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What about wealth inequality as the root cause of housing shortage? Even if supply is eased, the wealthy (those who have enough capital to earn passive income)

• burnt-resistor 1y ago
  [flagged]
  • tptacek 1y ago
    "Trickle-down" economics is a direct subsidy for high-income earners meant to spur demand. That's the opposite of what increasing the housing supply does.
    • burnt-resistor 1y ago
      Totally wrong strawman missing the bigger point. It's still a vague, misguided utopian ideology focused on helping the rich supposedly "overproduce" while doing nothing for everyone else. That's trickle-down economics 101.
      • tptacek 1y ago
        Well, you have the economics wrong, and our ability to handwave at each other about whose policy is "miguided" and "utopian" seems like a pretty boring conversation. Regardless: it's obviously not "trickle-down economics". Trickle-down economics are policies that deliberately and directly subsidize the wealthy in the hopes of spurring demand.
      • jeromegv 1y ago
        Supply and demand is not an ideology, it’s the most fundamental way that pricing works in a capitalist society. Has been studied for centuries. To think that supply and demand would not apply to housing and instead be trickle down economics is a hell of a statement.
        • bee_rider 1y ago
          The Supply and Demand model makes some assumptions that are not always true (perfect competition, for example). The model isn’t an ideology, it is just a model. But there are a lot of ideological beliefs around this stuff. Some people seem to think that all markets have perfect competition, or that the resulting efficient pricing is inherently always good. Housing seems pretty far from perfect competition to me. https://en.wikipedia.org/wiki/Perfect_competition#Idealizing_conditions_of_perfect_competition https://en.wikipedia.org/wiki/Perfect_competition#Idealizing...
  • esseph 1y ago
    Trickle down was a Reagan thing. I'm very confused by your statements. I mean it was the Big Beautiful Bill that just added 3-5 trillion in debt and reduced taxes on the very wealthy. I don't think those impotent Dems had any sway in this.
    • nielsbot 1y ago
      Dems are also beholden to the wealthy--not sure they tried that hard, overall.
    • burnt-resistor 1y ago
      Then you're too focused on political concerns. Neoliberalism doesn't recognize political parties, it recognizes money. As Gore Vidal would say, the Property party.
      • immibis 1y ago
        To avoid confusion: neoliberalism has not much to do with the liberals (Democrats). It's closer to libertarianism, but only about money.
        • esseph 1y ago
          I think I was confused (speed) reading through it and hit the Democrats part and was just thinking to myself... They have extremely limited power right now, and aren't passing laws? There are some wild political takes on the internet sometimes, and it can be hard to parse out exactly what the person is trying to say (especially if the reader failed their speed reading comprehension ;-) )
    • skinnymuch 1y ago
      Neoliberalism, trickle down, abundance. They are all similar and/or the same.
  • tomhow 1y ago
    I have a soft spot for anyone with a background in Turbo Pascal from the 90s (my father built our family business on Turbo Pascal then Delphi through the 80s and 90s, so I grew up with it around the house). I just wish you'd dial back the combative tone of your comments on HN. You've been engaging in a lot of political/ideological battle recently, and it would be good if you could remind yourself of the guidelines and make an effort to use HN in the intended spirit. We're trying for curious conversation here. Different perspectives about economics are very welcome. Slurs and swipes are not. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  • lanfeust6 1y ago
    How about for fun, instead of rhetorical devices and snarky projection, just look at the facts. The data on effects of zoning reform in places like Minneapolis and others, about where housing is cheaper wherever it's easier to build, about rent dropping ( https://denverite.com/2025/07/25/denver-rent-prices-drop-q2/ https://denverite.com/2025/07/25/denver-rent-prices-drop-q2/) when you build way more units, etc.
    • cindyllm 1y ago
      [dead]
• tptacek 1y ago
  You haven't actually worked this example out. Try it. The wealthy buy the extra supply; they now compete with all the existing supply for tenants. What happens next?
  • nielsbot 1y ago
    Depends on how many tenants there are: is is a buyers' or sellers' market?
    • tptacek 1y ago
      Whether it's a buyer or seller's market depends on supply!
