I'm confused by this objection, if you draw a stereotypical supply and demand curve, you can see how prices settle to an equilibrium point. Of course reality has more complications, but I think your objection is 95% answered by a supply and demand curve. You keep building houses when it is profitable. You stop when it is not. This naturally keeps everything in balance.
Free markets for housing are likely to settle into an "optimum" where some percentage of people cannot afford housing at all, because while construction/rental of housing for them would net a return, it's not worth the opportunity cost. Plus you should not wait for the market to respond to a lack of housing: people will be homeless in the meantime. Supply/demand is mostly reactive, because building for anticipated future demand years down the line is very risky, so most investors don't like that.
Markets don't optimize for "everyone gets some", yet that's precisely what you need for housing. You'll always need the government to come in at some point to provide for those left behind by the free market.
The thing about arguments like this is they're usually used in service of blocking housing. As in we shouldn't do what Austin did because it won't fully solve the problem. We should instead stick with the status quo, which gets much worse than Austin.
Isn’t the initial response to a lack of housing that people consume less housing than they would like, rather than homelessness, eg families with children sharing rooms more than they might like, adults living with roommates, or just people having to live further away from where they would like to be (or moving out of a city altogether)?
I don’t dispute that there are levels of affordability that are bad enough that they start to lead to various forms of homelessness, but it doesn’t seem to me like a fundamental rule that, if some people can’t afford to live alone in a large amount of housing, they also can’t afford to live with roommates sharing a smaller amount of housing, and that the right level of housing prices should also price some people out of those arrangements (ie it demands a pretty high level of inequality if you assume that the market allows typical people to afford to live alone and that sharing can typically reduce per-person rents by half or more)
Individual landlords also dislike those and may not allow it, because the ability of the household to make rent now depends on all adults in that household. 3-4 broke adults who may only loosely know each other and with their own individual plans are a lot less stable than, for example, married couples. It's basically 3x the risk and hassle. Chances are you'd have to evict them after just a couple months.
They'd rather just leave the apartment empty and hope to find a better tenant.
Is that not typically happening only for more egregious situations? E.g. the ban is on more than 3 or 4 unrelated adults living together. There are plausible reasons why that should be regulated, it is not clearly a conspiracy by homeowners to prop up the value of their own homes.
> Free markets for housing are likely to settle into an "optimum" where some percentage of people cannot afford housing at all, because while construction/rental of housing for them would net a return, it's not worth the opportunity cost
You provide no basis for the idea that the returns on housing have to drop below the point at which its financially viable to build before housing becomes affordable. You just say "because" then restate your premise.
> Markets don't optimize for "everyone gets some", yet that's precisely what you need for housing.
Just because markets don't optimize for it, doesn't mean it doesn't achieve it.
> You'll always need the government to come in at some point to provide for those left behind by the free market.
"Not worth the opportunity cost" is not the same as "not financially viable". It means that there are lower risk/higher return investment opportunities than creating that housing. More simply stated "Why would I want to turn my $100 into $110 +/- 20% if I could turn them into $130 +/- 20% instead?"
"I lost a foot" is not the same as "diabetes caused me to need my left leg amputated below the knee", but if you're talking about whether or not you can make it to the store a few blocks away without assistance the distinction isn't really important.
The trick is to acknowledge the market as the main mechanism at play, and have the sense to work around the margins. When the tinkerers get too enthusiastic, they tend to do more harm than good.
I have struggled to understand why houses don't get built and land sits idle for years. I can only assume that it's significantly more complicated. I'm not trying to excuse the complications. I guess if the house prices are forecast to go up, you build some houses, but not all that you can because the longer you wait, the higher the profit will be on the ones you start later. If house prices are going down, even if it's profitable when you start, you're not likely to build houses because you might be left holding houses that will sell at a lower margin. If there was a tax on unused land, that might skew things towards building more even if prices are declining, but I'm sure there are lots of views on that.
