Guess what happens next.
The rate of empty apartments is extremely low. This means that we have a supply shortage, not a pricing problem.
It's the land under the house that appreciates in value.
If you want to reduce that land value appreciation, here are two good ideas:
Land value taxes help to discourage the hogging of land while encouraging construction, which in turn dampens the price of land.
Removing restrictive zoning polices means that the demand for land is decreased, thus dampening the price of the land.
You can't compare a house and a car in terms of value.
Both require maintenance and both can decay to unusable if left abandoned too long. That much is similar.
But maintaining a car beyond the point where parts are available becomes very expensive since everything becomes a custom job. There are few 100 year old cars running around and those which exist are a labor of love, but from an economic perspective makes no sense. It would be far cheaper to just buy a new car.
This never happens with housing. You can maintain a house indefinitely, through many generations and it never becomes cheaper to buy a whole new house. (Barring some disaster to it, natural or human-induced, of course.)
So a house can't become a depreciating asset. A roof over your head will always have value (that's why this whole discussion exists, everyone agrees there is value to a home) and since that house will last essentially forever, it can't possibly become worthless.
Most people would prefer a regular house or apartment, given the option.
It’s pretty clear that treating housing as an investment and not as a fundamental right has led us here.
Unless you’re invested in real estate in which case your incentives are to keep the system in place.
That's the hard part. I imagine most homeowners are of the idea "I got mine, who cares about anyone else?" We see this line of thought in many parts of politics. Honestly, I'll take a bath on my home value if it means my kids, their friends, my niece, etc. get to secure housing. I don't care. Hell, I might find myself in a hard spot in the future and I don't want housing to be an issue. Housing is so important to one's dignity, ability to work/access some services and safety. There's no reason people should be collecting houses like baseball cards.
No, it's pretty clear that insufficient supply in certain areas has led us here. Treating housing as an investment is just a symptom (it's really unavoidable if the good is scarce).
We need to limit land value increases.
A land value tax helps with that. Increasing supply by upzoning might help even more.
This conspiracy theory that people who own real estate are limiting supply so their investments go up is not reality. People indirectly want to limit supply because they enjoy their neighborhood the way it is. It turns out what they enjoy about their neighborhood others enjoy about the neighborhood so the price goes up. It doesn't mean that they are overall goal is to increase the value of their house. The evidence is that adding public transport and rezoning to higher densities and commercial use would increase the value of their property a lot but most oppose that because that is not why they bought in the neighborhood.
this isn't true. vienna's social housing program is a good example of how this works. and they have cheap median rent in 2023 compared to other cities their size.
And this is putting it mildly.
I also think that the kind of housing that results from Communism isn't very desirable.
Regarding Vienna: They still allow private investment into real estate.
and did i ever say anything against private investment into real estate? no. this black and white thinking is part of the problem.
> I also think that the kind of housing that results from Communism isn't very desirable.
what is undesirable about cheap housing with good urban planning on a decentralized, local level like they did in vienna?
> Until we remove real estate as a form of investment
That’s what I was responding to. I see now that this isn’t your opinion.
You think those are different things?
If prices go up because demand is high and supply is low, then the way to fix this is by increasing supply.
If you cap the prices, supply will be even lower and you get shortages.
A pricing problem is when you have sufficient supply, but the sellers in the market are colluding to fix high prices. This can be fixed by trust breaking and/or price controls, but this isn't what's happening in real estate. Real estate is an extremely competitive market.
I don't see clothes as investments but I still buy them, same as food. And industries are there to provide and profit over it.
If somehow magically houses stop being "investments" to hoard and rent away, people would still build houses, you know, to live in them.
In the same way, real estate investors are necessary to build apartment buildings.
You are right that a piece of clothing is a depreciating asset. And maybe what you mean is that a house should also be a depreciating asset.
Well, we can make it so by properly taxing the land value.
Maybe that's what you mean, and in this case I'd say we agree!
Vienna is a great example.
https://www.youtube.com/watch?v=41VJudBdYXY (Youtube: Vienna's Radical Idea? Affordable Housing For All)
https://www.youtube.com/watch?v=d6DBKoWbtjE (Youtube: Does Vienna Have the World's Best Council Housing?)