i agree 100% , but what is the solution to that ? just raising wages en masse erodes the power of money and leads to inflation.
You could disallow corporate ownership of dwellings of any sort, and heavily tax ownership of more than two homes per family unit.
You could provide significant tax benefits to lifestyles that approach self-sufficiency, such as people in rural areas that grow their own food.
You could mandate a quota of completely remote workers for many industries, encouraging the diffusion of people and opportunities across the country, instead of everyone rushing to expensive cities in hopes of finding work.
Does that mean no high density residential? I can’t see how individuals build apartment buildings.
I would have thought that "build to let" would be the rarer case, but like I said I might be blind to the idiosyncrasies of the US here
I suggest (and have suggested numerous times) that we disallow ownership of property for profit. Create a system that allows people to “buy” property short term through government loan structures that have very low interest rates and allows them to create an equity building mechanism early on. On paper it would have all the benefits of purchase with all of the benefits of leasing as well.
The flood of new available property would absolutely crash our current economy, since it’s so extended on property ownership, but we did it wrong and we need to correct.
"From 1978 to 2021, CEO pay based on realized compensation grew by 1,460%, far outstripping S&P stock market growth (1,063%) and top 0.1% earnings growth (which was 385% between 1978 and 2020, according to the latest data available). In contrast, compensation of the typical worker grew by just 18.1% from 1978 to 2021"
Source: https://www.epi.org/publication/ceo-pay-in-2021/#:~:text=Fro....
Subsidies or government backed contributions won't be the answer. Universities have a societal function and could conceivable operate without profit in mind, but they still chose to be greedy and act like for-profit businesses once government backed loans became a thing. The government tried to fix access to education by directly injecting cash via students instead of fixing it through the universities. Taking the same approach with home buyers would be a mistake because real estate obviously is meant to be for-profit and acts that way, so they will obviously raise prices as well.
So you'll probably need to fuck over a lot of banks, investors, construction and real estate companies to get housing prices accessible to the wider population and change economic interactions in that market. I wouldn't count on that though - the government will probably choose to fix it through backed loans or subsidies again, if they do anything.
Does it really bother you someone could be ignorant of something here?
Someone who understood basic economics wouldn't assert that investors are ruining the housing market for individual family buyers without explaining how the housing market or one particular housing market is different from all the other markets were investors are helpful for bringing products and services to individuals and families. I am sympathetic for example to the argument that the housing market in Vancouver and perhaps other parts of Canada is being distorted to the detriment of families by wealthy Chinese wishing to establish a safe trove of assets outside the reach of the Chinese government. But there are more barriers to Chinese investors (and Chinese visitors) in the US than in Canada, and the US is 9 times more populous than Canada, so that makes any particular severity of distortion cause by Chinese investors at least 9 times less likely in the US than in China. Non-Chinese investors who have an accurate understanding of the other investments available to them, on the other hand, will tend to invest in housing only when they seriously expect the demand for housing to increase--"expect" as in actually willing to put money on the outcome, not merely to opine on the outcome in internet forums--so their investment helps out families on net by helping to increase the supply of housing to meet the increase in demand.
>Does it really bother you someone could be ignorant of something here?
I'm not sure I understand the question. If you'd phrase your comment as a question about economics, I wouldn't've replied like I did (with a complaint in the form of sarcasm). Most humans are vulnerable to misinformation if it is repeated sufficiently often by a sufficiently diverse set of writers or speakers, and certain economically-impossible or -implausible arguments are repeated often enough on HN that I consider it worth my time to try to counter.
So you don't think that adding demand without adding supply makes prices go up?
Or you disagree that prices going up makes it harder for a family to buy a house?
Edit: I see you added to your comment...
> so their investment helps out families on net by helping to increase the supply of housing to meet the increase in demand
And I still disagree, because this isn't what we see happening.
>because this isn't what we see happening.
What we see happening has alternative explanations, for example: there are millions of very-high-paying jobs in the Bay Area, which is course is generally a good thing, but it has the undesirable effect of making it hard or impossible for families that do not have one of these very-high-paying jobs to live here because there are strong barriers to the creation of new housing, which forces the people with the high-paying jobs to spend more than want to spend on housing, which (happily for them) they are able to do (because of their high income) but which sadly makes it impossible or very onerous for lower-income families to live in the Bay Area. Most of these barriers are in the form of regulations imposed by local governments. Where I live for example in Marin County, growth is controlled (kept below the level investors as a group would prefer to have it at) in part by denying new housing projects the ability to connect to the Marin Municipal Water District, I have heard.
The flaw in this argument is that it assumes markets are perfectly efficient, when in reality they are affected by several factors.
> there are strong barriers to the creation of new housing
Right, this is one of those factors.
Others include land limitations, interest rates, government incentives and backstops.
Plus even if you're right that decades from now housing will be more affordable that's of little use today.
So the housing market is different because housing serves as shelter. Investors owning multiple properties are eschewing the actual utility of the asset and only focused on its value. From the perspective of a society wanting to house its citizens and improve quality of living, it's a very inefficient use of the asset and the land that its on.
Because investors often have more cash than ordinary family buyers, they are able to outbid family buyers. This happens regularly and is one of the core reasons for the argument made initially.
Because investors might buy and sell housing more often than a family who actually inhabits a home, this increases the money velocity in the market and drives prices upwards as more sales are made. Canada is a good example of this: https://laws-lois.justice.gc.ca/eng/acts/P-25.2/page-1.html
All of this means that some portion of the house's price is only based on speculation (other parts being land, construction quality, location, amenities, etc.). This means that investors that buy houses to speculate are simply increasing prices with no material improvement to the asset.
If we were talking about stocks or assets-that-aren't-also-necessities, these reasons wouldn't be a problem.
Chinese home buyers IIRC have a cultural aversion to having strangers living in any home they might want to live in themselves in the future. But with the except of the Chinese investors (which IMO cannot be numerous enough to distort the huge US housing market) investors either rent out or sell the housing they own, so I don't understand in what sense you think investors are "eschewing the actual utility of the asset": someone still gets to live in the house, even if it is not the owner of the house.
>All of this means that some portion of the house's price is only based on speculation (other parts being land, construction quality, location, amenities, etc.).
I concede that that can be an accurate statement (though it is not how I would put it) on a temporary basis, but I point out that when an investment causes current housing prices to increase, there will invariably be a time in the future when the same investment causes housing prices to be lower than they otherwise would be by approximately the same amount. And the I ask you, Why do you care more about situation of families now than about their situation in the future?
A common sentiment is that wages haven't kept up relative to costs of living, so we have problems now that need to be solved because we are already 'behind'. If that's true, it will further mean that families in the future will have less equity due to delays in purchasing a home relative to previous generations who could more easily afford necessities and luxuries.
So ideally we should give a break to home buyers now to help compensate for that at the expense of larger investors and organizations who can frankly afford the loss (collectively). The alternative is to keep investors happy and rich with profits at the expense of the population's needs and financial trajectory.
So if i am reading the very first graph right, the top 10% wealthy in USA in 2023 held about 96Trn out of 140 Trn.
The top 10 % is not usually middle class