First we need to realize that rising home "value" just means rising prices. Our policy is to essentially make housing more expensive since pre-existing home owners benefit.
Genuine value of a property often raises.
For example access to a new train station.
Access to a school that starts performing better.
Features that people want where the supply is going down.
It's completely ignoring the massive wealth drain on the average American. There's an enormous opportunity cost.
Realistically, we're in a place where significant prices increases (which has happened, obviously ) and a significant price drop would both have a significant economic impact. Both groups (home owners, and renters) are large. And while a chunk of people that own homes are investors, there are a ton of people that own their home and pretty much depend on selling and capturing the equity in the future for either their next house or retirement. Many of those people are just middle class folks, well into the fat part of the bell curve. Obviously on the flip side, more expensive homes makes it more difficult for new homeowners to buy in, and break out of the renting cycle, build equity, build wealth, etc, etc, and that's also bad. Just wanted to point out the flip side of it.
I get that this seems like an unpopular observation on HN. But still, any significant price reset on real estate in the US would cause a LOT of people to lose a huge amount of their net worth. And if they recently bought their first home, they will then be massively underwater with all of the negatives that brings.
It's pretty easy to say that only investors are going to lose, without appreciating that you're advocating for destroying more than half the population in order to provide a better future for the remainder. Think of a better plan.
It absolutely wouldn't because first time buyers would still be competing with investors, except the investors would be able to buy properties in cash with no need to spend time arranging mortgages, and with guarantees that they won't need to drop out of the sale because it'd happen so fast, which would be very appealing to sellers. Plus, investors would still be able to outbid private buyers no matter even if prices are lower. Everything about selling a house favors selling to an investor (apart from morality maybe).
At this point a house price crash without legislation to block corporate investment in housing stock would likely see a massive shift of ownership from individuals to corporations.