Comment by JumpCrisscross
5 days ago
> 71 dollars off 1850 isn't going to do anything
The point is the modern urban economic illiteracy that pretends supply and demand don't exist in housing (except when it comes to short-term rental stock, in which case it magically reappears) is wrong. Our housing crisis is a supply-side problem.
This is only half the truth. The reality is that demand is propped up by fannie/freddie and mortgages in general. The fact that the government will buy investment property mortgages is bonkers. In reality, you should only be allowed to mortgage the raw materials and labor of a primary home, everything else is just leveraged speculation. There's also a immigration question, but should be purely solved using new supply. Finally there's a question of, should you even be allowed to own investment properties in cities. A real land reform would be huge for the country; ie. forcing landlords to sell investment properties in any area where rent exceeds $x.
It’s a supply-side problem, but with majority of people being either indifferent to the problem or against downward pressure on the housing prices (most people don’t rent). The prices have skyrocketed, and most people who bought in the last 5 years wouldn’t want their assets to depreciate, if they spent 500K+ on it.
> most people who bought in the last 5 years wouldn’t want their assets to depreciate, if they spent 500K+ on it
If they spent any amount on it. The long-run equilibrium is managing housing prices like the Fed, with a commitment to building enough to keep median real home prices flat. (I'd argue for a one-time adustment to pre-Covid levels. But that's arguably an arbitrary threshold.)
Absolutely. I only pointed to the last 5 years, because there was an insane appreciation and a lot of people went the route of “becoming house-poor, but owning their homes”. Those people, who are on the younger side, won’t ever support depreciation of their assets.
Honestly, I have no idea how a government can resolve it without a large scale intervention or centralized action a la China.