In Texas, at least, the lack of income tax is made up for in property taxes. Just owning that plot with nothing on it is still going to be a sizable liability.
Sitting on it is a predictable cost, while building means a costly chaos which may or may not turn out the wished profitability. So when you are used to "old profits" you maybe rather wait on the predicted do-nothing-cost, and hope for the tide to turn again in your direction.
Guys you have no idea about these things and what you are talking about. source: I am a city plot owner.
No land owner will suddenly become a developer to build an apartment block.
A plot owner can sell land to a developer or form a joint venture with developer putting in their land as starting capital (much more risky) most people either keep land as gold or sell it when they need money.
I hope it is clearer now.
The very idea that everyone who owns land should build an apartment block is laughable, it is very complicated endeavour best not to get into it if you know nothing about it. Hell building a single family house is complex, let alone five story building.
So you either keep it if you don’t need money or you sell it if you want to buy something else or need to have liquidity. And you don’t even sell it to buy other investment vehicle because land is already better than gold.
My plot increased 3 times in price in 10 years. Try to beat that with SP500. It’s virtually immune to inflation no matter how the broader economy fares it will always shield from inflation because you cannot make more land hah.
Even in utopia of automation and post scarcity society good location land will be truly lucrative and unimaginably expensive if not outright prohibited to own by private individuals. The question is what will be a “good location” in 30 years.
> My plot increased 3 times in price in 10 years. Try to beat that with SP500. It’s virtually immune to inflation no matter how the broader economy fares it will always shield from inflation because you cannot make more land hah.
> Even in utopia of automation and post scarcity society good location land will be truly lucrative and unimaginably expensive if not outright prohibited to own by private individuals.
Indeed, there’s a reason you see silicon valley execs going all in all acquiring land to build fortresses. At the end of the day, regardless of the cold march of technological progress, land remains the root of all real power.
> No land owner will suddenly become a developer to build an apartment block.
No one is suggesting this.
> A plot owner can sell land to a developer or form a joint venture with developer putting in their land as starting capital (much more risky) most people either keep land as gold or sell it when they need money.
Most people don't own vacant lots, but some who do hold onto it as an investment. It's a pretty poor one on average over time, just like gold (which is a good analogy).
> The very idea that everyone who owns land should build an apartment block is laughable, it is very complicated endeavour best not to get into it if you know nothing about it. Hell building a single family house is complex, let alone five story building.
Again, no one is suggesting this. The assumption is that a developer would buy a lot to build on, because that's what happens in practice.
> So you either keep it if you don’t need money or you sell it if you want to buy something else or need to have liquidity. And you don’t even sell it to buy other investment vehicle because land is already better than gold.
Land and gold are not better than the stock market over time.
> My plot increased 3 times in price in 10 years. Try to beat that with SP500. It’s virtually immune to inflation no matter how the broader economy fares it will always shield from inflation because you cannot make more land hah.
The S&P 500 beats real estate over time. Congratulations on getting lucky with your plot of land. Land is a good inflation hedge, assuming you are in a growing area. Ask rust belt land owners how things worked out for them.
> Even in utopia of automation and post scarcity society good location land will be truly lucrative and unimaginably expensive if not outright prohibited to own by private individuals. The question is what will be a “good location” in 30 years.
Thanks for highlighting one of the many issues with communism, but we will never reach a post-scarcity society for many reasons, including this one.
You know what increased more than 3x in the last 10 years? The S&P 500 index (it went from $203.87 at the start of 2016 to $681.92 at the start of 2026). And your plot of land is a massive outlier to the upside in the US overall during that time.
Historically, undeveloped land basically tracks inflation. Obviously, there are specific plots of land that dramatically exceed that, and there are specific plots of land that don't keep up with inflation.
That's the only thing you got right: raw land is an inflation hedge.
If a minority has most of the wealth then the equilibrium supply may include a lot of supply of second homes, very large homes on large plots for the rich, properties sold at a premium based on how much they can extract from renters, and even investment properties occupied by nobody whilst still having insufficient small basic homes and dense housing.
