there are so many incentives working against any kind of intervention, that I never expect one to occur.
    - VirusNewbie 4y ago
      If someone owns a condo and wants to buy a mansion, does it make sense for them to hope all real estate appreciates in price vs depreciates?
      - im_down_w_otp 4y ago
        If they want to maximize the sale price of their condo? Yes. They’ll just have to relocate to a different housing market to buy that mansion. You just described every Californian who upsized by moving out of state. They definitely wanted their condo, bungalow, or shack to get top dollar in their market.
    - maeil 4y ago
      > Everybody else wants housing to continue to be a growth investment Acting like non-NIMBYs don't exist is harmful and does a massive disservice to them. They do exist and they need to be praised instead of ignored.
    - prawn 4y ago
      I agree with the generalisation, but as a homeowner in another Western country, I'm unsettled by the "up & to the right": creates a less affordable environment for my children, and leads to a less stable place to live. I'd guess you generally get a safer community with more people invested in it and fewer people in desperate situations. Further, affordable housing (as in, literally affordable, and not under some means-tested scheme) means more opportunities for me to buy further properties.
- mihaaly 4y ago
  I wonder why the rich and those in charge of regulating and steering policy think it will not end bad for them too when masses could not afford the housing on the highly inflated prices fuelled by passive money drawn out of economy into "investment" (more like sleeping) properties, hence crashing housing prices all around making them loose a lot. And that all that living cost hikes will not exacerbate things further accelerating this crash as people need to spend sooo much on housing less remains there for the functional parts of the economy? They hope they die before this comes or what?! They will not be in charge and could sip gin and tonic silently in a big warm garden somewhere before this happens? But what about their children and their other young family members? What will they do with properties woth nothing in a dissolving society where it will not be good or perhaps not even safe living due to unrest of the poor? A frequently repeting worry in articles and analysis here and there is the gigantic wealth accumulated for few stucked away suffocating the rest of the society and raising desperation yet what I can see people seem to mumble "it's ok so far, it's ok so far" to themselves while falling alongside a high rise building. Do they hope for a soft landing with this behaviour? They hope that printing cash in increased speed pumped into even more passive wealth here and there through the sliding middle and lower classes will last forever?
  - varispeed 4y ago
    The solution for this will be CBDC - electronic programmable money and social credit score. The class of the ultra rich that has developed and controls the governments will use the poor as means of production - since they already own most of the economy, there is no longer any need for markets in the traditional sense, that we know. At one point if you have 100 billion, it doesn't matter if you have 101 or 200. The capitalism has reached its end and the rich are preparing us for the so called fourth industrial revolution.
    - mihaaly 4y ago
      It did not work in the history of isolated submissive societies, it will not work in the period of highly interacting and highly conscious global societies. For their sake I hope the title of one Aerosmith song will not become reality. https://www.youtube.com/watch?v=ZK__9UIN5gk https://www.youtube.com/watch?v=ZK__9UIN5gk
- tannhaeuser 4y ago
  The situation in the UK and in Sweden appears to be very different, though. Sweden's rent control was certainly welcomed as pro-tenant policy, except (as noted by GP) has led to a black/secondary market of sub-letting and selling existing rent-controlled contracts at enormous prices, while keeping economical incentives for new construction low. That's really basic economic literacy and even suggested by OECD to the Swedish government. Of course, that doesn't stop eg Berlin leftist parties to suggest rent controls (read: to buy votes).
jjoonathan 4y ago
Misguided handout-seeking poor are not stopping construction. Rent control doesn't solve the problem, but it doesn't cause the problem either. > NIMBYsm in disguise Yes, this is the real problem: the same capitalist incentive structure that pulls forward the future returns of a new housing investment also pulls forward the consequences of future supply normalization onto current owners. Capitalism also guarantees that these owners are the ones with power. It gives them the means and the motive to torpedo new development. So they do. Capitalism causes NIMBYism. Which is the real problem.
- dogma1138 4y ago
  Forced rent control definitely causes a problem as it suppresses supply.
  - jjoonathan 4y ago
    We agree that suppressed supply is the problem. You think the suppression is caused by clueless and misguided poor people. I think the suppression is caused by clued-in rich people pursuing enormous financial malincentives. Do you disagree that the malincentives exist? Or do you think that clueless poor people are a more effective political bloc than clued-in rich people pursuing enormous financial malincentives?
    - dogma1138 4y ago
      You are still missing the point, rent controls restrict supply and even worse mobility they make the market far less efficient and more expensive for the majority of players under pretty much any rent control system.
      - ChuckNorris89 4y ago
        >rent controls restrict supply and even worse mobility Exactly this. People love having rent control until they want to change apartment to upsize, downsize or move, and then realize they can't because the market is FUBAR.
AdrianB1 4y ago
You got the communist part wrong. If you are born in 1989 as your name suggests, I see why you got it wrong, like that entire generation and the generations after that, but it does not makes it right. Food shortage in Romania had a very different cause.
- ChuckNorris89 4y ago
  What exactly did I get wrong?
  - AdrianB1 4y ago
    The food shortage situation.

