The people withholding units from the market are your normal landlords and speculators who can stomach reduced rents in the income. They need to be taxed out of existence. LVT continues to be the right answer here, both for incentivizing development and disincentivizing speculation/holdouts.

Edit: Yep, vacant units per capita are at historic lows. We have a construction problem not a vacancy problem: https://fred.stlouisfed.org/graph/?g=131FW#0.

> In addition, a vacant unit may be one which is entirely occupied by persons who have a usual residence elsewhere.

I guess we would have to read further on how they determine temporary. But given the sampling method, I would guess people doing a door to door survey and noting it as temporary absent if it’s well kept?

The headwinds on construction are labor shortages, material shortages, zoning, and land prices. Zoning and land prices are both also alleviated by LVT.

The feds actions show they want high asset prices relative to wages.

The plan is exactly as you describe. "Asset inflation good, wage inflation bad" is government policy at this point.

Aka profit inflation, instead of wage inflation.

https://www.youtube.com/watch?app=desktop&v=tU3rGFyN5uQ

It’s an economic axiom that high interest rates mean lower asset prices.

So can you explain what you mean?

Also - as far as I know every us city except for Miami has had a decline in real estate prices - so again - where are you and everyone in this thread getting information? Anecdotes?

If that is the case, why is housing so expensive?

The Fed hasn't really squeezed hard. They're looking for a soft landing. We went from super loose negative real rates to just loose policy, but to hear Jay Powell say it, we're already tight and restrictive. We probably need to get up to 3%+ real rate (maybe 6%+ overnight rate) to get a good washout and some forced selling.

Housing prices have nothing to do with 2023 interest rates. Well they do, the fact that they are stalling/falling is very much to do with the higher interest rates.

You can't look at 20+ years of loose monetary policy, take the 1 year of high interest rates, and blame that on high asset prices.

Btw, have you looked at stocks and bonds in the last 1 year? PE ratios? They've collapsed. Because asset prices collapse with high interest rates, and stocks and bonds are much faster at responding than real estate.

But still, real estate prices have fallen in every major city bar one.

"In September 2023, Boston home prices were up 2.7% compared to last year, selling for a median price of $770K." [0]

"In September 2023, Naples home prices were up 11.4% compared to last year, selling for a median price of $702K." [1]

I stopped at 2 (the 2 that affect me) because that was enough to falsify your statement, but I probably could've gone on for another 150 cities.

[0] https://www.redfin.com/city/1826/MA/Boston/housing-market

[1] https://www.redfin.com/city/12171/FL/Naples/housing-market

Wages finally start to creep up after decades of lagging behind productivity, panic, need to raise rates aggressively.

When home prices double in a decade there was no concern, when a burger king employee asks for a 10% raise its a crisis.

So the fed doesn't have any other good options. They cannot raise taxes on the rich or institute a wealth tax or 'take' the rich's assets. That's up to Congress. Blaming the Fed I think is unproductive because they seem to be doing their job trying to balance low inflation and a low unemployment rate as much as they can, within the limitations of only being able to change interest rates and quantitative tightening/easing(not to mention things like the war in Ukraine increasing energy prices which affect prices of almost everything). If you had the choice between high(or run away) inflation and slightly higher unemployment(which was historically low), what would you choose? Wage increases are eaten up by inflation.

Endure, they will cave eventually. They always cave.

Investors looking for a return on investment want to rent everything. They leave property empty when remodeling, or when between tenants.

You're just banking on leveraged appreciation.

Take a $2M condo. The rent is will be ~$60k for a year. The appreciation will be ~$200k, and the the principal (@ 3% interest - which they have if they're leaving it empty - is $35k).

You're getting an expected $235k if you leave it empty, and $280k (after vacancy and management) if you take on the risk of renting it.

Why go through all the hassle when the government is doing everything they can to pump up prices on leverage?

After all, actual cashflow is real/concrete and hence has a momentum and credibility that tends to reduce panic.

Once the money changes hands, it also is ‘permanently’ the owners. Expected market value? Not so much.

At some point, enough people blink that it collapses.

Or maybe not. At least that is what everyone in that situation tells themselves.

But it isn’t panning out for Chinese firms anymore like it used to.

This takes time to actually happen though, as everyone has very strong incentives to keep wil-e-coyote’ing once they’ve run off the edge of the cliff. And they did that many years ago.

And it does work, as long as there are enough ‘greater fools’ around, and there are a lot of greater fools.