I don’t really understand the market failure happening with such a long term housing shortage. By definition there is excess demand for housing right? So it should make economic sense to build more.
When I ask people always say conspiratorial stuff like “they” maximize profit by keeping housing low but even if there was a conspiracy there should be individuals who are not part of the conspiracy who would profit from going against it.
So it has to be either regulatory or funding based, I think. But I don’t know of any recent regulations that would cause this nationwide, “zoning” is probably part of it but there was no one timeline for that, it’s super local. And funding has been free for a decade and a half and homebuilding has still been slow.
Look to other forms of scalping to see how this works at a smaller scale. Scalping isn’t done through conspiracy, but a bunch of small, self-interested actors reducing supply in the market to inflate prices.
On top of that there are actors that are more coordinated and not as small, like corporations that own hundreds of thousands of homes. These corporations can just coordinate internally (not conspiracy, business) and reduce supply to increase their own returns.
This works for smaller actors too though. As long as the number of houses owned is more than a couple, then it’s likely they’d profit from temporarily restricting supply, and locking in renters to leases for more money. They’ll try to slowly sell off their supply without “flooding” the market and hurting the value of their own supply, just like other scalpers.
Scalping isn’t the comparison though because 1, scalpers don’t reduce the total supply. Any scalper who refuses to sell a portion of their tickets, loses all the money they used to buy them, and the opportunity cost of selling them, and there’s no way it’s worth it for any given individual. The supply/demand differential they make money from is that the venues only have a certain number of seats.
Which brings me to 2, theres no equivalent of homebuilders in the scalper world. If some scalpers could generate new seats at the venue for roughly the cost they pay the venue for tickets, supply and demand would figure themselves out pretty quick.
Hard disagree on the last part there. For one, homebuilders again. Their business model is to build the houses and then sell them, if they joined the “sell houses slower” cartel it just means they earn less profit.
But really the whole idea you’re laying out, the math only works if everyone works together, so it becomes a prisoners dilemma. Because say there’s 20 companies slowing down house sales to maximize profit, there can always be a 21st who gets the benefit of the restricted supply from the 20, but they just sell as much as possible and become the most profitable of all. Maybe it’s in everyone’s interest to restrict supply, but it’s in any given company’s interest to sell as much as possible. So it has to be an as of yet unknown cartel of every home seller in the country and there’s just too many of them to have both: Either it includes everyone or it’s secret.
Its wild how the entire country is experiencing a housing shortage
Which entire country? This is lemmy.world
Given your comment “the entire country” has no context of what country you’re taking about I can safely assume that arrogance as an American trait.
USAs population has more than doubled since WW2, supply and demand has created this problem, not individual humans deciding to be landlords.
I don’t really understand the market failure happening with such a long term housing shortage. By definition there is excess demand for housing right? So it should make economic sense to build more.
When I ask people always say conspiratorial stuff like “they” maximize profit by keeping housing low but even if there was a conspiracy there should be individuals who are not part of the conspiracy who would profit from going against it.
So it has to be either regulatory or funding based, I think. But I don’t know of any recent regulations that would cause this nationwide, “zoning” is probably part of it but there was no one timeline for that, it’s super local. And funding has been free for a decade and a half and homebuilding has still been slow.
I don’t get it.
Look to other forms of scalping to see how this works at a smaller scale. Scalping isn’t done through conspiracy, but a bunch of small, self-interested actors reducing supply in the market to inflate prices.
On top of that there are actors that are more coordinated and not as small, like corporations that own hundreds of thousands of homes. These corporations can just coordinate internally (not conspiracy, business) and reduce supply to increase their own returns.
This works for smaller actors too though. As long as the number of houses owned is more than a couple, then it’s likely they’d profit from temporarily restricting supply, and locking in renters to leases for more money. They’ll try to slowly sell off their supply without “flooding” the market and hurting the value of their own supply, just like other scalpers.
Scalping isn’t the comparison though because 1, scalpers don’t reduce the total supply. Any scalper who refuses to sell a portion of their tickets, loses all the money they used to buy them, and the opportunity cost of selling them, and there’s no way it’s worth it for any given individual. The supply/demand differential they make money from is that the venues only have a certain number of seats.
Which brings me to 2, theres no equivalent of homebuilders in the scalper world. If some scalpers could generate new seats at the venue for roughly the cost they pay the venue for tickets, supply and demand would figure themselves out pretty quick.
Hard disagree on the last part there. For one, homebuilders again. Their business model is to build the houses and then sell them, if they joined the “sell houses slower” cartel it just means they earn less profit.
But really the whole idea you’re laying out, the math only works if everyone works together, so it becomes a prisoners dilemma. Because say there’s 20 companies slowing down house sales to maximize profit, there can always be a 21st who gets the benefit of the restricted supply from the 20, but they just sell as much as possible and become the most profitable of all. Maybe it’s in everyone’s interest to restrict supply, but it’s in any given company’s interest to sell as much as possible. So it has to be an as of yet unknown cartel of every home seller in the country and there’s just too many of them to have both: Either it includes everyone or it’s secret.