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Housing can hardly be the poster child of free-market: there's a lot of information asymmetry, barriers to entry, it takes a lot of time, even in the best condi
by erispoe 11y ago
Housing can hardly be the poster child of free-market: there's a lot of information asymmetry, barriers to entry, it takes a lot of time, even in the best conditions, to get a project built... It's highly cyclical: supply can take years to even start to address demand, whereas projects can be killed very quickly when the economy goes down. This is why housing needs regulations if we want it to function properly. We need the right set of incentives to make sure we have housing for everyone.
I fail to see, however, how actively restricting building, i.e. supply, is going to alleviate tensions in the market. Anti-development people use an argument that is very similar to "build it and they will come", only in reverse: if you don't build it, they won't come. Believing that they will be able to deplete demand by restricting supply.
- eli_gottlieb 11y ago>I fail to see, however, how actively restricting building, i.e. supply, is going to alleviate tensions in the market. Anti-development people use an argument that is very similar to "build it and they will come", only in reverse: if you don't build it, they won't come. Believing that they will be able to deplete demand by restricting supply. Well, it keeps turning out that 80% of new housing construction targets the ultra-high-end luxury market. You would think this would push down the prices of lower-end housing through supply/demand, but then the luxury apartments get turned into ghost apartments for investment purposes, leaving even the high-income without a place to actually live, with the result that sometimes increased housing construction actually increases prices. And that's terrible.