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"building more houses won't help if they are all used as investment" Supply and demand applies to housing as well. If many new units are constructed, both rent

"building more houses won't help if they are all used as investment" Supply and demand applies to housing as well. If many new units are constructed, both rent and prices go down, even if they are used as investment.

nradov 3y ago
In theory yes, if they build enough housing so that supply exceeds demand then eventually prices will drop. In practice though in popular vacation areas building smaller amounts of new housing often induces additional demand that drives prices up at an even faster rate.
- missedthecue 3y ago
  But we're talking about small towns here not Lake Tahoe
  - Ccecil 3y ago
    Well...My town is Coeur d'alene, ID. So not far off from Tahoe. Although, just 20 years ago people laughed if you told them you were from Idaho. This was the place in the middle of nowhere that nobody wanted to live. The majority of apartments are owned by commercial entities. Smaller individual rentals are being converted to vacation rentals. Commercial rental collusion on a massive scale (empty high priced commercial units all over) causing issues with running a small business. The local real estate people and the newspapers were saying there have been housing prices dropping by 10k/month...but somehow Zillow shows my parent's house gaining 20k. Clearly someone is not telling the truth. June 2020 we had investor groups knocking on doors buying houses at 40% over market value...I spoke with more than one. What will happen when people start to realize that these investments are not panning out? What happens when the large corporate investors (REITs too) start dumping their positions? Maybe it will never happen... Biggest issue is that the illusion people live by is that rents follow market value...but the reality is that rents are set by what people can pay. Most who rent in the area cannot afford increases of 20%/year. If they could...they would be homeowners already. There are not local jobs to support the type of cost of living increases that we are seeing. Not sure there is a solution.

nradov 3y ago

In theory yes, if they build enough housing so that supply exceeds demand then eventually prices will drop. In practice though in popular vacation areas building smaller amounts of new housing often induces additional demand that drives prices up at an even faster rate.

missedthecue 3y ago
But we're talking about small towns here not Lake Tahoe
- Ccecil 3y ago
  Well...My town is Coeur d'alene, ID. So not far off from Tahoe. Although, just 20 years ago people laughed if you told them you were from Idaho. This was the place in the middle of nowhere that nobody wanted to live. The majority of apartments are owned by commercial entities. Smaller individual rentals are being converted to vacation rentals. Commercial rental collusion on a massive scale (empty high priced commercial units all over) causing issues with running a small business. The local real estate people and the newspapers were saying there have been housing prices dropping by 10k/month...but somehow Zillow shows my parent's house gaining 20k. Clearly someone is not telling the truth. June 2020 we had investor groups knocking on doors buying houses at 40% over market value...I spoke with more than one. What will happen when people start to realize that these investments are not panning out? What happens when the large corporate investors (REITs too) start dumping their positions? Maybe it will never happen... Biggest issue is that the illusion people live by is that rents follow market value...but the reality is that rents are set by what people can pay. Most who rent in the area cannot afford increases of 20%/year. If they could...they would be homeowners already. There are not local jobs to support the type of cost of living increases that we are seeing. Not sure there is a solution.