Then what's Jack's point? Greg ain't arguing economics. He's saying what's happening in his area.
He's literally arguing about the production and distribution of goods lol.
What's gonna happen when there's a surge in new home construction because thousands of developers suddenly decide there's money to be made in affordable housing? The prices of raw materials and labor rise, all other things being equal. Do you have any idea what sort of profit margins developers tend to operate on? I don't. My guess is that with rise in costs there'll be a rise in price. And my understanding is these costs are already high. Then there's land and its location relative to jobs. Time is money and transportation ain't free.
Geez if only there was some way we could somehow influence the supply of *checks notes* bricks, wood, and steel.
Two sides of the equation, people.
And like I said in a prior post, who wants property values to shrink beside people who don't own any? Shit, even the governments down like that since it fucks their budget. But they can offset that with the extra taxes on the newly built homes. So maybe they can subsidize since everyone else is in business to make money.
This is a genuine issue, but actually puts you on the same side as
@Jack V Savage (excuse me for putting words in your mouth but pretty sure I'm right) vs. NIMBYs and zoning laws. Housing is the primary vehicle of wealth accumulation for the middle class in America (and Canada - god, so much in Canada), so overhauling/socializing the market probably isn't as politically viable as just adding to it.
I guess. It's just that people are seeing new construction not being enough to offset new demand, and thinking that new construction is *driving* demand.
Yea lol, that's a whole other thing. Suppliers are a common target when people don't like the price of something, as if they set the price.
But that bypasses the understanding of supply and demand we maybe took for granted earlier.
But does more construction actually prevent them getting priced out of that specific area? The added construction that is actually affordable could be built in a different part of town and the residents get priced out anyway.
I think that's the key part of the disagreement here, many people are skeptical that developers will want to build affordable housing and will instead prefer to build luxury housing. I would imagine that to some extent its kind of a folk belief that has some truth to it but is often exaggerated.
Jack covered this already, but the simple point is that if the developers are building expensive homes it's because that's the point where supply is meeting demand.
@Gregolian is upset that
his demand is not being met, but that's different from the aggregate demand. Something happening in aggregate doesn't mean it's also happening to each unit of the aggregate (fallacy of division).
If the supply can overcome that demand, the price falls and Greg's needs are met. Now that might be near impossible for practical reasons - maybe something runs out or there just isn't enough space or the timeline for that price movement is beyond Greg's lifetime - but no one's made a case for any of those itt (despite being prompted repeatedly).
I don't know much about construction so I'd actually appreciate a little more insight there. I was under the impression that America could hold a billion people *wink*
@PolishHeadlock2. But the insight should also not contravene economics 101.
I wonder if the fundamental problem here is economic inequality in the sense that when new housing supply is generated, its those who are upper class, who already own homes, who are better able to buy up the houses either as investments or if they're really rich then as a second or third home. So when demand is driven by investors or buyers looking for a summer home more than first time buyers then the latter get priced out by the former.
If so then I don't think housing policy is itself is the solution, the solution would be to reduce economic inequality so there isn't as much of an imbalance between elites and the masses in terms of purchasing power in real estate.
That's very possible. But "reduce income inequality" sounds a lot more pie-in-the-sky to me than "build more houses" and I'd want to see adequate evidence that the latter doesn't work before shifting priority to the former.
In terms of the best policy to control that kind of wealth influx - I know of taxes on foreign real estate investment and subsidies for first-time homebuyers, but couldn't tell you how effective those are. But note that any effect that increased supply does have on mitigating soaring prices also reduces the return on investment.
I mean, yea. But I don't see "reduce income inequality" as a proximate solution to almost any problem. It's a systemic problem you work on while fixing everything else you can in the meantime.