That has been obscured and hidden from the public consciousness, but it's there (and it basically has to be, as if it's not, eventually you get insanity where nobody can afford to live in anything - some say we're close to this but it cannot continue, just like population simply cannot literally increasing forever or eventually the entire mass of the Earth would be made of people.)
Too many landlords have been buying long and selling short, and losing money doing so but it's hidden by (sometimes) apparent appreciation - that train is rapidly decelerating and will be at the station soon, as the low interest rates have dried on up.
The mortgage interest lack-of-deduction for most (because of the increase in the standard deduction) also affects things. What we likely should be doing is making it easier to build second homes and "dump" them on the market even for a bit of a profit, so as to increase supply.
If you don’t buy in to libertarian laissez-faire economics, which most people don’t, then this makes sense. (“Makes sense” is a much lower bar than “has the effect that we want it to have.”)
I wouldn't even complain if all houses halved in value, despite being a homeowner. That my home would be worth less is irrelevant, because I'm not selling it, and if I was, I'd have to buy a new house anyway. People who see houses as investment would hate it, of course.
I agree that you are accurately describing the economically illiterate thought process, just not that it's correct.
Price controls are one of those interesting things where there's a phase transition from near-universal support to near-zero support at a certain knowledge level.
My point here is that housing is not only a financial asset, and should be treated as more than just a financial asset. Or if you want to take an economic approach here, you need to come up with a utility function that more accurately reflects what we care about—we think that two people who have housing is a better situation than one person who has two houses and one person who has none.
More construction isn't the ebd goal, (except for developers and investors I guess), if anything, it's a means to an end. The end goal is affordable housing.
GP: "Government regulation is preventing the construction of more housing"
You: "So true. For example, we need more regulation that make housing a legally encumbered asset with uniquely constrained and inflexible financial properties"
What is your thought process here? Do you think this kind of thing will encourage the provision of more houses? Do you have a sense for how making housing an exceptionally financially risky asset will influence whether or not investors are interested in building more housing, and how they have to perform initial pricing to offset rent-fixing and regulatory risk?