Re:Low interest rates in advanced countries have pushed mone...
by deepnotderp on Wednesday November 24, 2021 @05:18PM
(#29335836)
When people say “investing” in real estate they generally mean buying existing houses, not investing in construction projects.
And “throughout the ages” is nonsensical, slavery is as old as civilization and yet abolishing it led to wealthier and happier societies.
Imagine if instead of real estate speculation that capital went into creating new technologies and businesses.
Re:Low interest rates in advanced countries have pushed mone...
by BenoitEssiambre on Wednesday November 24, 2021 @05:26PM
(#29335895)
The bidding up of existing ones is a side effect that happens however central banks are more about controlling investment in new ones than the price of existing ones.
Higher prices of houses means there is more incentive for them to be built (or repaired) and for the builders to be paid well. Central banks stimulation is meant to make sure this happens to a sufficient degree, just not so much that builders (and workers more generally) are paid too well that it would drive inflation too high.
Re:Low interest rates in advanced countries have pushed mone...
by BirdieNZ on Wednesday November 24, 2021 @06:28PM
(#29336447)
Both you and the GP are correct, in different ways. Investing in housing development results in houses being built, but investing in land does not. Land values going up are the real problem here, not so much house values. Houses generally depreciate in value, as they deteriorate. In general, no one is opposed to investors who build new dwellings or improve and maintain existing dwellings. The issue is that land ownership is a monopoly which results in land-owners being able to extract economic rents from society without doing anything to improve or maintain or add value to society.
Land-lording and economic, monopoly rents are bad, housing developments and rentals being hired out are good.
Re:Low interest rates in advanced countries have pushed mone...
by BenoitEssiambre on Wednesday November 24, 2021 @07:40PM
(#29336986)
Land ownership monopoly is definitely a problem but it's independent from interest rates.
Re:Low interest rates in advanced countries have pushed mone...
by throwaway2048 on Wednesday November 24, 2021 @05:19PM
(#29335839)
Its not resulting in housing being built, its resulting in existing stock getting bought and flipped.
Re:Low interest rates in advanced countries have pushed mone...
by missedthecue on Wednesday November 24, 2021 @05:49PM
(#29336105)
You probably could have typed your comment without the "this is very wrong" leading it.
Investing in real estate is a real investment when it results in houses being built. In fact it is maybe one of the most timeless and obvious form of investment. People have built and traded dwellings through the ages. Prices have to rise when good land gets scarce and labor gets more expensive.
Low interest rates _also_ boost investment in technology and businesses.
Raising rates, if you mean central bank rates, would reduce investment in both houses and technology. Raising interest rates is a signal and incentive from central banks to not invest in anything and instead hold on to government paper.
Raising rates means funding the wealthy's savings by providing them a backstop. When they can't find assets that retain sufficient value on the private markets, they can just hold to government paper having above market returns. I wrote more here a while back: https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...