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Comment by tharmas | Hacker News Reader

Investors add to demand for housing. This will help drive up prices. And no, builders will not necessarily increase supply if they can realise increased margin of profit due to increased demand. We see that with RAM manufacturers. RAM suppliers constrain supply to boost margins. Same with house builders. The difference is people can go without RAM but everyone needs a place to live.

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> Investors add to demand for housing

And here I thought people who want to live in houses add to demand for housing.

Investors buy houses that people want to live in. If people don't want to live someplace, you won't see any investors there either.

> And here I thought people who want to live in houses add to demand for housing.

Desire is a necessary component in demand, but it also requires willingness at a given price point. If houses are selling for $1,000,000 and you only have $500,000 to spend, then no matter how much you dream every night about having a home, you are not a contributor to demand.

Counterpoint: houses sell for $1,000,000 because there are more people with $500,000 (and every other number less than $1,000,000) who want those houses than there are houses.

How is that a counterpoint? It says the same thing with different words.

You said the person with 500k is not contributing to demand, they said the person with 500k is contributing to demand.

Said comment doesn't mention demand. However, it is true that supply and demand normally find equilibrium, which is the concept the comment was trying to describe. Which is the same concept I described. In simple terms, if you have 10 houses for sale (supply), then in a normally functioning market there will only be 10 people with the desire and willingness to buy them (demand). Many more may have the desire to own a home, but factors like price see their willingness disappear.

There are two exceptions:

- Surplus: When the price is too high and is unable to fall. Where supply exceeds demand. This manifests as there being houses trying to be sold, but that nobody wants to buy.

- Shortage: When the price is too low and is unable to rise. Where demand exceeds supply. This manifests in non-price mechanisms taking over. You might, for example, see houses get sold via lottery as a potentially higher bidder is prevented (e.g. the government stepped in and started enforcing a price ceiling) from offering more.

There may be some argument that there is a housing surplus in some markets, where houses are for sale but never find a willing buyer. However, it seems most houses eventually sell. There is likely no argument for there being a housing shortage by the technical definition. If you have unlimited money, you can surely buy any house on the market.

There are always exceptions, but it is pretty safe to say that supply and demand are finding equilibrium in most housing markets.

1 house is built. Alice wants to own it to live in it. Bob wants to own it to rent it to Alice. 2 people want to own the house.

> 2 people want to own the house.

and so how do you decide who gets it?

1) morally. Alice deserves it because her intention is more pure.

2) financially. Bob gets it, because he can pay more for it than alice.

Which choice above you make as a policy direction is a reflection of your world view. I'm voting for 2), but i can understand the POV of 1), even tho i disagree with it.

You are entirely missing the point. The correct answer is to build 2 houses. The problem with these policies is that they artificially restrict demand. If they didn't do that, nobody would have a problem with them.

> The correct answer is to build 2 houses

the utopian answer is to build two houses. But we don't live in utopia.

The constraints faced today is real (paper or physical). You can't wish it away, and you can't say it's "easier" to just build two houses.

So build 2 houses.

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