What I'm describing is a systemic dysfunction due to financial incentives.

The "crisis" is specifically the high cost of housing. So if whatever you do doesn't lower the price then by definition you've failed to solve the problem.

It's certainly a dichotomy but I don't see how it's false?

> We can easily build twice as much in high cost areas (with the strongest job markets) with little impact on existing home owners.

It's certainly possible to encounter nonlinear behavior. If some aspect has saturated then we might build quite a bit without seeing any substantial price movement. But eventually prices would start to decline.

That doesn't really make sense. The problem we're trying to solve is that housing is too expensive. If we do things that end up lowering the cost of housing, then the saleable value of "average Joe's" house will also go down. You can't say that newly-built housing will be (for example) 20% less expensive, but existing housing will keep its value; that's just not how the housing market works.

I'm not sure if "obliterated" is the right word to use, but if making housing affordable means a 20% drop in home prices (which is perhaps not even enough in some places), average Joe existing homeowner is going to run into financial trouble once that happens.

> We can easily build twice as much in high cost areas (with the strongest job markets) with little impact on existing home owners.

If that's the case, then all that new housing will also cost more or less exactly the same as the existing housing stock costs, and the problem will not have been solved yet.

Also known as “housing cannot be both a good long-term investment and simultaneously remain affordable over a long period of time.”

Many people have been sold on the former and will (fairly understandably) act to protect the value of their single largest purchase which often has a large mortgage attached to it.

Many people overlook the effect of 30 years of general inflation on their outstanding mortgage debt. Also, most people's income rises as they age, so the monthly payment becomes proportionally smaller. If you buy around 30-35 (and many in the US, outside of crazy areas, buy much younger), then their income will rise for long periods of their mortgage.

How do home owners get into trouble from falling prices if they're just living in their home?

Sure, if they need to move and sell, the price difference might be less favorable to them, but having to weigh cost vs benefit of moving is a fact of life one way or another.

It's a strange expectation to have that home values should act as an investment that can only ever go up.

Letting that expectation influence policy on making space for living available is one of the root causes of this crisis.

My feeling is because we build little in the way of new units of housing most places. All the money being injected into the real estate industry is from the price-debt spiral.

I'm only proposing to build enough units such that house prices rise at the rate of general inflation or slower. In many highly developed, capitalist systems, their housing prices barely budge in a generation when accounting for general inflation. This is done though careful regional planning. This business of "housing as investment" (for normies) is awful and greatly harms renters.

To be honest, just getting to the point where house prices don't rise above inflation, maybe even stay fixed (so inflation eats away at their value), would be a massive accomplishment. The main problem at the moment is prices keep rising above inflation in most places, year after year.