Ca you imagine people's reactions if gas prices dropped 10%? Or if food prices fell 10%? Or car/university prices fell 10%? Society functions best when it actively tries to minimize cost of living. Unfortunately we have created an political-economic system where half the population is incentivized to push housing costs as high as possible, or at least prevent it from falling, because it will enhance their personal wealth.
I hope for my childrens' sakes that there will be a massive boom in medium/high density housing construction over the next few decades, that brings house prices and rents to all-time lows. But this will never happen because homeowner-voters will never allow their personal nest egg to be threatened.
The great irony is that high density housing dramatically increases the value of the real estate, which is the actual investment. A single family home is in fact a wealth sink - you're constantly maintaining it and even with great effort it will probably be an undesirable building to live in within a few decades. While someone may pay to live in the building you currently occupy, at some point someone is going to buy the land to do something else with it. Like imagine if you owned an acre of downtown Manhattan with only a ranch style house on it - the skyscrapers around you are not going to lower your property value.
There is concern that lower rent places will allow lower income individuals to reside in these communities, and that will lead to undesirable conditions like crime, despite the fact that if rent were lower than a person of a given income level would have more cash in pocket and thus be less inclined to things like crime, and nearby affordable housing means local businesses could find people to work for lower wages, lowering the cost of living for everybody.
If people invested in making their communities desirable places to live, genuinely increasing the value of their real estate, rather than relying on scarcity to increase the value of their house, everyone would be better off.
Its counter intuitive at first glance, but in my area (west coast) it is actually the renter-friendly voters who scare off development. Too many rental protections lead to developers opting for development in red-er pastures.
I'm banking on the middle-ground: commercial real-estate being re-built/re-zoned into medium and high density housing
It would appease pretty much everyone: struggling downtowns with existing infrastructure can start to revitalize, former commercial landlords start seeing revenue again, and NIMBYs dont have to worry about new neighbors
It doesn't work that way because if house prices dropped 10% people would just buy bigger/nicer houses. Houses today are so luxurious today, granite countertops, ducted A/C, beautiful wood floors its just become normal.
The fact that people still associate stone kitchen counters with "luxurious" is a holdover from 50 years ago when homes were actually affordable. When houses cost $25k, a $50 stone was a substantial expense. Now it doesn't amount to anything. Nothing about the modern American home market is in any way influenced by the marginal cost of slightly nicer materials.
Gas prices were unusually low during the 1990's and that's when the SUV exploded in popularity. Look at an inflation-adjusted chart and you'll see a big dip between 1990 and the early 2000s.
I hope for my childrens' sakes that there will be a massive boom in medium/high density housing construction over the next few decades, that brings house prices and rents to all-time lows. But this will never happen because homeowner-voters will never allow their personal nest egg to be threatened.