Capital that could be invested in better serving the bottom half has to compete not only with the use of those resources to further enrich the rich but other investment opportunities.
There is more than enough land for everyone, and rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes. The demand of the rich does not eliminate demand of the poor, so the market produces different kinds of housing for different clientele.
Think about it this way: assume you supply all the housing to all the rich people. Then there still remains untapped demand of others that can be fulfilled by further production of homes for those specific people.
This story fails when land becomes restricted, which is exactly what zoning laws cause. Zoning is a big harm to the poor.
> rich people aren't really competing for the kind of housing that poor people are competing for, e.g. smaller plots with smaller homes.
This disregards basic geometry. Sure, in some rare situations you only have one small plot of land surrounded by existing construction or natural boundaries. But, in the majority of cases, you have one large plot of land, and you can either construct one big house on it, 5 smaller houses, 10 small houses, or 200 apartments in a block. The rich are absolutely competing for this lot with the poor.
And as inequality goes up, the rich can even start contemplating buying up surrounding properties, tearing down construction, and transforming a small plot into a much larger one.
Given the choice between being homeless and living in favelas, millions in Brazil have chosen to live in favelas.
The reality of zoning laws in Western countries is to provide a target for regulatory capture by the NIMBY crowd. With the result that we're systemically underbuilding housing, then wonder why we wound up with homelessness.
Favelas are a local optimum which systemically is very difficult to get out of and is a sign that the regulator is powerless. It's a great example of a market failure.
There's a couple of "ifs" there and the scenario seems implausible. If I look at the prime real estate in a city it tends to be a lot of skyscrapers rather than very large homes (with occasional exceptions like say a Buckingham Palace). But it looks like the economic equilibrium is lots of cheaper apartments rather than large homes for rich people.
> ... and even investment properties occupied by nobody ...
Not much of an investment. Something is wrong if that is happening, probably manifesting as a lack of supply. Otherwise what is the point of an "asset" that doesn't generate income, degrades over time and could easily be rented out at a profit rather than sitting unused?
Whatever scenario there is where it makes sense to have an empty property, assuming a sane policy backdrop, it'd always be better for the owner do what they were going to do anyway but also rent it out.
People don't want to rent those homes out because once you're doing so it's difficult to evict a long-term tenant. You just lose out a lot on flexibility - even if you try and manage that risk by leasing out housing e.g. on a yearly basis, landlord-tenant law often overrides that since there are strong ethical reasons for not evicting someone who has since come to treat that rental space as their home.
Short term rentals are better on that score: no one sensible forms a long-term expectation that they're going to live in an Airbnb that they've rented for a few days. (If you think short-term rentals are "bad" for the long-term market or have negative side-effects on the neighborhood, then tax them to manage that tradeoff. But banning them altogether is unconscionable and just leads to houses sitting empty and unused.)
The purpose of housing is not to provide an investment vehicle nor should we optimize for this. Airbnb should just regulated out of existence in most urban markets because we are chronically low on housing and the city doesn't need short term rentals at all.
The purpose of most real estate is to provide shelter for people, not to sit empty and unused. That's exactly what AirBnb allows to those who are only willing to rent short term (because it's their vacation home and they want to be able to use it).
Housing someone provides a fundamentally different kind of value than offering a second home or short-term stay. A home meets an essential social need, while vacation homes and similar uses provide far less public benefit. On that scale, the social value of housing a person is vastly greater than the value of adding another short-term rental bed.
That does not mean hotels would stop being built, because developers and hotel operators are optimizing for a different kind of value. But it is more than enough reason to oppose turning even a single home into a de facto short-term hotel.
The reality is not simply that people are monetizing unused space. The ability to rent homes short term encourages people to buy more second homes than they otherwise would, because the income offsets the cost. It also encourages investment in housing that would otherwise remain in the long-term market, since owners know unused time can be monetized. Some buyers purchase properties specifically to operate them as Airbnbs, and many landlords convert homes that once served monthly or yearly tenants into short-term rentals because they can charge more, adjust rates freely, and often earn more overall.
