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What does "fold" even mean? Real estate prices are not being artificially elevated, they are a simple function of supply and demand. Just build more houses and
by ars 4y ago
What does "fold" even mean?
Real estate prices are not being artificially elevated, they are a simple function of supply and demand. Just build more houses and prices will do down, and they'll go down slowly, without collapsing.
The typical model works like this: The suburbs around a city grow, the city runs out of space. This causes land in the suburbs to become expensive, so they subdivide lots and build more houses. The suburbs now become the city.
And people move to the edge of the city and create new suburbs, and the city grows.
Of course if you read the propaganda suburbs are evil, but in the real world, they are simply a place where the city will eventually grow to.
Maybe that's the problem? People are actually buying in to the propaganda and not building suburbs, and this breaks the entire model?
- hkt 4y ago> Real estate prices are not being artificially elevated Alas, they are. Supply and demand for housing is measured in units of currency, not people. Ask yourself, how many multiples of income can you borrow, with what kind of deposit? The ratio has shrunk over time, allowing roughly the same people to borrow steadily increasing amounts of money. What's worse is that (in some countries at least) common measures of inflation don't measure house prices. The UK is an example of this. I'm unqualified to tell for sure, but I suspect some central banks have seen house prices as a way of keeping down measured inflation. The solution (IMO) is a policy of relative decline - look to make house prices rise more slowly than wages for a generation.
- sokoloff 4y agoThe US does not include house purchase prices (the one-time capital cost), but does include actual rent or owner equivalent-rent (the ongoing/operating cost) in its measures of inflation. This is entirely sensible consistent treatment, but often inadvertently or intentionally misunderstood.
- swexbe 4y agoNo, the problem is that suburbs are the only thing we build anymore. Fresno has doubled it’s population since 1940 while 10x increasing it’s land usage.
- ricardobayes 4y agoBlame instagram and US television programmes for that. Even in Europe now everyone wants a house with a lawn, which is unfeasible and leads to a lot of frustration. Even if you're stuck in an apartment, it has to be "instagrammable", 10 year old kitchens are unacceptable. Oh and you just _got_ to have iPhones, otherwise you're an undateable nobody.
- ako 4y agoHousing prices are mostly a function of supply and demand, but heavily influenced by demand from investors, and the limitation that not all supply is created equal: it’s all about location, location and location.
- Balero 4y agoNot everywhere has the space the the US has. Many places in Europe, especially Germany, the UK and the low countries simply have no space to grow into, the urban areas are basically touching as is. It is politically unfeasible to turn swathes of these countries into an endless urban/suburban sprawl. Many have a strong agricultural lobby (The Netherlands in particular) and/or have an eye on food security.