      • nielsbot 1y ago
        If the wealthy buy up existing limited housing supply and there are many tenants looking for housing, then they can continue to raise rents, no?
        • tptacek 1y ago
          The premise here is investors that just continually buy up all the supply, even as supply continues to increase, in the hopes that some day housing, the single largest asset class in the United States, will reach the limit of all possible supply? You don't feel like this is "spherical cow" calculating? The amount of investor-owned housing in most metro markets is a rounding error, and the amount of vacant investor-owned housing is smaller than that. The logic you're using here depends on deliberate vacancy; as soon as you concede that investors let out properties, you force them to compete in the market for housing with all the other supply.
          • Avicebron 1y ago
            Yeah except it almost always gravitates to a cartel, almost always, because that is how people work, even when piloting corporate machines. I'm speculating here, but I'm guessing you haven't been month to month rent in a while.. EDIT: you seemed to have tried to redirect the question to this "always buy up more land as an appreciating asset", when both can be true. "Buying that land is an appreciating asset (we haven't made much more I'm aware)" and that "forming an asymmetrical power relationship with the renters improves owners life" are mutually beneficial activities
• spankalee 1y ago
  Where's the evidence that wealth inequality is the root cause of housing shortage, as opposed to say, the real and factual lack of building? Even if the wealthy did buy up extra supply to rent out, that would only mean increased supply of rentals, which would lower rents.
  • immibis 1y ago
    It can be both. Wealthy people make it illegal to subdivide large housing units.
  • nicoburns 1y ago
    If people had the wealth to own land and build on it then they'd build their own.
  • oarla 1y ago
    Not commenting on the ethical side of it, in many instances rentals are just a side income, the real value is in the increasing price of the house due to demand outpacing supply. See https://news.ycombinator.com/item?id=37855625 https://news.ycombinator.com/item?id=37855625 for past discussion on this.
    • potato3732842 1y ago
      Demand is out pacing supply because while the greatest and silent generation was happy to retire on stonks, pensions and bonds the boomers all went out and bought more and more homes and condos and whatnot for rental income. It used to be that rental housing was either owner occupied, like a landlord living on one side of a duplex or it was a big commercial investment. The current trend of every idiot having their starter house from 20yr ago listed as an airBnB wasn't a thing back then. So basically we "need" way more housing per capita now so that they can all have their stupid little side gigs.
  • Schiendelman 1y ago
    Want something really interesting? There's a pretty decent chance that our wealth inequality is entirely caused by restricting housing supply. ;)
• lokar 1y ago
  Who owns housing is orthogonal to the rent or imputed rent for an owner occupied unit. The effective monthly rent is supply and demand.
• lanfeust6 1y ago
  When interest rates were rock-bottom a bigger chunk of new builds were purchased, but they're not anymore. Vacancy rates in cities, though, are very low, and if you constrain supply of rental units, rent prices go up. That impacts the poor demographic far more. People who rent entire houses are not typically poor, unless maybe you count places where houses are cheap like Mississipi. The actual data does not agree with you at all. In places that have implemented zoning reform, housing gets cheaper. In areas where it's easier to build (red states), housing is cheaper. There is no reality at all where supply of housing jumps high but prices do also. > Personally I'd like to see legal constraints on investment in primary, single-family homes, and fewer legal constraints on building them. Where investors are concerned, these are purchased to flip, or with the expectation that prices would rise. Given that we had inelastic supply but perpetually growing demand, that was a good bet. So, if you build way more, an investor wouldn't be so confident about that price increase. Now compound that with the risk of borrowing at higher interest rates to buy those properties.
• energy123 1y ago
  Rental stress is a bigger problem than price appreciation, though. Investors cannot cause rents to increase by buying stock.
