4 ms·

The real estate market is driven by speculation no? So that has to be solved before building more is ever going to be a useful option. Otherwise we just pour ga

The real estate market is driven by speculation no? So that has to be solved before building more is ever going to be a useful option. Otherwise we just pour gas on the fire of real estate speculation by expanding the size of the bubble. Building supply without any restriction in demand just scales the problem up linearly in proportion to the money put into new development.

galleywest200 3y ago
Could you elaborate on how building apartments specifically for low income residents would do this? My county has started buying old hotels and whatnot to convert for their uses.
throwaway6734 3y ago
How do you figure? If more houses are built, prices will go down.
- jfghi 3y ago
  I disagree with this notion. Rental values are often controlled algorithmically. Given the low inventory of housing for sale, it’s possible for the monopolists to purchase the new homes and use vacancy in order to maintain higher levels of pricing for the portfolio by artificially controlling the supply levels.
  - galangalalgol 3y ago
    If property taxes were evaluated the same way for the landlords as for everyone else, that wouldn't be feasible would it? And home maintenance and insurance for unoccupied homes is typically very high. There is also the risk of squatting or the cost of people to prevent that. Has anyone done some math on the housing density that is most economical? My guess would be that the height limit would be close to five or six stories before the engineering to go higher was excessive, but that is just a wild guess. Courtyards down to ground level so people can have an external view seem wasteful from a heating and cooling perspective, most people don't want to live with no windows.
  - omnimus 3y ago
    Yeah this fairy tale that we dont build enough because of regulation is told everywhere. Even in countries with rapidly declining population and long reign of right wing anti regulation governments. The real solution would be to fight the speculation and accept acces to a home as a human right. So prohibit/tax unrented rentals, progressively taxes owning multiple homes. I live in a poorer EU country where foreign money bought everything they could. They dont even bother renting it out because increase of the value of the properties is where the money is. If they started to rent the evaulations would fall.
  - BurningFrog 3y ago
    The plural of "the monopolists" is an interesting concept :)
    - jowea 3y ago
      I think the word is "cartel".
      - BurningFrog 3y ago
        "Oligopoly" if you're an economist.
- bradjohnson 3y ago
  This is clearly not true if you observe actual real estate and rental prices and as long as we continue to allow corporations to own a majority of development projects, it should be obvious this won't work. The profit incentive doesn't work this way, and they are better off just letting a home sit empty than to dilute the value of their portfolio by selling or renting low to compete against themselves.
- Podgajski 3y ago
  There is not perfect price elasticity in the housing market. The demand for housing right now is pretty much infinite because of the speculation. In other words, the housing price is not based on supply, but it’s based on the demand. And the demand is being driven by speculators. The answer is to remove housing as an investment vehicle. Also prohibiting the ownership of multiple houses by a single individual or institution.
kiba 3y ago
Supply would absolutely help with the problem, but it's not sufficient. To discourage speculation, governments should impose land value tax, but not property tax, to encourage efficient use of land. You'll also need to pair with other reform, like changing how zoning should be done, how transportation is planned, and so forth.
- galangalalgol 3y ago
  Land value tax has some issues as well. The zoning reform might be able to dix them, but only with some micromanaging I think. If we want walkable areas, that means multi-use zoning. Not all land uses have the same roi, so if you set the land value relative to the value that comes from using it for the highest roi case, say case A, then no one will use land for case B or C. So to take it to hyperbole, you'd end up with blocks of liquor stores and no housing, or all housing and no grocers. It is a complicated problem, and the solution will also be complicated.
Trumpi 3y ago
> The real estate market is driven by speculation no? No, it's driven by supply and demand.
- bradjohnson 3y ago
  It's really not.
  - Podgajski 3y ago
    Well, it is a demand, but not a supply and demand balance of housing supply, but a supply and demand balance of speculation. In other words, there’s a high demand for speculation (profit) in the housing market.
BurningFrog 3y ago
> The real estate market is driven by speculation no? When two things happen concurrently, it can be hard to tell cause and effect apart. In reality, real estate speculation is driven by the simple fact that prices always go up, making it one of the best investments there is for those with enough cash. If you legalize massive housing construction, housing prices will start going down, and the speculation money will have to go elsewhere.
- Sakos 3y ago
  Which leads to the real problem. People have been treating real estate like an investment for decades now. You're essentially going to wipe out the wealth of all the middle class by doing so, so you're up against an immovable wall of political incentive for the current system to persist.