varispeed 4y ago

> but for some reason that route is never explored. The reason you are looking for is called corruption. There is a very strong lobby of landlords and the rich treating residential housing as a store of value. It offers better returns than keeping money in the bank and it is safer, especially if you are from a country where your assets could be in danger - it's much harder for foreign states to take control of the property, sell it and recover the monies. Here in the UK we have the same problem. Good percentage of the ruling party (and opposition) are landlords, there is a ton of foreign money coming in buying up properties left and right and they don't even care if they are rented out, because empty property gives good enough return. We even have banks start to move in this business as well. It has gone completely mad. But since big money is all over it and our security services are not interested in looking into it, nothing is going to change it will only get worse.

joshuaissac 4y ago
> The reason you are looking for is called corruption. It could just be democracy. Homeowners are an important vote bank and they generally want house prices to rise. A government that substantially increased housing supply would cause house prices to drop, which would make homeowners unhappy.
- im_down_w_otp 4y ago
  I try to remind people in the US that there’s exactly one constituency that wants affordable houses. People who don’t have houses yet. Everybody else wants housing to continue to be a growth investment, and thus increasingly unaffordable. Developers want to make & sell more expensive things. Lenders want to make more & bigger loans. Existing owners want the value of their most valuable asset to go “up & to the right”. That’s a very big hurdle to overcome politically. Even worse in the US where real estate investments are a central pillar of the broader economy, and if the “growth investment” patina of it starts to fade, then a cascading catastrophe will likely follow. The situation might be untenable as prices keep going up, but there are so many incentives working against any kind of intervention, that I never expect one to occur.
  - VirusNewbie 4y ago
    If someone owns a condo and wants to buy a mansion, does it make sense for them to hope all real estate appreciates in price vs depreciates?
    - im_down_w_otp 4y ago
      If they want to maximize the sale price of their condo? Yes. They’ll just have to relocate to a different housing market to buy that mansion. You just described every Californian who upsized by moving out of state. They definitely wanted their condo, bungalow, or shack to get top dollar in their market.
  - maeil 4y ago
    > Everybody else wants housing to continue to be a growth investment Acting like non-NIMBYs don't exist is harmful and does a massive disservice to them. They do exist and they need to be praised instead of ignored.
  - prawn 4y ago
    I agree with the generalisation, but as a homeowner in another Western country, I'm unsettled by the "up & to the right": creates a less affordable environment for my children, and leads to a less stable place to live. I'd guess you generally get a safer community with more people invested in it and fewer people in desperate situations. Further, affordable housing (as in, literally affordable, and not under some means-tested scheme) means more opportunities for me to buy further properties.
mihaaly 4y ago
I wonder why the rich and those in charge of regulating and steering policy think it will not end bad for them too when masses could not afford the housing on the highly inflated prices fuelled by passive money drawn out of economy into "investment" (more like sleeping) properties, hence crashing housing prices all around making them loose a lot. And that all that living cost hikes will not exacerbate things further accelerating this crash as people need to spend sooo much on housing less remains there for the functional parts of the economy? They hope they die before this comes or what?! They will not be in charge and could sip gin and tonic silently in a big warm garden somewhere before this happens? But what about their children