This is always a hilarious idea because like... think one step further amigo...
Residential development already has razor thin margins. Your idea is that people will still do this multi-million (or multi-billion)-dollar projects into an environment of flat or falling sales prices?
The problem is the cost of inputs, full stop. Land and labor (and now materials) are too expensive. Land is the one component that's pretty much a bullshit price, i.e. there's no reason it needs to be high in absolute terms, because the land is all there regardless of the selling price.
It’s really hard to loosen supply side restrictions on “this somehow became a hip neighborhood.” You can in general make more housing available, but not prevent rising prices in specific neighborhoods.
You absolutely can prevent a "hip neighborhood" from becoming the equivalent of a short squeeze. Prices are not only signals of current scarcity, but also future scarcity. Once you've established that any increase in property value will lead to an influx of capital, followed by a swift increase of supply, every increase will partially suffocate itself.
Not everyone needs to live in a hip neighbourhood?
My intuition agrees with the supply side argument. Also higher interest rates to reduce demand? Isn't this how we got here, to these very high house prices worldwide, by a combination of the two? Taxes seem a second order effect here at best.
Of course, the people who already own land in the now-hip neighborhood either don't want it to change and grow at all, or they want the price to go up as much as possible so they can cash out. The existing owner class never have an incentive for ownership to be affordable...
Only in the most literal sense. In a far more accurate sense what we are talking about is land where people want to live and that does grow, more or less, with population growth. It's only a handful of cities with geography that makes desirable land fixed.
This is always a hilarious idea because like... think one step further amigo...
Residential development already has razor thin margins. Your idea is that people will still do this multi-million (or multi-billion)-dollar projects into an environment of flat or falling sales prices?
The problem is the cost of inputs, full stop. Land and labor (and now materials) are too expensive. Land is the one component that's pretty much a bullshit price, i.e. there's no reason it needs to be high in absolute terms, because the land is all there regardless of the selling price.
It’s really hard to loosen supply side restrictions on “this somehow became a hip neighborhood.” You can in general make more housing available, but not prevent rising prices in specific neighborhoods.
You absolutely can prevent a "hip neighborhood" from becoming the equivalent of a short squeeze. Prices are not only signals of current scarcity, but also future scarcity. Once you've established that any increase in property value will lead to an influx of capital, followed by a swift increase of supply, every increase will partially suffocate itself.
Not everyone needs to live in a hip neighbourhood?
My intuition agrees with the supply side argument. Also higher interest rates to reduce demand? Isn't this how we got here, to these very high house prices worldwide, by a combination of the two? Taxes seem a second order effect here at best.
Of course, the people who already own land in the now-hip neighborhood either don't want it to change and grow at all, or they want the price to go up as much as possible so they can cash out. The existing owner class never have an incentive for ownership to be affordable...
The funny thing about land and population growth is that land doesn’t. It’s fixed.
Only in the most literal sense. In a far more accurate sense what we are talking about is land where people want to live and that does grow, more or less, with population growth. It's only a handful of cities with geography that makes desirable land fixed.
and population in developed world is also no longer growing
Immigration means that population will grow in first tier countries.
The premise of real estate (above survival) is living somewhere other people don’t.