galleywest200 3y ago

Could you elaborate on how building apartments specifically for low income residents would do this? My county has started buying old hotels and whatnot to convert for their uses.

throwaway6734 3y ago

How do you figure? If more houses are built, prices will go down.

jfghi 3y ago
I disagree with this notion. Rental values are often controlled algorithmically. Given the low inventory of housing for sale, it’s possible for the monopolists to purchase the new homes and use vacancy in order to maintain higher levels of pricing for the portfolio by artificially controlling the supply levels.
- galangalalgol 3y ago
  If property taxes were evaluated the same way for the landlords as for everyone else, that wouldn't be feasible would it? And home maintenance and insurance for unoccupied homes is typically very high. There is also the risk of squatting or the cost of people to prevent that. Has anyone done some math on the housing density that is most economical? My guess would be that the height limit would be close to five or six stories before the engineering to go higher was excessive, but that is just a wild guess. Courtyards down to ground level so people can have an external view seem wasteful from a heating and cooling perspective, most people don't want to live with no windows.
- omnimus 3y ago
  Yeah this fairy tale that we dont build enough because of regulation is told everywhere. Even in countries with rapidly declining population and long reign of right wing anti regulation governments. The real solution would be to fight the speculation and accept acces to a home as a human right. So prohibit/tax unrented rentals, progressively taxes owning multiple homes. I live in a poorer EU country where foreign money bought everything they could. They dont even bother renting it out because increase of the value of the properties is where the money is. If they started to rent the evaulations would fall.
- BurningFrog 3y ago
  The plural of "the monopolists" is an interesting concept :)
  - jowea 3y ago
    I think the word is "cartel".
    - BurningFrog 3y ago
      "Oligopoly" if you're an economist.
bradjohnson 3y ago
This is clearly not true if you observe actual real estate and rental prices and as long as we continue to allow corporations to own a majority of development projects, it should be obvious this won't work. The profit incentive doesn't work this way, and they are better off just letting a home sit empty than to dilute the value of their portfolio by selling or renting low to compete against themselves.
Podgajski 3y ago
There is not perfect price elasticity in the housing market. The demand for housing right now is pretty much infinite because of the speculation. In other words, the housing price is not based on supply, but it’s based on the demand. And the demand is being driven by speculators. The answer is to remove housing as an investment vehicle. Also prohibiting the ownership of multiple houses by a single individual or institution.

kiba 3y ago

Supply would absolutely help with the problem, but it's not sufficient. To discourage speculation, governments should impose land value tax, but not property tax, to encourage efficient use of land. You'll also need to pair with other reform, like changing how zoning should be done, how transportation is planned, and so forth.

galangalalgol 3y ago
Land value tax has some issues as well. The zoning reform might be able to dix them, but only with some micromanaging I think. If we want walkable areas, that means multi-use zoning. Not all land uses have the same roi, so if you set the land value relative to the value that comes from using it for the highest roi case, say case A, then no one will use land for case B or C. So to take it to hyperbole, you'd end up with blocks of liquor stores and no housing, or all housing and no grocers. It is a complicated problem, and the solution will also be complicated.

Trumpi 3y ago

> The real estate market is driven by speculation no? No, it's driven by supply and demand.

bradjohnson 3y ago
It's really not.
- Podgajski 3y ago
  Well, it is a demand, but not a supply and demand balance of housing supply, but a supply and demand balance of speculation. In other words, there’s a high demand for speculation (profit) in the housing market.

BurningFrog 3y ago

> The real estate market is driven by speculation no? When two things happen concurrently, it can be hard to tell cause and effect apart. In reality, real estate speculation is driven by the simple fact that prices always go up, making it one of the best investments there is for those with enough cash. If you legalize massive housing construction, housing prices will start going down, and the speculation money will have to go elsewhere.

Sakos 3y ago
Which leads to the real problem. People have been treating real estate like an investment for decades now. You're essentially going to wipe out the wealth of all the middle class by doing so, so you're up against an immovable wall of political incentive for the current system to persist.