There's more housing than people. What's artificially limited is salaries. Higher salaries would mean massive benefits for workers and businesses. And catastrophe for non workers and real estate.
Higher salaries = everything which is produced by working becomes more expensive. That is not a problem for people who work for a living, because they have higher salaries and can afford it. But it is a problem for those who do not work, because they'll might have to sell their surplus real estate to afford cost of living.
But mainly it is that you would need to remove or decrease benefits for those who do not work in order to have room for higher salaries. That is not a problem for the unemployed because higher salaries means that the only people without work are those who do not want to work. But it is a big problem for those who do not want to work and for example would like to live off their real estate.
The gut reaction to higher salaries is that people would have more money to purchase real estate or pay rent, but I think the downwards effects for real estate are much stronger. And the evidence is that in every country which has seen a period of high salaries for workers, real estate has been cheap during that period for workers to buy.
> And the evidence is that in every country which has seen a period of high salaries for workers, real estate has been cheap during that period for workers to buy.
Real question. Do we have evidence of this from anything except developing economies pulling countries out of poverty? Like a first world country sort of thing. Because to me it seems like higher salaries comes first, and the property would lag for a bit while the market reaches its new level. Does that make sense?
I don’t think this is really true. It’s naively true if you just look at the number of homeless people vs the number of empty units, but misses:
1. That markets need some portion of empty units for fluidity.
2. That many people aren’t homeless, but living in situations where they would take more housing if it was available. (Living with roommates, ex-partners, family, etc.)
3. Many places simply don’t have enough housing for everyone who wants to live there. If they did, people would move from other places.
You know, this is actual economic orthodoxy. The government is supposed to stimulate the productive economy (the part that's not rent-seeking like landlords) by causing inflation by overpaying it's employees (and hire). Which then forces private employers to pay more and causes high inflation. Why? This haircuts existing debts, both public and private and is very bad for rent-seeking, and good for anyone productive (making money).
Of course, that also shows the problem: it haircuts pensions as well, since they are a large part of the rent seeking class.
There is not more housing than people in places where people have the highest income. The median income of Sunnyvale is twice that in the US, but the median house is 5x more expensive there.
But housing supply is not constrained. There is more housing than people.
You could build as much more housing as you want, but if those houses only become accessible to purchase for those who already own real estate instead of for those who work, then nothing will change.
There's more housing than people. What's artificially limited is salaries. Higher salaries would mean massive benefits for workers and businesses. And catastrophe for non workers and real estate.
I’m struggling to see how real estate would be catastrophically harmed by higher salaries. Could you help me see the line between those two points?
Naively, if I knew everyone’s salaries were about to double, I’d hope to be holding a fair amount of real estate going into that doubling.
Higher salaries = everything which is produced by working becomes more expensive. That is not a problem for people who work for a living, because they have higher salaries and can afford it. But it is a problem for those who do not work, because they'll might have to sell their surplus real estate to afford cost of living.
But mainly it is that you would need to remove or decrease benefits for those who do not work in order to have room for higher salaries. That is not a problem for the unemployed because higher salaries means that the only people without work are those who do not want to work. But it is a big problem for those who do not want to work and for example would like to live off their real estate.
The gut reaction to higher salaries is that people would have more money to purchase real estate or pay rent, but I think the downwards effects for real estate are much stronger. And the evidence is that in every country which has seen a period of high salaries for workers, real estate has been cheap during that period for workers to buy.
> And the evidence is that in every country which has seen a period of high salaries for workers, real estate has been cheap during that period for workers to buy.
Real question. Do we have evidence of this from anything except developing economies pulling countries out of poverty? Like a first world country sort of thing. Because to me it seems like higher salaries comes first, and the property would lag for a bit while the market reaches its new level. Does that make sense?
> There's more housing than people.
I don’t think this is really true. It’s naively true if you just look at the number of homeless people vs the number of empty units, but misses:
1. That markets need some portion of empty units for fluidity.
2. That many people aren’t homeless, but living in situations where they would take more housing if it was available. (Living with roommates, ex-partners, family, etc.)
3. Many places simply don’t have enough housing for everyone who wants to live there. If they did, people would move from other places.
You know, this is actual economic orthodoxy. The government is supposed to stimulate the productive economy (the part that's not rent-seeking like landlords) by causing inflation by overpaying it's employees (and hire). Which then forces private employers to pay more and causes high inflation. Why? This haircuts existing debts, both public and private and is very bad for rent-seeking, and good for anyone productive (making money).
Of course, that also shows the problem: it haircuts pensions as well, since they are a large part of the rent seeking class.
There is not more housing than people in places where people have the highest income. The median income of Sunnyvale is twice that in the US, but the median house is 5x more expensive there.
If housing supply is constrained, higher salaries simply mean people bid more on rentals and rents go higher.
The only answer is to build more housing and have a high property tax in unoccupied housing.
But housing supply is not constrained. There is more housing than people.
You could build as much more housing as you want, but if those houses only become accessible to purchase for those who already own real estate instead of for those who work, then nothing will change.