• __turbobrew__ 1y ago
  My gut feeling is that wealthy people buying up the housing stock to rent out is not actually as common just supply restrictions not meeting the demands of individuals. I used to live in Vancouver, and on my street almost all occupants were owners. But guess what, the number of houses on that street has not changes in 100 years, and the number of people who want to live in Vancouver has probably increased tenfold. The issue wasnt that all the housing stock was bought up, the issue is that housing stock did not increase to satisfy demands. Additionally, a place like Vancouver is really a global real estate destination. People with money who are not from Canada come to Vancouver and drop a few mil on a single family home and outprice all the locals. If you are buying a house in Vancouver you are competing with wealthy people local, but also the top wealth from across the globe. BC did pass legislation to make all single family homes qualified for quadplexes, but I think it is too little too late. Anything short of taxing every residence which is not a primary residence AND banning foreign ownership AND reducing permitting toil AND raising interest rates, is going to fall short. I gave up a few years ago and moved somewhere else. Vancouver is no longer for Canadians.
  • aianus 1y ago
    Why not tax primary residences too? Why should housing hoarders pay no tax when someone who invests in a productive business or hoards mostly useless shiny metals has to pay capital gains tax?
    • __turbobrew__ 1y ago
      I would be fine with house sales incurring capital gains/losses. You are right, it is just another asset.
    • Tiktaalik 1y ago
      They probably could be taxed but not a lot of countries do this and those that do have exemptions. There's many arguments against taxation of primary residents but the strongest is probably that it punishes and hinders the ability for people to make sideways movements from similar properties to other similar properties, so it hinders housing liquidity, labour movement etc.
• appreciatorBus 1y ago
  Piketty logic assumes infinite demand. Housing demand is very large, large enough to seem infinite when North American cities have spend 100 years banning every form of housing imaginable except the single family house, but it is not actually infinite. If Piketty was correct, then inflation adjusted housing cost per sqft floor would always go up everywhere all the time. But we see dramatic differences in different periods of history, between different cities and we see rents stabilize & decline after building booms. We see housing costs go up the most in the places that build the least and the least in places that build the most. If Piketty was correct, rich people could do this with things other than housing - they could buy cars and rent them out and then reinvest the profits to buy more cars. Ofc this doesn't actually work because there is no scarcity of cars - for better or worse we have chosen to place almost no limits on the quantity and density of cars in any city, state or country, while placing extremely tight & arbitrary limits on the quantity & density of floorspace in every city. For every car a rich person buys up to rent out, a car company reinvests the profits to build 1 more and then some. There is no functional reason residential floorspace cannot be exactly like that.
  • throwawayqqq11 1y ago
    The housing market is much more inelastic than eg. the cars market. Whether demand in housing is infinte is a question of scale of population and wealth growth and elasticity. With that given, i would assume the postulated effect of run-off construction and renting, but we only have poluation growth and not the other two.
  • andriamanitra 1y ago
    Just off the top of my head I can think of plenty of functional reasons why residential floor space cannot be analogous to cars. Most importantly location matters. Space and buildings are not something that you can easily ship from one market to another to balance supply and demand. Space is inherently limited and replacing existing buildings with new more efficient ones is also problematic when you have people happily living in those old buildings, especially in high demand areas. Construction work takes time and in the meanwhile the displaced families will create even more demand. There are practical limits on how densely you can pack floor space before it becomes prohibitively expensive, unsafe, or simply impractical. As you build higher the costs grow exponentially while the livable space per floor keeps decreasing due to the tapered shape of the building and need for larger structural core and more elevators. Above certain height you will be forced to target wealthier residents which means either offices or large luxury apartments that are anything but space efficient. Construction is extremely capital intensive. A building takes a large upfront investment, and it takes a long time for it to pay off. With cars the cost of making more is marginal once you have an assembly line in place so it's significantly easier to re-invest profits into ramping up production. Renting real estate makes more sense than renting automobiles because real estate is more expensive, less liquid, and better at holding its value over time. Owning a house is more difficult even when it would make financial sense to do so (not everyone can get a mortgage, or commit to living in the same city for an extended period of time). > for better or worse we have chosen to place almost no limits on the quantity and density of cars Even worse, most places have chosen to place a lower limit on the quantity and density of cars through parking mandates. It is absolutely insane that we are still wasting space on parking even in densely populated urban centers where it's impossible to accommodate everyone commuting by car.
