Why not simply increase the supply?
Increasing the supply means building new buildings, and that often means building huge lots of five-over-ones, priced as luxury apartments in a growing market. The people building the new supply expect to make a profit, and in a market with growing prices, they aren't selling for less than what they think they can get out of it.
We see this in big cities where vacancies are at an all-time high (aka a lot more supply), but prices aren't going down.
You are putting forward that landlords acted collectively to increase the price of realestate. This is obviously wrong. The price of homes is determined by the market. It doesn’t matter who owns those homes, they are worth what the market says they are. Landlords do not control the market and even if they banded together in a conspiracy to increase the price of homes, they couldn’t because the vast majority of homes are owned by regular people.
The high price of housing is caused by a shortage. If you don’t believe me then watch the 60 minutes segment about it. There’s no conspiracy. If there weren’t landlords building new stock it would be even worse. It’s so ironic that the hive mind spits in the face of the only people building new housing; the only people making the problem better.
Landlords and homeowners and the finance industry don't control the market... they just form a political bloc that controls zoning and taxes and transportation infrastructure and central finance, and these knobs in turn control the market. For some reason, they always vote for policies that pump their holdings. Can't imagine why. These policies do create problems, though, and it's not only reasonable to attribute the problems back to the people who voted for them, it's unreasonable to do anything else.
"It's just the market!" is on par with "Look, a squirrel!" in terms of critical thinking.
The landlords don't need to conspire - they know what's good for them and the politicians either own property themselves or are connected enough to landlords to help them out.
None of these parties have an immediate interest in the lower class affording housing or maintaining the community fabric in the long term - especially the faceless incorporated ones.
There's no super strong market force to push the price of a house down, while there is a large market force to keep it valued where it is or make it go higher.
It's also difficult to tease out the effect of general price inflation. If house prices stay stagnant but currency is devauled, prices are decreasing in real terms.
Where?
Rents go down when landlords go bankrupt.
That's what happened in 2009-2010. It took about 4 years after peak homebuilding, and 2.5 years after peak home prices, and about 12-18 months after the financial crisis started. Real estate tends to lag financial markets by about that time period. But it does happen - eventually markets respond to supply and demand, and firms that try to buck the trend get swept out of the market.
Owners make money leaving properties vacant all the time. In fact, in many markets capital gains have been much more significant than rental income for a long time now.
There are people who own vacant houses that they have zero interest in renting, and are not looking to sell. This could be a vacation home for a billionaire that they seldom get around to visiting, but want to have ready for them, and just have staff check in periodically. Renting it when not in use may be uninteresting (have to lock up their belongings, arrange some form of management company, have insurance concerns (if somebody realizes they are renting from a billionaire, they might get "hurt", hoping for a big quick payday) etc.)
Similarly there are vacant houses own by speculators that have zero interest in renting out the unit, and are not currently looking to sell, since the market isn't right yet.
This is among many other scenarios where vacant does not mean available to rent or purchase (well at least not at anything close to market rates. Some of these people may reconsider if offered way above market rates, but that generally only happens if a property is uniquely valuable to just that one buyer.)
If you want to actually solve the housing crisis, you just have to build more housing. It really is that simple.
It's because some people here own real estate and don't want to see YIMBY policies that would cause their rental income to fall
Some people would increase density until we're all living in Blade Runner hoping it would make rents drop.
Think of houses sold to outsiders as a form of export. It's the best form of export: the good you are selling does not leave the premises, and the local community continues to collect taxes on that. The outsider does not consume government services as much as a local, so, what's not to like? Even better, when those outsiders visit, they spend much more on local businesses, because they are tourists.
The more houses that are empty most of the year, the better for the local community. Because that's tax money that gets collected at very little cost for the local government.
The problem, of course, is the artificial barriers to build more. People have this idea that the land is fully built up, there no way to build more.
That is so far from true. I live in one of the most densely populated neighborhoods on Earth (17k people per km2). Recently a 67-story tower was built across the street from my building. The neighborhood does not feel any more or less crowded than before. If they want to build some more, they can build more. There is (almost) no lot that's not built up, but you can take down a 12-story building and erect a 50-story one.
So, here's my thesis: let builders build as many residential units as they can (provided they are safe, or course). This way the house prices will come down to earth. People will be able to move from the rural areas to the big metropolitan areas, where the jobs are. They can't move right now because the housing costs are just so damn high.
Such a migration would result in both increased GDP growth, and lower impact on the environment. Much lower. I used to live in a very dense city before (3600/km2) before I moved to my current incredibly dense neighborhood. My energy footprint went down maybe by a factor of 10. Easily. Grocery is across the street. Before it was a 15 min drive.
Can you believe that? More affordable housing, higher GDP growth, lower environmental impact? There's no closer thing to a free lunch in our modern society.
The trend toward homes being investment and stores of value for the wealthy is contrary to the goals of building healthy communities that are not filled with ghost homes.
The price of a house should go down in time, just like the price of a car goes down in time. Or the price of any other good.
In principle the supply side has natural constraints, but they are easily 2 times above what has been built until now.
You can think of it this way: the population density of Manhattan is about 27000/km2. The entire NYC has a density of about 10000/km2, while Jersey city has 7000/km2.
However, artificial demand must be dealt with as well, or we overbuild resulting in a bunch of empty homes. Another disadvantage to only dealing with the supply side is the prices of building materials will be unnecessarily high due to additional artificial demand from investors building homes as stores of value.
Finally, supply side only solution creates a potential nonlinear event where investors dump once the homes start to depreciate. A seesawing which the Fed has bolstered with artificially low rates across many asset classes. Not necessarily a bad thing altogether for the housing asset class, but it seems inefficient from a resource standpoint.
https://www.outsideonline.com/culture/essays-culture/how-to-...