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Comment by whatever1 | Hacker News Reader

Housing crisis is just a result of increasing income inequality and the resulting real estate investment craze. The population of America (real demand) did not suddenly double at any state/city.

Rich have become so much richer that can afford bidding wars at unattainable prices. They can buy investment homes and be cashflow negative for decades in anticipation of the increased market bidding prices. Of course they oppose any sort of legislation that would increase competition.

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The population of a place doesn't have to double, or even change at all, for prices to go up. All that is necessary is for more people to want to live in a place. Those with the $ to satisfy that desire will outbid those who don't and you can easily double/triple/10x prices with no change in population.

How come more people want to live in the entire US if the population is relatively flat? Prices are up everywhere.

The only answer is that the increased observed demand is a result of the increased investment demand (rather than native demand)

Your factual statements are wrong. The US population isn't flat over time, and housing (supply) decays over time. Prices aren't up everywhere, just the places people actually want to live.

Let’s see some data:

https://jabberwocking.com/we-dont-have-a-housing-shortage/

Housing construction exceeds the population growth for the past 20 years. But housing prices are skyrocketing especially the last 10 years.

Your figure doesn't contradict my claim. We have spare housing capacity in undesirable places people don't want to live (rural towns, small midwest cities). We have shortages in the (especially coastal) cities, where the jobs are. This is obvious from prices, which are set by supply and demand.

https://pbs.twimg.com/media/Gw_BQYXbUAEicud?format=jpg&name=...

This seems like it contributes to the problem, but doesn't feel like the root cause at all. Every homeowner, not just the ultra wealthy, has an incentive to oppose new housing. (Though in many metros any homeowner is automatically wealthy by some definition). The lack of supply seems like the core issue here.

What if the housing crisis is what's causing wealth inequality? Piketty's data pointed to this.

Definitely is a negative feedback loop. So I expect the trend to accelerate as long as foreign investment keeps flowing into the US in the same rates

Other than people claiming it, what actual evidence have you seen that foreign investment would be a problem if we weren't restricting housing supply?

If it is just internal money the bubble will burst. If you have the entire world pouring cash to bid on us real estate it can really go to almost infinity

The main reasons that international cash comes in is either speculation or offshoring money.

If the housing supply actually matched demand, the housing market becomes unattractive for speculation.

If foreigners are buying houses just to park their money, building more housing to meet the demand helps to alleviate that. This situation feels like a case where regulations designed to prevent housing supply from sitting empty can make sense but I have no evidence or story on how would need to be implemented to achieve that goal without negative unintended consequences.

> The population of America (real demand) did not suddenly double at any state/city.

The population has literally doubled multiple times, and housing supply has not increased. There used to be significantly more units per capita.

A lot of the time it's not rich people bidding over a home, it's people in a game of chicken to see who will put themselves in the worse financial position.

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