Comment by brightball
4 days ago
At scale, it limits the supply of available homes to buy which increases the prices.
When we constantly read stories about people not being able to afford homes today, it’s all driven by pure supply and demand. When a firehose of money gets aimed at any aspect of the economy everything gets more expensive.
This is from institutional investors. Sometimes it’s government when we are talking about the price of education or healthcare for example.
None of this is happening "at scale", but either way, you're talking about the price of deeds on houses, and affordable housing isn't about home ownership; in fact, the urge people have to drive this issue towards "starter homes" is a big part of the problem, because the highest-opportunity areas have strictly limited carrying capacity for single-family homes in the first place, and what we desperately need to do is upzone and diversify the housing stock.
It’s literally a new development. Someone went out and turned some raw land into rental houses. If they had left it as raw land, there also would have been no change in supply of houses to buy.
Instead, now they’ve created a slight reduction in demand for houses to buy by offering a housing alternative that didn’t exist before.
> it limits the supply of available homes to buy
It also lowers the demand (it increases the supply of an alternative).