How do you lower the price of real estate?
How does this decrease my rent? I do not want to own property because I do not want my entire wealth invested in a single asset. For me, renting is ideal and then my money goes in to a wide array of assets which provides a better safety net than expecting that house prices will always stay the same or go up in the future.
Renting also affords me the ability to move whenever I feel like upgrading or downgrading without being stuck trying to sell the previous property and paying insane taxes each time.
That's the idea: with cheaper real estate you won't have to put your entire wealth into it, trading it would also be easier, and so ownership would be more attractive option.
Currently I would comfortably put $20,000 in to housing as an asset. I can not see any way possible that banning rentals would allow me to buy a $500k construction cost apartment for $20k.
So this change forces me to invest in a market I do not want to invest in to. Buying one of these apartments is an incredible risk as it will likely devalue over time and be difficult to sell on when I want to move. So every time I move under this system I am risking massive losses Vs just having a weekly price and no commitment or risk.
It doesn't sound like your landlord is doing you any favors.
To buy a property means paying tens of thousands in taxes each time you buy. If I stay here for 2 years and sell I would pay more in just taxes than the entire rent would have been and I am on the hook for any issues with the building or changes in value.
And I am perfectly happy to pay a known weekly amount which is well within my budget and put my savings in to other investments which don't tie me down to living in a particular place, do not require taking out multi decade loans and are easy to sell back for cash later.
Similarly, we could speak about it for another decade, or we could build now and solve part of the problem in five years.
This also doesn't exclude other fixes that can happen orthogonally.
It does not have to take nine months (the national average) to build a house or a hundred houses. Housing can be and in times of necessity has been built rapidly and well. My favorite example is Hilton Village in Newport News, VA, built to house workers at Newport News Shipyard at the tail end of and after World War I. Five hundred units were constructed within two years, and they were built cheaply yet with a randomization to the sequence of models and detailing that kept the houses from feeling like a cookie-cutter development, avoiding pitfalls into which many suburbs today fall. A hundred years later the homes remain occupied and in fact prized today for their charm.
The barriers to affordable, desirable, swiftly built housing are artificial.
The city of Los Angeles presumably has access to average material costs and average labor costs, but the simple apartment complex they developed to house the homeless still ended up at $746,000 a unit https://www.nbclosangeles.com/investigations/las-homeless-ho...
https://www.vox.com/policy-and-politics/2017/1/1/14112776/ne...
They don’t rent them, they don’t lower the target price.
They’ll wait for months or years for the sale to come in order to maximize their returns, and they have enough liquidity to be able to wait.
The real rate is of course the inflation adjusted rate, and Fed policy has been one of the prime drivers of higher inflation.
If they weren't printing 120B a month, or monetizing government spending, real rates would go up. Treasury yields are artificially suppressed by their bond buying.
Beyond asset purchases, simply raising short term rates would immediately dampen inflation, though has economic consequences as well (slow business activity).
Unfortunately the Fed seems more interested in supporting markets than doing what's right for the longer term health of the economy. Wealth inequality has been primarily perpetuated through monetary policy... Though fiscal plays a role too, of course.
One can't simply raise interest rates on a whim.
There is no subsidy on residential mortgages in the UK but still the same problems with house prices.
Rezone for more density.
Allow building with less red tape.
Government incentives to build.
It can be very easy if there's the political will. Look at what China did when they built all those empty cities... which are now pretty much filled.
If we built 30 million new housing units in the next few years, I guarantee you the cost of housing would decline significantly. If it's profitable to build, builders will do it.
Unfortunately the US government has been more keen on supporting housing prices rather than lowering them.
Discourage owning empty homes with taxation.
Make evictions more difficult, even for squatting.
Require mixed use and prohibit office-only / mall-only areas and McMansions.