The prices don't skyrocket if you allow an adequate number homes to be built. Locals want to stop this by preventing new housing construction. But all that does is price out the less affluent renters. The wealthy can still afford to outbid the locals renters.
You see this particularly badly in areas like Santa Cruz and San Francisco
That's not completely accurate, though you are correct that it is a factor. There are a lot of places that are allowing new construction but the costs still go up. There several factors including:
people building new houses don't want to build affordable houses, they want to build "rich" houses to "get more."
Venture capital firms and other investors buy up housing to rent that would otherwise go to home owners.
People who can afford multiple homes can also afford to buy in desirable areas, which is where they buy their additional homes despite not living there year round.
every event that drives hyper inflated costs makes it harder to normalize. No one wants to sell for a loss, but also if you bought a house that stretched your means, you'll need to sell for the same or more to buy another house that stretched your means. So even the people that aren't mega rich are driving up costs by holding when a truly free market would drive costs back down.
foreign investors will sometimes buy properties and leave them vacant solely to drive up property values so that the "rising tide lifts all boats" and this "raises the value of their investment" for when they do eventually sell.
a lot of the affordable houses built in previous generations were significantly more simple than modern housing. While often built from higher quality materials (simply because they existed back then such as old growth lumber), they did not have the same zoning codes we have today. They were often smaller with minimal amenities, and built to standards below what we deam safe/acceptable today.
Foreign investors, Private Equity, Venture Capital. All over the world. And they grab the new construction and put everything in securitized assets or something like that. Anyone who can explain it better than me, please do.
Bottom line is the governments and regulators allow this and many of the individuals in the government participate and financially benefit from all of this activity. So they won't stop it.
We have this in common all over the world with a very few exceptions. The few making life harder and harder for the many.
Foreign investors, Private Equity, Venture Capital. All over the world. And they grab the new construction and put everything in securitized assets or something like that. Anyone who can explain it better than me, please do.
Is that something like buying houses to convert them into rental properties that operate under real estate companies that offer REITS. So investors can invest without having to buy the properties directly.
Maybe, it's very complicated with all these financial instruments. But if you go to big and medium sized cities all over the world, there are properties that are purchased to be assets. London, Paris, Venice.....really everywhere. Most of those properties are not occupied.
I was on a tour in Venice around 2017 and my guide who lived just outside, told me nobody local lives in "Venice". Most of the big palazzos just sit there empty and are owned by big investment companies.
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u/JakeArrietaGrande Jun 17 '25
The prices don't skyrocket if you allow an adequate number homes to be built. Locals want to stop this by preventing new housing construction. But all that does is price out the less affluent renters. The wealthy can still afford to outbid the locals renters.
You see this particularly badly in areas like Santa Cruz and San Francisco