Fixing the housing crisis is not rocket science. “Minneapolis has been build
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So people who want to park their money in a house rather than living in it are discouraged to buy up the available housing.
Yup, good. Seems like it should be going exactly as expected.
Why develop new housing blocks (as a private developer) if it is a depreciating asset.
To live in the house.
>Why develop new housing blocks (as a private developer) if it is a depreciating asset.
To sell to people who want to live in the house.
I’ll just rent until the price bottoms out
>To sell to people who want to live in the house.
People won’t buy and you’ll be stuck renting.
Also I think your calculation of "rent until price bottoms out" only makes sense if the price is dropping by more, each month, than a month's rent. Idk but that seems like a dramatic drop.
Rent what inventory? If everyone wants to rent the monthly rent goes up until the market reaches equilibrium. Once again, look at cars. Do you see a majority of the people renting cars because "prices will be lower for the same model next year"?
Like I mentioned in another comment it’s different if the housing is being built simultaneously nationwide, like Japan, then people don’t have an option. That represents a nationwide shift in mentality where housing is no longer an investment. Cars are pretty evenly priced across the nation (within a few thousand) so people don’t have an alternative. But that’s not the case here.
The speed of building is limited and may be below demand.
Often in conclusions like this a particular trend is getting extrapolated outside of the applicability region, becoming invalid.
For the other 99%, time marches on - they want to have children and raise those children in a house _within a fixed timeline_. Because of time, they are unable to wait forever, so they (figuratively) put a stake in the ground and realize that a house is a home - not an investment - where they can raise a family. Since those 99% of people aren't waiting for the lowest price, housing prices don't collapse and rental prices don't skyrocket.
Certainly, having something like one out of five homes being bought up by investors simply for the investment seems to be very skewed - something along the lines of old coin collecting or acquiring art.
Housing has a specific purpose and if the supply is so downregulated that it is losing that purpose something has gone wrong...
People who need a place to live? Why? Do you think all housing in Tokyo is built by the government?
People who were buying homes because they can? Yup, absolutely. That's the whole freaking point.
It might be good or bad, but clearly it is very different simply due to price.
If a relatively cheap trinket depreciates to zero, hardly anyone cares.
Cars are generally the second most expensive thing people will ever buy and they depreciate, which does bother most people from a financial perspective. But they last a long time and while they are very expensive they're not life-changing expensive.
A house though, is going to cost decades of your labor, so having that depreciate too fast is going to scare a lot of people.