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Comment by Nelkins | Hacker News Reader

High housing prices are mostly explained by lack of housing. Here's one good article on the subject, specifically written to address the arguments of people who are skeptical of this claim:

https://furmancenter.org/research/publication/supply-skeptic....

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I don't disagree that adding housing depresses house prices, at least in the short term, but the causal flow of extended low interest rates and a preference for income tax over land tax and the interrelation between expectations of increasing housing pricing over the long run so clearly relates to the sextupling of housing prices in most of the west that I don't really know how to politely debate the issue.

Take Ottawa, for example. One side of the river is in a tax region where property is taxed moderately, the other is in a tax region with very little property taxes. The difference in price is 5x of an annual income for a home vs 12x for a home. And yes, some of this is due to language requirements for schooling, but it's only a small part of the overall difference. These are two regions with the same interest rate for housing when evaluating regions with varying interest rates and property taxes the differences are even more stark.

Lastly, it's much, much easier to build more housing when the cost of land isn't so inflated. The system of forces involved here are cyclically causal, they are not a directed acyclical graph.

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