Though if you want to reduce the prices of housing quickly, I don't think anything could beat rent control plus an aggressive use of eminent domain to build lots of public housing quickly. Even though public housing was done extremely poorly in the US and earned a very bad reputation, other countries have done it much more successfully.

A market solution would naturally take far more time (at a minimum, there'd be no reduction in prices until new development project finish and their supply hits the market), and the equilibrium price may still end up being lower but still unaffordable to too many people.

> How?

If you keep demand constant and increase supply, you will decrease price. This is one of the most basic tenants of microeconomics.

If that's too abstract, just imagine you're a landlord in SF who's used to increasing your rent by 10% per year (no idea what the actual number is) because there are 1% vacancies in the city. Now imagine that all of a sudden more housing came on line so that there are now 20% vacancies in the city. You probably wouldn't be able to increase your price and may have to drop it.

Now imagine that the number of bedrooms in SF increased by a factor of 10 overnight. The price of real estate would crater.

In the long term, the price of real estate will go up with density. All you have to do is look at places like Manhattan, Tokyo, Hong Kong, etc. This is because cities tend to draw in new citizens from the surrounding area until it is too expensive or too uncomfortable to live there. However, it takes time for those people to move to the city and fill vacancies.

There really aren't.

The upward pressure caused by the need to keep property values increasing will always, in the long run, outweigh any other policy that you can use to attempt to reign in cost-of-living. You can play tricks to delay the effects or slow them down, but adding drag resistance doesn't stop a falling leaf from trending downwards.

Mathematically, you cannot lower cost-of-living while also insisting that the price of the single largest living cost (housing) keep increasing.

The only alternative is to lower the price of housing, but you can't do that without lowering real estate values for existing landed property owners, so they fight that tooth and nail, in nearly every locality across the board.

Nah. Housing rises in value even if you don't touch it. Demand is rising and supply isn't. The solution is to make it easier to build more.

More houses attract more people which increases housing cost.

.. and fewer will be speculated on, driving up the underlying price, which is then translated into rent.

this is my problem with simple smithian models of real estate - they ignore the wider capital market impacts.

not a fan of rent control, but also not a fan of fund fueled real estate bubbles, and both influence the cost of rent.

> I'm curious what makes you think this.

> Suppose you built twice as many housing units as you had residents. Rents wouldn't decrease? Why not?

It seems entirely logical that rents should decrease.

Not the OP but I do always question this, despite sounding logical. Why? Because it has never worked that way in practice. Can you think of a city that built so much housing that rents became cheap (relative to local income)?

It's easy to say "built twice as many housing units as you had residents" and I agree if you could do that overnight, rents would free-fall. But in practice it would take years to build so much housing. Meanwhile, more and more people and jobs are moving in, attracted by all that new housing. The area becomes ever more popular and more expensive. So you end up with a city that is more vibrant, with a lot more people and a lot more jobs and economic activity. All good things, but rents don't go down, given all this success rents go up.

Really? Maybe I'm being overly simplistic, but surely building enough dwellings to exceed the immediate demand would lead to prices dropping?

Could you point towards some links to learn more about this?

The very opposite. The market optimizes for maximum profitability, not for maximum savings for renters or best quality of life.

There's a reason why governments have been building cheap housing across the last 100 years in most developed countries.

After reading many internet conversations on property, the idea that supply drives down prices in property is far from an accepted viewpoint.

Hum. No. People don't want to spend a lot. But the whole system is built so owners can extract rent either from rentals or from buyers to which banks will lend enough money to meet the seller's price.

Can you go into this? Sort of sounds like more money chasing a static supply, which is a situation where I wouldn't expect a decrease.

black markets spring up to serve demand when there's law and regulation that tries to prohibit such demand. I don't see how making the real estate market this way is gonna get it better.

The only way to make prices drop is to increase supply. trying to tax a fringe group, or to penalize investors etc, is not going to do well at all. And doing so will also dry up investment for growing supply.

> help alleviate some acute symptoms.

A short term symptom abatement, if it even does abate anything, is not going to make any difference tbh. Concentrate on solving the fundamental issue - lack of supply due to various interest groups resisting supply growth.

... for a given amount of money. However, money is easier to create than houses.

That doesn't work either, though it may slow the rate of price growth.

If you want to reduce the price of housing, tank the local economy. It's the only thing that works. Supply side policy is neutralized by its own effect on accelerating/decelerating economic growth, e.g., the attack you suggest doesn't work because reducing the growth of the cost of housing in the short-term accelerates local economic growth which creates upward demand-side pressure on housing, and eventually there are limits to supply in any geographical region (and even moreso in any commute time radius, since density shrinks the radius for any given time.)

If you want to reduce the ratio between median wages and the cost of housing (which is probably more important than nominal or even real housing prices), attack the distribution of income.

That's what makes it one of the weakest. The housing market does not follow a standard supply-demand curve for a number of reasons.

> Rent control has never been good anywhere.

Citation needed. Rent control has helped a lot of people find stability in a time of need, enabling less trauma, stress and improving chances of class mobility.

> In fact, it decreases supply by not shifting prices higher to induce more production.

Is this a real effect that you can measure in the real world? Has this ever happened in reality before? Or is this a theoretical concept? One that you assume plays out under ideal circumstances and that I assume are never met in real life?

If you want to lower house prices, easier to just tax houses/properties more.

Care to explain your logic around this statement?

I think that is the point. The market doesn't make sense already for people who actually use the homes because of the investors. If there were property policies that targeted investors and forced their money elsewhere, prices would drop dramatically, making housing affordable again.