You are referring to properties held by the already rich (only the rich can afford 'vacation homes').
If they can't afford a 'vacation home' without short term rentals then it should be sold and provide housing year-round and build equity for a new homeowner.
There are some places in the UK (mostly new developments in London) that have a significant number of deliberately empty investment properties despite the law here making it easy to evict tenants. They are not being used for short term rentals either.
Although the easiest route (no-fault eviction) is being abolished soon, wanting to sell a property remains a valid reason to evict.
Some people just buy property as a speculative investment.
I do not think it is the main cause of shortages in London - that is people buying holiday homes, which are often large and centrally located. London provides a lot (restaurants, nightclubs, gambling, prostitution, financial services...) that attracts people with a lot of money to spend from all over the world.
> despite the law here making it easy to evict tenants
"Easy" is relative. "Evicting" an airbnb'er once the term is up will always be orders of magnitude easier than kicking out a long-term tenant who regards that as their actual home. There's not even anything necessarily wrong with this! The easiest way to address the issue is literally to slash any remaining red-tape that's making things difficult for those who would want to AirBnb these properties out, while managing the resulting side-effects (including the plausible effect on the long-term rentals market) by levying a special fee if necessary.
As a bonus, easy AirBnb rental provides an alternative for some who might otherwise want a permanent holiday home.
If we don't have an excess of housing why should we allow ANYONE even one single property to serve as an unlicensed hotel. If we tax un-lived in property extremely punitively nobody will hold them at all and it should soon be sold or rented out.
I'm fine with taxing both long-term vacant properties and AirBnb at fairly high rates, since both have negative effects on the surrounding neighborhood - the latter to a markedly less extent than the former, of course.
If you want second homes to be used productively, just allow folks to list them on AirBnb for planned short-term rental. Long-term rentals are a total non-starter politically for second homes, since you obviously can't ethically throw out someone who regards that rental space as their home. But short-term is actually fine.
As for larger homes, people should be allowed to live in there as larger, extended family groups - a common pattern in non-Anglo cultures. Ban "single family" restrictions since they amount to unconscionable discrimination against such reasonable living arrangements.
Some would say that housing is a right (while acknowledging the need for housing construction and its workers and supplies to be paid for) and that it should be funded somehow, even if the free marker profit becomes negative during certain periods. Like any market manipulation, the question then would be how to intervene to keep housing construction going when construction isn't profitable, while not fomenting corruption in the industry.
Housing where? Is housing for me in Malibu a human right? There's plenty of places to live in Texas for basically nothing.
I'm honestly trying to take this seriously, but I really can't square the problem of location and utility. On of the reasons why West Virginia has such a low homeless rate is just that mobile homes and manufactured housing is pretty much legal in many areas around the state. One of the reasons why California is so expensive is that those types of inexpensive housing options are effectively illegal statewide.
Yeah seriously... when I was dirt poor and hurting, I moved to Shreveport and was able to get by on minimum wage. There's plenty of places in the Deep South where one may live a decent life for moderate wages. Not everyone gets to live the life of Riley.
> There's plenty of places to live in Texas for basically nothing.
What are the employment options there? If I move to a cheap house somewhere where there are no jobs for me, I just moved somewhere where I cant afford.
As someone who has lived here for a long while, it seems like there are lots of jobs in a lot of industries here. We're not all oil riggers and cowboys.
Again, I'm not trying to be difficult here, but "where" is "somewhere." There are jobs in Austin, San Antonio, Kerrville, Marfa, and El Paso. They might not all be for me, but they exist in all these places. Where you live and what your commute is, again, is not exactly something that's particularly trivial to define. At what point should I start looking in San Antonio rather than Austin?
These are hard questions. This is what I mean when I ask whether I have a right to housing in Malibu? At what point should I be expected to just move to East LA?
