• SCB@lemmy.world
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    1 year ago

    Yes lack of supply with an increase in demand yields higher prices.

    • Ryantific_theory@lemmy.world
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      1 year ago

      The issue isn’t really supply though, it’s that houses are held as investments, not as property, and it massively inflated their value. That’s created a lot of pressures that benefit from desperate homebuyers.

      Twenty percent of homes last quarter were bought by investors compared to ten percent in 2010. Can you guess what happens when a fifth of home purchases are intended to generate more profit? Rent goes up, houses are flipped and sold at even higher rates, and homebuyers are squeezed further out by deeper wallets. New home builders intentionally reduced production because letting demand grow makes people more likely to purchase new homes, which are sold at a premium over existing homes. We’re manufacturing just over half of the homes per month that we did back in 2005, and whenever sales are too slow (like in 2018) they just reduce completions until the market is forced to buy at the prices they want.

      The moment housing became an investment instead of a place to live it steadily screwed over the market. If too many residential homes are released onto the market investment groups lose potential profit, but strategic purchasing and selling can maintain rising prices and steady profits. Not to mention that the collective investment spending of a couple hundred billion a year on buying up residential properties has a vested interest to ensure the supply doesn’t ever catch up and reduce the value of their investment.

      Basically the housing market has been a disaster for decades, and it happily continues downhill.

      • SCB@lemmy.world
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        1 year ago

        Houses are held as investments because homes are good investments. Homes are good investments because supply is too low

        • Ryantific_theory@lemmy.world
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          1 year ago

          That’s… A truly remarkable perspective lol. I just told you that the supply is artificially constricted to inflate prices and gouge profit, and your response is “that’s what makes it good.”

          What’s next, investment groups buying up a significant percentage of non-perishable foods if it’ll make “good investments because supply is too low”? Basic necessities of life shouldn’t be investments because supply and demand aren’t really relevant when you need something. It’s just extortion with extra steps.

          A huge portion of the population is choosing not to have kids because houses are too expensive, and even if they manage to get one, raising a family on top of that is too expensive. When investments are negatively impacting the entire population of a country, that’s a bad thing.

          • SCB@lemmy.world
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            1 year ago

            I never said it was good. Homes shouldn’t be investments. Ideally, they’d depreciate in value without renovation.

            The reason they appreciate in value is we don’t build enough.

            • Ryantific_theory@lemmy.world
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              1 year ago

              Yes, though you did just call them good investments. An investment being good solely because the market is an anti-consumer purgatory isn’t a good investment. The moment the housing market is fixed the investment collapses back to being driven by property location instead of the simple fact that its exists. Not to mention concerns about another housing market crash or recession waiting in the wings.

              Homes should depreciate in value, similar to cars, and imagine what would happen if car manufacturers decided they liked the Covid price points and supply constriction, and started treating them like the housing market? There’s more money to be made in ensuring there isn’t enough supply than there is in meeting demand.

              • SCB@lemmy.world
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                1 year ago

                I can recognize the reality of a good investment while disagreeing that it should be a good investment.

                People aren’t building because they are choosing not to. They’re not building because they literally can’t.

                • Ryantific_theory@lemmy.world
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                  1 year ago

                  Probably would have been worth clarifying that distinction earlier, but I’m not attacking families looking to pay for a home to be built. Construction companies that build new homes en masse are doing so to make money, not to address the housing shortage.

                  Much like Nissan being pleasantly surprised at making more money by discontinuing production of their cheaper models, larger construction companies aren’t at some sad loss to meet demand. they acquire building permits based on how many months of completed housing supply they have waiting to be purchased. When it passes a certain level, apparently 6 months of supply, they slow down completions and reduce the number of new permits until the supply is sold at the prices they want.

                  Otherwise it would be less profitable. I’m not saying there aren’t other issues, and smaller home building outfits struggle with local permitting, keeping employees, and rising prices for materials and appliances. But a huge issue with the industry is that it’s fundamentally against their best interest to solve the housing shortage. There’s a happy little feedback loop between builders and investors that keeps pumping home prices up, which lets new ones be sold for more, which pumps home prices up. Which restricts more and more of the housing market to investors, until the dystopian future where everyone rents except for the lucky souls that inherit the family property.

                  • SCB@lemmy.world
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                    1 year ago

                    It is not against anyone’s interest to build housing and you’re making a lot of frankly absurd claims here, specifically just to villainize people.

                    Highly recommend you look up criticisms of SFH zoning policy