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I hear people saying "new housing is getting bought up as an investment vehicle, building more just helps the rich". Of course this is factually incorrect, but even more importantly, *in a world where enough housing gets built, housing is a depreciating asset, not an investment*.https://twitter.com/fchollet/status/1437566790565957632 …
When there is sufficiently supply, the price of a house / apartment goes down over time as it gets older (thus less attractive) and needs repairs. Eventually you have to tear it down and rebuild. Just like a factory. Or a car.
The price of housing only goes up because of artificial constraints that prevent supply from meeting demand. Housing works as an investment because we don't build fast enough / dense enough.
Artificial restrictions on housing development are a regressive tax on the poor and a gift to the rich, period. It's wealth transfer from renters to owners.
Imagine applying the "gentrification" narrative to any other asset, like cars. "Producing high-end cars is pricing the working class out of the market, they can't buy second-hand Toyotas anymore, we need to stop making high-end cars". It sounds insane.
You know what actually increases the cost of cars? That's right, the microchip shortage. Because it introduces constraints that reduce the rate of production of new supply. Guess what? Housing works the same, but NIMBYs are the microchip shortage.
Is there a good way to quantify this?
True that a house undergoes structural impairment and associated depreciation. However - the land and the nbd it sits on often appreciates in value - for so many reasons!
In the SF Bay area, it is not the house that holds value. It is the land. The reason land commands such value is because ppl want to live close to work, school, restaurants, hospitals, museums, etc. You can buy land for cheap in Idaho, Utah, or anywhere in flyover parts.
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