You're omitting a major component of the demand side: investors and speculators. If the market was just made up of the people who are looking to live in those homes, the market would be reasonable for those people. But we have a massive amount of investment funds looking for returns in an uncertain market, plus near zero interest rates for the near future. The number of investors who are buying houses they have no intention to live in is skyrocketing, either to rent out, to flip, or just to hold vacant in the hope values keep rising.

Investors and speculators don't live in houses, renters do. If there isn't renting demand, than it doesn't matter how much speculation there is, prices will fall. Blaming investors is directing the anger at the wrong place. Blame regulations and building restrictions that prevent housing supply being built where people want it.

Did you see the last part of parent post? Corporate speculators actually gain even more by taking the property off the market and letting the fallow property increase prices for the rest of their herd of properties.

Good point.

One way to look at this is that a house on a piece of property can be treated as a fungible product for two different markets: it can be an investment vehicle for investors, or a place to live for homeowners.

As its value to one of those markets increases, buyers on that side suck supply out of the other market. You can get a sense of how much this is happening by looking at the vacancy rate: higher vacancy rates implies that houses are worth relatively more to investors than homeowners.

The parent was talking about the rental market so I am talking about that. I agree your point applies to ownership.

The market for home ownership affects the market for renting. The boundaries between renters and owners are not fixed.

> one way to drive prices in your city down is to have some even that renders it undesirable (..., defund the police ...)

there are so many problems with your post but the assumption that defunding the police is necessarily going to cause prices to collapse is probably the most obviously biased one.

the idea that you should view housing as simply a matter of supply and demand and not consider any externalities is an abominable position. All people need shelter, it's not something that people opt into for the enjoyment of it alone. By the logic you have presented, the top 1% of people banding together and buying up all of the housing and squeezing everyone else is perfectly fine if it makes the numbers look nice, regardless of how it affects people's lives. The way you have framed the problem is inhumane.

Another way to make rent more affordable is to raise the tax rate on income generated from residential rentals to the point that people are not buying up all of the housing stock for the sake of investment alone. Income from residential rentals is taxed at the same rate as ordinary income, the kind you get from actually doing something. Why would anyone work if they can just own someone else's house instead?

You can't solve a housing shortage by charging landlords more taxes any more than you can solve a famine by charging farmers more taxes. If there aren't enough homes for everyone who wants to live in a city, then part of the solution has to be building more homes.

All people need shelter but people are not entitled to shelter in any place of their choosing. Your proposed solution will increase rent prices for people who can't afford to buy a house while pushing the housing prices down and making them more affordable to middle class. So essentially you are making house purchasing more affordable to middle class at the expense of the poor and investors.

> people are not entitled to shelter in any place of their choosing

I don't think that's a useful framing, because it's again putting the framing in terms of market dynamics in a vacuum. People don't pick where they're born, they don't pick who their parents are, and they don't pick the socioeconomic status that they're born into or have as children. The majority of people are born somewhere and cannot really afford to leave. For example, 72% of Americans live in or near the city where they were raised (https://www.northamerican.com/infographics/where-they-grew-u...). Most people don't have the agency to pick where they live based on price alone, because other non-market factors become comparatively larger when you have less money. If you can pick where you live based on price and how interesting it sounds, congratulations, that is privileged position. That's not to shame that position or anything, I'm just saying that the problem has to be viewed from the standpoint that most people aren't in that position. People are interdependent with their relatives, their friends, and their neighbors. Moving costs more than simply the price sticker of your new home minus the price sticker of your old home: the social costs are enormous. I think that a basic right of modern societies should be that people should not be priced out of their homes because of the whims of investors. So again, I think the idea that these things should be viewed through the lens of market dynamics alone is inhumane.

> Your proposed solution will increase rent prices for people who can't afford to buy a house while pushing the housing prices down and making them more affordable to middle class.

ok maybe. My point isn't that I have the perfect solution, my point is that there are far more levers to pull than what was being suggested, and that I do not want to live in a society that considers the problem by only looking at markets and pricing.

I hold the opposite view it should be purely viewed through market dynamics in terms of solutions to societal problems we are trying to solve. As soon as you try to come up with the solution that ignores them you immediately get 2nd order effects that might be directly undermining your original goals. If there is lack of housing any solution that does not meaningfully increase the supply of houses will fail. (I am an immigrant so have pretty decent grasp on sacrifices one makes to move to get access to better opportunities).

