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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]You can see this with housing. Tearing down single-family homes and replacing them with luxury condos is reducing the available stock of homes for people with children. It's basically saying we cater to childless adults. [/quote]

You mean the popups, which typically involved a 3 BR TH going to two or three 2 BR condos?

[b]Well, yeah - if we built more midrise/hirise condos, enough supply to lower the price for condos, there would be less incentive to do those kinds of flips.  They would still become luxury though - old unrenovated 3BR houses are going to become renovated luxury 3BR houses. Only real way to make housing for families affordable close to a desired central city is to get (even UMC) families used to living in condos/apts, as they do in NYC[/b]. [/quote]

I know this is the super trendy arguments among lefties -- that anything that increases supply is good, even if it's luxury condos for the rich. I find it so, so ironic, because this is basically a form of trickle-down economics. It's so funny that people on the left side of the political spectrum have found a form of trickle-down economics they can get behind. Paul Ryan would be very proud. [/quote]

The real issue is the Federal Reserve. By holding interest rates so low, more people can get huge mortgages. More people able to get more huge mortgages means more people bidding on houses, which drives prices up. [b]When the Powell starts really raising rates, the size of the mortgages people can get will crash. That will mean fewer people bidding on houses, and prices will fall. [/b]Increasing the supply of homes might eventually affect prices but probably not until decades from now. [/quote]

Except they started raising the rates in 2016. All that did was send people in a buying frenzy and bidding war.

Real estate in this area doesn't work the way you think.[/quote]

This makes no sense. Interest rates have been extremely low since the 2008 financial crisis. Yes, they've come up a bit but they're still at 2.5 percent and Powell is getting ready to cut them again. The Federal Reserve is why housing prices go up so fast. This is not disputed. It's a deliberate byproduct of Fed policy -- they've said explicitly that this is what they are doing.

When interest rates go back up to normal levels -- and it is inevitable -- everyone is going to be in for a shock. Because sellers suddenly won't be able to get anything near what they thought their house was worth and buyers won't be able to afford nearly as much as they thought they could. The result is housing prices are going to go way down. Even in Washington D.C. This has already been happening, even with interest rates going from zero to 2.5 percent. Ask a realtor -- they see this firsthand.

It is very weird that people emphasize the importance of the supply of housing, and downplay the importance of interest rates. That's exactly backwards.  Yes, the supply matters but only over many decades. If you want to change housing prices, increasing the supply is an extremely slow way to do it. [/quote]

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