undefined | Better HN

0 pointsAnthonyMouse2y ago0 comments

Demand isn't just about need, it's also about quantity. If there are a million households who need a housing unit, need it so they're not on the street, but there are five million housing units in the area, housing will still be very cheap. Because 80% of the units will be empty even after everybody has one, and people are not going to pay anywhere near as much for a second one because they don't need it as much.

Whereas if there are a million households who need a housing unit and there are only 750,000 housing units, you've got a big problem. For which the solution is to build more units.

0 comments

3 comments · 2 top-level

bluefirebrand2y ago· 1 in thread

> If there are a million households who need a housing unit, need it so they're not on the street, but there are five million housing units in the area, housing will still be very cheap

This is only true if enough of those five million housing units are competing to get filled

If a single person or company owns all five million housing units, they can set the exact same, arbitrarily high price for all of those houses. Then it's a problem for the people who need houses: take it or leave it

AnthonyMouseOP2y ago

But your scenario is rarely if ever the case. Especially when referring to new housing, because landlords and construction companies are typically different entities, so when the new construction is complete it goes for sale into the market and anybody has the opportunity to buy it.

Meanwhile buying up an unbounded amount of newly constructed housing only to leave it idle would be extremely unprofitable, because they would have to be paying the construction companies the existing market rate (i.e. the monopoly price) to keep someone else from getting it, but then couldn't rent it out and recover any of the money because that would increase supply and lower prices (or, to put it another way, no further renters can afford the monopoly price so their choice is a lower price or an empty unit).

stefan_2y ago

Or, you know, if the latter isn't happening, you find some way of allocating them that isn't an absolute utter unproductive drain on the economy. There are lots of finite things in life for which there exist many different allocation strategies that have nothing to do with people with a GED screaming "supply and demand" and "socialism".

j / k navigate · click thread line to collapse