> Another way to make rent more affordable is to raise the tax rate on income generated from residential rentals to the point that people are not buying up all of the housing stock for the sake of investment alone.

Wouldn’t that just mean there would less rental opportunities because people wouldn’t rent out properties due to the increased tax burden?

Not really seeing how such a plan would work out since it would increase rents across the board from lack of supply and the higher taxes being passed along to renters.

sure, jack up property taxes instead of rental income taxes. The point is not the specific mechanic, the point is the desired outcome should be to reduce the number of residential properties purchased for investment and speculation. Zillow owning 7k houses doesn't actually do anything good for society; that's 7k houses that people aren't living in. People buying houses shouldn't be forced to compete with the search engine that they're using to buy houses.

> the idea that you should view housing as simply a matter of supply and demand and not consider any externalities is an abominable position

Comrade, I am speaking about "how it works" not "what would be really nice if..."

> Income from residential rentals is taxed at the same rate as ordinary income, the kind you get from actually doing something.

I can tell you have never owned an apartment or a house. The amount of money and time that goes into maintaining a property, managing risk of bad tenants, etc is really high. Not to mention property taxes which is likely something you've not heard about (or, at least you don't mention that in your post when talking about the tax burden.)

> I can tell you have never owned an apartment or a house.

I own my home and I pay property taxes, nice try though.

> Comrade, I am speaking about "how it works" not "what would be really nice if..."

faced with "the rent going up is a problem for working class people" you're instantly taking the side of investors and positioning it through this lens:

> I want to make sure people understand the dynamics.

the problem is not that people don't UnDeRsTaNd ThE dYnAmIcS, the problem is that the dynamics actively incentivize the creation of an investor and speculator class that owns a substantial portion of the housing stock and drives price up based on speculation and not based on any actual need to use the product. The supply is artificially held low by the investor and speculator class, my argument is that this is actively harmful and that the idea that the only way to raise supply is to build more houses is wrong, because your framing assumes a vacancy rate of zero, which no major city has.

They're specifically framing it as understanding the dynamics and answering the question "What will make rents go down? Only two things". There's very little sympathy or opinion in their post.

This is true, but it's important to consider also things which might artificially constrain supply, such as laws that make it harder to build housing or policy which incentivizes buying homes as an investment. A commonly repeated statistic, there are more empty homes than there are homeless persons in the US (around 17 million empty homes vs. around 600,000 homeless).

> COVID, defund the police, rising crime, suburbs more attractive with work from home, etc.

If there are any cities for which this is true, it’s cities like Seattle and Portland. Theoretically, they are not desirable to live in because of COVID, very high crime rates, not idea for working from home, huge public safety problems, etc.

But rent is higher than it has ever been.

San Francisco, Seattle and Portland are great cities. Austin is a great city. Don't believe what the conservative media wants you to believe about SF or what the liberal media wants to make you believe about Austin. Those cities are used as an "example" of what the democrats/republicans "will do with the country" if they win national elections. It's been going on for like 30 years and if like 1% of what they said was true San Francisco would now be a pile of shit and homeless people and to live in Austin you would need to have your own army to defend against the evil corporations that are coming for your land.

The main problem with all those cities is public transportation sucks.

I generally agree with your points!

Except the reason people in my social circle would never move to Austin isn’t about guns, it’s about women’s access to quality reproductive care, including abortion.

And I don’t think the democrats are exaggerating the extent to which that is not an option in Texas.

Yeah of course every once in a while you'll get something that's both real and both sucks about Austin and about San Francisco. That's how you get fuel to be able to exaggerate about everything else for a couple more years.

Yes, they are very not desirable, so much crime, poor working from home experience, poor public safety, everything else the MSM wants you to believe, etc. Definitely don't come here....

Or maybe your sources are more interested in selling fear than accuracy.

Exactly this. If these places are so terrible, at least according to uh, fox news, then why are they still so desirable?

One thing to remember is that sqft != quality of life. I know where to get tons of sqft, but I will be driving an hour every day to even find food. Quality of life... maybe if you never leave the house? ha!

Again, that's supply and demand. In NYC there was a demand hit when COVID started and there were great deals on rent. That's gone away because people have sort of come back.

My point is purely logical - the way to get rent down is to either increase supply or decrease demand. If crime, etc gets bad enough, demand will drop and rent with it. The argument you're making (implicitly) is that things haven't yet gotten bad enough for people to move out.