At the end of the day, housing in Austin is relatively inexpensive. There are real options below $300K. Living in SF, it's pretty astounding that that's even possible within the city limits, much less at reasonable commuting distances.
I certainly think incentivizing subsidized low income housing is worthwhile, and I think even incentivizing builders to just target the low income price points is also worthwhile. I just think that focusing on subsidizing the lowest income folks, rather than letting markets actually work for most people has been shown to trivially fail in CA where I live at actually accomplishing anything. A lot of "ugly" 5-over-1's have been built in Austin, and it's working to keep the place affordable for working class people. I'm absolutely fine with that.
> At the end of the day, housing in Austin is relatively inexpensive. There are real options below $300K.
This is so insanely out of touch. Most people will never be able to afford a house over $200k, even in Austin. I live here, you apparently live in California. As a resident, let me tell you that Austin is not affordable, and definitely not "inexpensive". Housing here is relatively inexpensive compared to the most expensive metros in the world, it's not relatively inexpensive compared to the US housing market, or more relevantly, the Texas housing market. This isn't the Bay Area, it's the middle of Texas.
> A lot of "ugly" 5-over-1's have been built in Austin, and it's working to keep the place affordable for working class people.
Austin isn't affordable for working class people and it hasn't been for a long time, so no, those new constructions aren't keeping it affordable, they've just stopped the insane rent increases that were coming every year for more than a decade. A living wage in Austin for a single person is $100,000, for a family it's $200,000, and that is well above the median household income of ~$90,000. Working class people are well below the median and aren't making $90,000 per year. These numbers are from an article in our local newspaper from this week. [0]
I literally grew up in Austin. I understand the Austin housing market. I understand is not cheap. That doesn’t mean it’s not affordable.
According to your article:
> Based on those costs, MIT estimates the living wage for a family of four in the Austin metro area is $112,866 a year, or $49,322 for an individual.
That’s well below median household income.
> The organization created a “Household Survival Budget,” which includes housing, child care, food, transportation, health care, technology, taxes and miscellaneous expenses. According to the group’s estimates, the living wage for a family of four in Travis County is $102,096 with two kids in child care and $85,356 with no kids in child care. For a single adult, the survival budget is $39,924.
Again. When we are talking about the housing crisis in the Bay Area, we are talking about small condos costing $1M. Just forget having anything be closer to median income affordable for a family of four. In Austin that’s still possible. It’s not Milwaukee, but it’s a functioning housing market.
Elderly retirees seldom move. They’ve long paid off their mortgage and we keep property taxes extremely low so they are pretty much immune to the cost of housing. Once you put down roots in a community it’s hard to leave.
They also usually don't want to leave their established doctors. This is actually one of the reasons why we need mixed-housing options within neighborhoods so that elderly people can downsize into more manageable one and two bedroom apartments, condos, or duplexes etc without having to leave the neighborhood. Downsize into housing stock without stairs, without a large yard to upkeep, downsize into something smaller that would be more affordable to adapt for someone aging in place.
... but your own housing isn't any form of basic human right, its a luxury all around the world and always has been. Now I completely understand folks who come out of uni and see the salaries (sans faangs and generally devs and few other lucky positions), the prices and the emotions of missing out come easily.
But it isn't a right, just because you would like it. Same as I don't have a right to a car at price I would like, just because I live, by my choice, in rural environment close to nature. I desperately need one though for work commute, shopping, taking kids to school etc so thats as non-optional as accommodation to existence of my family. I can either suck up car's actual prices, move whole family so I don't need it or do similar choices in life to tackle that.
But car ain't a right. Same as your own accommodation, of course not a modest small apartment but a house, ideally close to work, amenities, schools, and costing peanuts. Literally what everyone else wants. Or am I incorrect in your expectations? Because if yes, its easy to accept cheap remote small old properties, those aren't expensive for above-average earners at all, anywhere.
Positive rights and negative rights. Societies can and often do guarantee rights that place an obligation on society and others to fulfill. In the US, we have a right to emergency medical care regardless of ability to pay. We have a right to a fair trial and representation. In NYC, the city is obligated to provide shelter for the homeless. Some thing that should be more universal. Not all questions can be answered by me right now.
