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Re:Home ownership is the West’s biggest economic-policy mistake by imtringued on Tuesday April 20, 2021 @03:39AM (#26871782)
Speculation isn't the problem. Speculation is like a time machine for prices. Speculators use information to discover the true price of an asset and keep buying until the difference between the market price and the "true price" shrinks to 0. In other words, they are making the market more efficient for buyers and sellers. Buyers benefit when the asset would be overpriced because of volatility. Sellers benefit when the asset would be undervalued because of volatility.

It turns out that the price of housing will go up in the future because of various reasons (primarily migration), but that information is available today. So what does the price time machine do? It transports future prices in the present and oh boy are those prices unbelievably high. The speculators are essentially whistleblowers. They are saying that the emperor has no clothes and promptly get burned on the stake.

Let's assume the opposite, that speculation itself was the problem, and not an external factor that is only brought to light. It would imply that the market price is exceeding the "true price" of the underlying asset and therefore the speculator will have a hard time selling his asset, unless another speculator buys the asset in an infinite loop. However, it doesn't change the fundamental problem, because at some point someone has to take the "true price" - market price loss because they are massively overpaying and cannot find a greater fool.

If you thought the latter was the case then you could just decide against buying a house because it is overpriced. Of course the problem is that no long lasting crash has occurred, even 2008 wasn't bad enough to keep house prices on a downward trend.

Re:Home ownership is the West’s biggest economic-policy mistake by Nursie on Tuesday April 20, 2021 @03:58AM (#26871909)
You ignore the fact that speculation adds significant demand in itself. If speculators can be seen to make money, more will join the market. This drives demand beyond what would be present if only owner-occupiers and landlords were buying. And what’s more in some markets like London it removes real-estate from use entirely as investment properties sit empty.

Your idea of a ‘true’ price is silly and part of the reason prices may go up in future is indeed the presence of ever more speculators. As they drive prices up, people end up paying more for smaller properties, stretching out their debt load just a little further, and raising the whole market. There is no ‘True’ price.

Re:Home ownership is the West’s biggest economic-policy mistake by gmtx725 on Tuesday April 20, 2021 @04:59AM (#26872305)
What even is a "true price", ontologically speaking?
Re:Home ownership is the West’s biggest economic-policy mistake by ephbit on Wednesday April 21, 2021 @03:30PM (#26894327)
Based on imtringued's use of the term, "true price" would mean the price (of an asset) that leaves no room for profiting from speculation. If there's no participant in the market left that anticipates the price of the asset to go up (correcting for inflation) in the relevant time frame (and also no participant that anticipates the price to fall), then the current price might be called the "true price" for the relevant time frame.