Blackstone, of course says: It's not us[0]!
[0]: https://www.blackstone.com/housing/our-track-record-in-housi...
While I think it's easy to demonize the investment companies (and there is plenty of evidence that in certain markets that non-resident investors drove up the price of housing considerably), basically everything I've read has said that, at it's root, the problem is just a huge undersupply of housing.
My question is: what is the real root cause of that? I know people talk about NIMBYism and regulatory capture, and that is most definitely a factor, but NIMBYs wanting to restrict additional housing has existed for many decades - why is the problem so acute now? Plus, the housing shortage is present in lots and lots of different countries with widely varying housing policies and demographics. Is it all just a consequence of the Great Recession hangover of under-building new homes?
My personal theory is that it's not so much a total broad-based underinvestment in housing, but it's that the economy has further concentrated wealth into fewer and fewer metropolises while many rural areas have hollowed out. E.g. you see depressed rural "ghost towns" in places like Japan and the US, and then you have famous examples of Italy selling old houses in villages for a euro. Thus, in many of these depressed locales, land is near free because nobody wants to live there, but prices in urban/suburban locales have gone through the roof because more people are congregating there.
That's just my pet theory though, I haven't really tried to back it up with hard data. I'm curious if anyone else has more evidence of what's driving the global house price insanity.
Money printing and bad economic policy. The government has printed trillions of dollars and injected it into the housing market, via guaranteed loans and loans directly purchased. All this money pushed up prices beyond what new supply could absorb (it takes time to build housing).
We have a similar market failure with higher education: easy money makes for high prices.
I guess a better way to frame my question is "Why has new home building been far below the actual need?"
Not real data, but like you, I have theory of sorts based on goals. And while affordable housing is a goal to some, even to sympathetic owners, some of the solutions hit their bottom lines when it comes to valuation, helocs and all that. In other words, the push to inflate prices higher is greater than the push to lower those.
Maybe it really is that simple.
More land in New York was downzoned than upzoned over the course of the Bloomberg administration from 2001-2013, which was considered a developer-friendly administration: https://www.politico.com/states/new-york/city-hall/story/201...
40% of existing buildings in Manhattan are bulkier than current zoning regulations would allow: https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...
This pattern is broadly similar everywhere, where there may be older, denser buildings in a neighborhood but new ones cannot be built because the screws have been tightened over time, parking requirements have become more strict, etc. The opposite should be happening, you should be allowing more capacity as the current capacity is used up to maintain supply.
---
There is also the fact that in a lot of areas that stopped building housing in the US, they pretty much reached out as far as you could get from city center by driving as a reasonable commute, so building ever more single family homes became significantly less desirable or possible. Now you hear people with crazy commutes like Stockton to San Francisco, nearly a 90 minute drive at 133km, but that is not really going to work out for most people.
> The legacy 1961 zoning created an invisible city with a loose shape, like a dress bought a few sizes too big, that the physical city had plenty of room to grow into. The Bloomberg administration has left behind a building envelope that’s more like a corset, pulled tight to the city’s body, cinching around places that were already small and boosting its curves.
Closed the windows, hour later call them up, complaining about the chemical smell. Took three months to get resolved. I was in an out of the hospital for months. Years for family to recover.
and to add to the fun, carbine monoxide from 2 sources. Included alarm with house was faulty.
Plus we were all acting like zombies. Bad smell made us keep windows open most of the time. Otherwise would have died. As it was gas company freaked out at how bad it was
"Buying up all the houses currently for sale, so that your only option is renting, and that at a rate we control" is bad.
("All" is an exaggeration, of course. But they have enough capital that they can significantly reduce the available market in several metro areas. The claim is that they do exactly that.)