The Universal Declaration of Human Rights, Article 25.1:
> Everyone has the right to a standard of living adequate for the health and
well-being of himself and of his family, including food, clothing, housing
and medical care and necessary social services, and the right to security
in the event of unemployment, sickness, disability, widowhood, old age or
other lack of livelihood in circumstances beyond his control.
What happens if everyone takes this declaration at face value and decides to be unemployed? Who pays for all the services that every person is entitled to?
Then your point is meaningless. I (GP) was also pointing out the same equilibrium mechanic. The specific point I was making is that all evidence points to the equilibrium (in the US and elsewhere) being at a point that does not make housing easily attainable, and so becomes a political liability.
"Go build homes [beyond equilibrium]" is not a solution
Which isn’t quite accurate as for example people prefer to move out of their parent’s homes while young adults but aren’t necessarily homeless if they don’t.
Basic housing is a necessity, but people also huge homes and 2nd homes etc. So housing policy should therefore be more complicated than simply subsidizing anything you can call housing. Capping the home mortgage tax deduction at ~median home prices for example is probably a better use of government funds.
That is the object of the sentence. He is asking who the subject is, in other words the thing or person that is doing the housing of the people. Is it the government? Is it you? I'm currently responsible for housing myself, which is annoying so I would prefer someone else take on this responsibility.
Not sure I buy the premise. Austin has a household $133k median income with a $435k median home price. It’s very affordable.
But, to make Austin more affordable still, you make it less expensive to build so that it’s profitable to build. Typical regulations that do this are:
- Lower minimum sizing requirements
- open zoning
- raise height limits
- make sure you don’t have unwarranted restricted fire codes (some places have elevator stairwell requirements that are insane)
- make permitting easier or not required at all for some cases
- no min parking requirements
Pretty sure as good as Austin is, they could easily reduce the costs by up to 30% (there are parts of the country with 50% the cost per sq ft for new construction).
That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. That’s caused most of the time due to excessive regulation.
Another reason is high demand in locations where offer is limited due to physical limitations. There’s always demand to live in Broadway, and offer can never catch up due to its physical limitations.
We are not talking about economic theory. We are talking about house prices. Time after time it has been seen that free-enough market can lower the prices to affordable levels.
The relative abundance of land compared to other factors of production is, in fact, such a proposition. But when land is restricted through zoning laws this stops holding true. In other words, we must eliminate restrictions on production for the benefit of all people, but particularly the poorest.
We don't need economic theory for that it's just common sense. Humanity has been erecting structures to live in for approximately our entire existence. The modern economy is mechanized. How could a wood frame structure or a small high rise possibly be unaffordable if the market is functional?
Stop and think for a second. Someone in good health with a willingness to DIY and a sufficiently flexible schedule can literally build their own house from the ground up. It's a substantial time investment but not actually as much as you might think. Housing isn't very resource intensive compared to the rest of the modern economy.
The only possibilities I can imagine to explain unaffordable housing are broken regulations, critical levels of resource exhaustion, natural or man made disaster, and gross economic dysfunction.
It's regulations. But before you call them broken, some of it is safety. Safety standards keep rising with technology and the economy as people can afford more. Same with cars. There's also zoning restrictions in some places designed to prevent slums by requiring large residences. I guess that's happening here too.
Also living standards, ancients houses are dead simple and today could probably be built with usd 5k-10k in a couple months. But most people wont accept a home with no electrity, no lights, no AC, no indoor plumming, etc.
The average person would need a MASSIVE investment in time to learn all the skills required in addition to investment in tools. Furthermore people won't lend joe random the funds required in the same fashion as they would for an actual finished house OR constructing a house via a contractor.
The invisible Hand may be monetary policy. The median household may simply no longer be able to afford the median home due to the continued wealth distribution shift brought on by interest rate targeting.