and their other young family members? What will they do with properties woth nothing in a dissolving society where it will not be good or perhaps not even safe living due to unrest of the poor? A frequently repeting worry in articles and analysis here and there is the gigantic wealth accumulated for few stucked away suffocating the rest of the society and raising desperation yet what I can see people seem to mumble "it's ok so far, it's ok so far" to themselves while falling alongside a high rise building. Do they hope for a soft landing with this behaviour? They hope that printing cash in increased speed pumped into even more passive wealth here and there through the sliding middle and lower classes will last forever?
- varispeed 4y ago
  The solution for this will be CBDC - electronic programmable money and social credit score. The class of the ultra rich that has developed and controls the governments will use the poor as means of production - since they already own most of the economy, there is no longer any need for markets in the traditional sense, that we know. At one point if you have 100 billion, it doesn't matter if you have 101 or 200. The capitalism has reached its end and the rich are preparing us for the so called fourth industrial revolution.
  - mihaaly 4y ago
    It did not work in the history of isolated submissive societies, it will not work in the period of highly interacting and highly conscious global societies. For their sake I hope the title of one Aerosmith song will not become reality. https://www.youtube.com/watch?v=ZK__9UIN5gk https://www.youtube.com/watch?v=ZK__9UIN5gk
tannhaeuser 4y ago
The situation in the UK and in Sweden appears to be very different, though. Sweden's rent control was certainly welcomed as pro-tenant policy, except (as noted by GP) has led to a black/secondary market of sub-letting and selling existing rent-controlled contracts at enormous prices, while keeping economical incentives for new construction low. That's really basic economic literacy and even suggested by OECD to the Swedish government. Of course, that doesn't stop eg Berlin leftist parties to suggest rent controls (read: to buy votes).

jjoonathan 4y ago

Misguided handout-seeking poor are not stopping construction. Rent control doesn't solve the problem, but it doesn't cause the problem either. > NIMBYsm in disguise Yes, this is the real problem: the same capitalist incentive structure that pulls forward the future returns of a new housing investment also pulls forward the consequences of future supply normalization onto current owners. Capitalism also guarantees that these owners are the ones with power. It gives them the means and the motive to torpedo new development. So they do. Capitalism causes NIMBYism. Which is the real problem.

dogma1138 4y ago
Forced rent control definitely causes a problem as it suppresses supply.
- jjoonathan 4y ago
  We agree that suppressed supply is the problem. You think the suppression is caused by clueless and misguided poor people. I think the suppression is caused by clued-in rich people pursuing enormous financial malincentives. Do you disagree that the malincentives exist? Or do you think that clueless poor people are a more effective political bloc than clued-in rich people pursuing enormous financial malincentives?
  - dogma1138 4y ago
    You are still missing the point, rent controls restrict supply and even worse mobility they make the market far less efficient and more expensive for the majority of players under pretty much any rent control system.
    - ChuckNorris89 4y ago
      >rent controls restrict supply and even worse mobility Exactly this. People love having rent control until they want to change apartment to upsize, downsize or move, and then realize they can't because the market is FUBAR.

AdrianB1 4y ago

You got the communist part wrong. If you are born in 1989 as your name suggests, I see why you got it wrong, like that entire generation and the generations after that, but it does not makes it right. Food shortage in Romania had a very different cause.

ChuckNorris89 4y ago
What exactly did I get wrong?
- AdrianB1 4y ago
  The food shortage situation.