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Comment by brutus1213 | Hacker News Reader

Housing seems to be a disaster almost everywhere in the world these days. This makes me think the issue is not a local one (or perhaps there are some traits in all of us as humans that are causing this mess). What is odd to me is that previous real-estate bubbles have been localized. Now, every single place I would consider living has had significant housing price increases/bidding wars, etc.

From an economics perspective, lets assume there was no govt regulation at all. I am not sure if the problem would be fixed. There is a trite old sayings .. "they aren't making any more land" or "location-location-location". But this inelastic supply of land is nothing new. So why is this happening now?

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> Housing seems to be a disaster almost everywhere in the world these days

Interest rates have been ultra low (versus historic norms) in the developed world for two decades. And prior to that they were on the decline.

Similarly, the developed world has largely not been building housing in line with population growth. For decades.

We are at the natural conclusion of decades of bad policy and we aren’t going to squeeze out of it in a few years. It will take decades of good policy to fix this and our leaders don’t seem programmed for maintaining good policy for more than a few years until there’s a hint of prosperity and then they fritter it away.

Low interest rates _should have_ allowed builders to build more homes too, but they haven't.

In the US housing supply did keep pace with demand until about 2006. Witness the reversion of prices to historical norms (briefly) after the housing crash. So the response of home builders to interest rates is mixed.

The problem here at least is that many homebuilders went bankrupt after the housing crash and the supply of skills and willingness to build homes decreased for a generation.

House building was stronger when interest rates were low, but still constrained by bad zoning and labour availability.

I hunted for my question and found an interesting Economics Explained video on youtube. That hypothesizes that Baby Boomers essentially voted to change policies to favor themselves as a cohort.

Setting aside the 'how' that's certainly what the outcome has been, at least in the UK.

We desperately need a pro growth government next. Desperately.

Was that the one saying, "you would expect a large generation to be poorer than a subsequent smaller generation because of more intragenerational competition, but actually the larger generation can use politics to favor themselves precisely because they are more numerous?"

https://youtu.be/PkJlTKUaF3Q

The situation is even more extreme in places like Italy where the young are even less numerous compared to the old than in the UK.

It's the political equivalent to deflation. If every generation is smaller than the last, you end up with a gerontocracy and no-change society. To maintain pro-growth policies, you need a critical mass of young people who embrace change and want to grow. Otherwise you get stuck in a positive feedback loop of more and more power and money concentrated among the old which depresses the birthrate.

Yup .. that's the one.

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