• spicyusername 1y ago
  What about wealth inequality as the root cause of housing shortage? Keep building. Eventually there are more houses than people who want to be in them, regardless of whether or not they're being rented or owned. When that happens you'll see the prices fall. After all, if nobody wants to rent your house, you'll either rent it for lower or sell it. If nobody wants to buy it, you'll lower the price. Ad nauseum.
  • dandanua 1y ago
    This will not work if there is an exponential wealth inequality in a society, which is where everything is heading.
    • 627467 1y ago
      Can you explain "exponential wealth inequality"? Sounds a bit like "problem A is unsolvable because - look at here! - no one is solving problem C!"
      • shazbotter 1y ago
        I mean, I can't speak to housing problems in this thread, but your second sentence sounds like every post mortem and root cause analysis I've ever seen. Sometimes problems have root causes that must be addressed first.
      • hdgvhicv 1y ago
        40 years ago you could buy a share in American companies for an hours work. Today you have to work 25 hours to buy the same share In 40 years time you’ll have to work 4 months to buy what in 1985 would cost 1 hour.
  • Tade0 1y ago
    China did that on a large scale, at one point using more concrete in three years than the US in the entire 20th century. There's reportedly enough housing stock to house the population twice over, yet prices still only increased. Where there's sufficient inequality, the country will run out of eligible land before the wealthy run out of money.
• Workaccount2 1y ago
  >will buy the extra supply and rent to the poor. The wealthy are generally monetarily shrewd, and building homes makes home ownership a worse investment. If there is a deluge of homes being built, the wealthy will take their money elsewhere. Being a landlord typically has ~10% annual return. Compared to just sticking money in the stock market, it's actually been worse as of late. The goal of the wealthy isn't to make people suffer, it's to maximize their ROI.
• uses 1y ago
  To the extent that housing speculation exists, it's because of the lack of supply. So you have the cause and effect reversed.
• imgabe 1y ago
  Higher supply still means lower prices. Even if "the wealthy" buy it all and rent it, they are still competing with all the other wealthy who are doing the same thing and that will limit how much they can charge for rent, and will make it a less profitable investment than other things the wealthy could invest in. Housing is not really a great investment. It's great for small investors because it's the only place where they can invest with leverage via a mortgage. If you have billions there's much better things you can invest in.
• reliabilityguy 1y ago
  So why are rents falling in Austin for multiple years in a row? Why did the wealthy simple didn’t buy all of it to extort more rent?
• JackYoustra 1y ago
  The causality is in the other direction, see (as I posted in another comment) https://www.brookings.edu/wp-content/uploads/2016/07/2015a_rognlie.pdf https://www.brookings.edu/wp-content/uploads/2016/07/2015a_r...
• CalRobert 1y ago
  Why is it OK to constrain investments on SFH but not apartments or condos?
• hdgvhicv 1y ago
  If there’s 1 million people and 2 million houses then the wealthy aren’t going to be. Using up to rent out as the return on investment will trend to zero. If there’s 1 million people and 500k houses they will buy them up because everyone needs somewhere to live and will keep paying more and more to avoid the overcrowded slums that someone has to live in.
• HEmanZ 1y ago
  If general housing is abundant enough that it has very low ROI compared to other available investments, then no they won’t buy up housing. One pretty simple way to do this is to raise property taxes high enough that a vacant condo is a very bad investment. This is what it would mean to commoditize housing. I think it’s a realistic goal for apartments/condos. Single family homes will always be constrained by land. (Edit): I think you, and a lot of people who are anti-capitalist on housing, make the implicit assumption that all housing is a fixed good. There is only so much housing and our political goal is to allocate that fixed amount. In a lot of major US cities this is sort of true because we have regulated the construction of new housing to the point where even the government can’t build it. But the anti-regulation perspective is that if we get rid of the regulations preventing housing construction, then enough housing will be constructed that the allocation problem isn’t much of a problem. (Or something in between, ie it’s a lot easier to build/buy social housing to give away to people if housing is already made very abundant, and the fact that even governments like California have to spend truly ludicrous amounts of money just to get a few crappy studios built)