This isn't an unexpected result of political incentives: Property owners want housing prices to go up, so they want to limit supply. Builders want to make more money, and their two ways to do it are to build more housing or make more money per housing unit.
The thing that satisfies both of them is regulations that increase the cost of construction. The builders get to put the money in their pocket (bill for more hours on the same house) while raising the price and so discouraging more housing from being built (so the landlords get to keep collecting high rents).
Rental supply is an idiotic concept. You are increasing rental supply by diminishing owned housing supply. You're not doing anything for housing supply, which is the only thing that matters.
And no, pushing up the prices of rents don't incentivize building. Building rentals is meh compared to just buying existing housing supply. While house prices are increasing, so will rental prices commensurately, because renting and buying a house are not isolated and independent choices.
In reality, there is no increase in construction, because the increase in housing demand is no different from someone buying a house, and the increase in property costs that follows it doesn't change anything.
There is a profit incentive to increase housing prices for developers. Doing something to decrease prices will hurt their bottom line, so they just let the prices rise
The real world is dictated by supply and demand. When demand is high and supply is low, prices rise as competition pushes them up. The increase in housing prices is a huge incentive for developers to build new housing. And it also increases the capital necessary to build more housing. Obviously the political situation will need to allows for new housing. Otherwise prices will just continue to increase.
Housing price increases, at least in the US, are due to regulations..plain and simple. If you make it easier for houses to be built, the supply will out pace demand and the market will force these prices down.
Only people to blame for ballooning housing prices are the politicians who have purposefully implemented restrictive building codes to make sure housing goes as sky high as possible. The reason it is like that is because we are under the impression that if housing keeps increasing then home owners will be able to spend more.
The real issue here is the higher costs of housing caused by the politics of zoning that creates artificial scarcity in housing. In a healthy market, there would be increased construction to offset the increased demand caused by people with higher incomes.
Because demand outweighs supply that's what tends to happen. The more people get paid, the more housing prices increase to capture that.
If supply was able to grow to meet demand, then that would put downward pressure on prices, but it isn't allowed to grow, and everyone other than the lord of the land suffers.
Pardon my ignorance, but property owners have the most fixed supply possible - they're selling house space, it's literally nailed to the ground. To paraphrase the root comment, the prices are set by how much tenants are willing/able to pay. Higher property taxes mean investors take less profit from housing, which means it takes longer for them to save enough rent money to buy more properties to lease. And therefore less money with which to drive up the bidding war prices.
I am not a housing investor, but I see many misguided articles claiming housing investors are driving prices up.
The factors that primarily control pricing in the housing market are supply and demand.
In Seattle, London, Los Angeles and elsewhere demand has risen steadily but supply has not. This causes prices to increase sharply.
The solution is to increase the housing supply. If the government removes regulations preventing developers from building new houses and apartments, many more will be built and prices will drop.
Many young people prefer to live in inexpensive high density housing. I remember looking at renting an apartment without a kitchen (there was a big shared kitchen for the whole floor) and without its own bathroom in my early twenties. Monthly rental price on this is around $300 per month as compared to $1,600 for a single bedroom apartment. Why aren’t there more of these? Government regulation prevents them from being built.
Government permitting processes take years to go through and cost millions of dollars for big new apartment buildings or for residential developments. If we lighten / remove these regulations, housing supply will decrease dramatically.
If you don’t want housing investors bidding up housing prices, then allow the supply to continuously increase. This will continuously drive down prices and no investors will want to buy.
Most demand for houses is from people. Most price increases are due to a lack of supply that exceeds population growth. Most lack of supply is caused by it being illegal to build higher / more dense, and a variety of other rules and regulations.
Landlords are for the most part capitalizing on these broader market / regulatory trends.
Only building more housing will make housing cheaper.
It's remarkable how some cities will do literally anything but that, probably because they know it will work and they're controlled by property owners.
Because they're opposing the building of new cheap housing as it will decrease the value of their investment.
Additionally, artificially raising the price in this way will increase the amount of time for which the property is not occupied, but that's a relatively minor effect in comparison to the above.
The thing that satisfies both of them is regulations that increase the cost of construction. The builders get to put the money in their pocket (bill for more hours on the same house) while raising the price and so discouraging more housing from being built (so the landlords get to keep collecting high rents).
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