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First of all the demand is not infinite. (It might be ludicrously huge, let's say 300 million people want to live next to Central Park with a view, but it's per
by pas 3y ago
First of all the demand is not infinite. (It might be ludicrously huge, let's say 300 million people want to live next to Central Park with a view, but it's perfectly tractable numerically. And of course we see the prices on billionaire's row, but we also know that as new comparable units are put on the market prices fall. Microeconomics works! See the linked studies here for data and the derived models https://www.noahpinion.blog/p/market-rate-housing-will-make-your https://www.noahpinion.blog/p/market-rate-housing-will-make-... )
Second, the current problem is that there's a huge amount of pent-up demand, people want to live in cities (because that's where the jobs are, and statistically also a few of their friends/acquaintances too), but even cities reached the sprawl limit and they would need to increase density, but boomers are having none of that.
- r00fus 3y agoNot sure you get it. It’s not about who wants to live where. It’s about who wants to add an investment in a location that they will subsequently rent out (probably through a property management service). It doesn’t matter if it’s a luxury condo near Central Park or a studio in a college town. Foreign and corporate investment demand will massively exceed the supply available anywhere. And as non-resident investors own a larger piece of the market, they can raise rents to unlivable rates - forcing more homes to be built, etc.
- ProfessorLayton 3y agothat’s not how investing works. they don’t buy assets just because they feel like it, but because they expect a return — and the reason they’re buying real estate is because there’s a nice return due to imbalanced supply and demand. if housing is plentiful enough that the returns are low, investors will look elsewhere.