It's true that if it was impossible to speculate on housing, there would be less incentive to create artificial scarcity by e.g. lobbying for restrictive land use policies.
This seems like an oversimplification. Speculation affects demand, so the amount of speculation is hidden within “relative scarcity”. If there is no speculation then demand is directly related to the needs and finances of potential occupants. If there is speculation then demand becomes connected to the buying power of the wealthy, and thus demand and prices are likely to be higher.
In particular, the wealthy investing class collectively have way, way more money than the renting class, so the finances of the wealthy class distort housing prices upward in ways which dwarf the supply and demand effects from actual renters moving in and out of an area.
We’ve all decided that it’s totally fine to artificially limit the supply of real estate. Speculation is the market (correctly, in most cases) betting that that will continue.
https://www.sciencedirect.com/science/article/abs/pii/S24058...
But yes, wealthy people have more capital and leverage to participate in time-displaced arbitrage. Gentrification is a bit more productive, since investors work at making their properties more valuable at least.
It’s that correct? Consider NFTs. They are a speculative asset with no recurring revenue attached. The natural price, I think, is zero, but speculators push that price up based on the expected return from future buyers based on predictions of how the market will move. There are no other supply and demand effects, just speculation on sale. Of course there was a bubble but housing is more grounded in reality and real value. Still, it may demonstrate that speculation alone can raise prices.
> Gentrification is a bit more productive
In the dry economic sense of “production” yes, but at the expense of dismantling communities. Perhaps more productive and less destructive would be the approach to housing taken in Vienna. The government buys land and builds affordable housing complexes on it, and once residents stabilize and their income goes up they get to stay in the housing so the buildings become mixed income and they’re pretty nice. Near where I live West Oakland is gentrifying with a wall of corporate owned housing that is replacing the front stoops and back yards of local residents with parking garages and Teslas. It seems almost as though the community is being slowly eaten alive.
Housing isn't comparable to NFTs, all logic goes out the door when something doesn't have intrinsic value.
> In the dry economic sense of “production” yes, but at the expense of dismantling communities.
Yes: whenever cities devote resources to "clean up" a neighborhood, they are also doing this. Slums are ugly, but they are also a source of cheap housing; old buildings might not use land very effectively, but they are also a source of cheap housing (and that new dense apartment building that they knocked down the old housing to build is no longer as affordable on a unit basis).
> The government buys land and builds affordable housing complexes on it
This isn't a bad approach, though I'm not sure how it would scale to the USA. The problem with the US is that "affordable" is often a term that is applied to a few hot cities rather than in general. If all the affordable housing is in Mississippi, no one would be interested in taking it, if it is where people want to live, then we will have lots of lopsided unsustainable population movements, if we just somehow even it out affordable housing, then some people are still going to be left out of their preferred location for housing.
https://www.sciencedirect.com/science/article/abs/pii/S24058...
For public housing, there is also the approach taken by Singapore. This article discusses both and may interest you. What I think matters most is we understand that it is possible to have more people in stable affordable housing, and we accept nothing less.
https://www.shareable.net/public-housing-works-lessons-from-...