> That means there’s an invisible hand keeping prices up
Construction labor is quite expensive and so are the raw materials (and going up). Means there is a hard lower bound on cost and unfortunately it's not that cheap even if they built at zero profit (which nobody will).
> That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. That’s caused most of the time due to excessive regulation.
No. Why do you guys fall so easily for the "regulation" cliche?
The answer is far easier: unwillingness to invest.
Why are there investment funds willing to burn through tens of millions in stupid stuff like NFTs or pets.com, but investing $10m on a 5 story apartment building that can get you a solid RoI of 20% is frowned upon?
Why the investment funds have to build the houses? Houses has been built/funded from zero by the future owners since forever, either individually or through cooperatives. That way, "investors" don't need a positive ROI, and they happily lose money overall if they get a home.
I know some people that are currently "willing to invest" in buying a ship container or two and transform it into a house to get costs down. The problem? Regulations don't allow them to put the container in their own property.
Using a shipping container is almost always a stupid plan compared to just putting up some wood. As much as I want to make zoning more flexible, I'm not in a rush to change that particular regulation.
Sounds arrogant to block someone else plan to have a home, just because you don't like it. And then claim regulations are not the problem, but lack of willing to invest.
If you think containers are a bad idea, don't buy one.
The demand for containers is rare and they don't really save money over building small out of reasonable materials. That specific regulation isn't blocking anyone from having a home.
The invisible hand is zoning. There's plenty of investment available but you literally aren't allowed to build what would be useful in most cases.
Sure you're free to go out into the middle of nowhere and build all sorts of wild stuff but there's no market for that because that isn't actually what anyone wants. You can't blame the investors when what people actually want to pay for has effectively been outlawed.
OP used the term incorrectly. The term was used by Smith to refer to the fact that in the market, order occurs by the alignment of incentives of different people without any central planner.
In reality, those ideas do not apply to the housing market, esp. as there is no real competition; and because the demand is absolutely inelastic (if we are already applying in MBA-wording universe)
Also, that this is true you can see if you compare to housing markets which "are more free than the Australian"
- inelastic means the demand is more or less independet of the price; you can't "just stop renting & living" if prices are going up, your options to bypass are highly limited -> therefore its called >inelastic<
Where does this happen, in presence of a reasonably free market?
I can only think of extremely land-limited places like Monaco and Gibraltar. Where the answer is "not everybody should live in Gibraltar".
But the US has a lot of land. So much land that it can afford wasting it on endless sprawl of single family homes, which is the least efficient way of providing housing. Most Asian megacities would not be able to exist if they had as strict zoning principles as the US has.
Maybe you should also think about barriers such as "bans on boarding houses". This is what messes with poor people the most. A room in a house full of rowdy individuals sucks, but it is still a room. Possibly you may spend just a year there, then find something better. A tent in an encampment of rowdy individuals is strictly worse on all accounts except cost, and bouncing back from that is harder.
there are many things you can do, but essentially you want to make it profitable for builders to make houses at a lower price point, or give the average person more money. Some approaches (not all of which I'm endorsing):
- reduce restrictions around planning / construction / etc (because it takes time and expertise to comply, both of which cost money)
- find a way to bring in cheaper labor, or make it possible for construction companies to hire the same labor at a lower price. Maybe a subsidy, maybe reduced taxes, maybe relaxed labor laws
- add a subsidy for homes
- make your citizens more wealthy, so the price is no longer above their means
- outsource construction to a place that can build it more cheaply (eg, prefab homes)
> - find a way to bring in cheaper labor, or make it possible for construction companies to hire the same labor at a lower price. Maybe a subsidy, maybe reduced taxes, maybe relaxed labor laws
It's far easier than that: just have your regional/local government finance urban renewal projects that increase occupation density. You can even tie the project to the expansion of a public transportation system.
Won't the market fill the gap? For example, in Indonesia, "standard size" houses are mostly out of reach for new buyers (young generations), so they build houses farther away and/or smaller.
