What If We Stopped Considering Housing an Investment?
Homeownership is considered a basic component of the American Dream, but shelter is also a basic necessity. "Rising milk prices are regarded as a household tragedy for some, and spiking gas prices stoke national outrage. But whenever home prices go up, it's 'a recovery,' even though that recovery also means millions of people can no longer afford to buy."
If we didn't consider homes an investment, Conor Dougherty writes, "People might expect home prices to go down instead of up. Homebuilders would probably spend more time talking about technology and design than financing options. Politicians might start talking about their plans to lower home prices further, as they often do with fuel prices."
The piece draws from several studies, including one that finds "a standard American home should cost around $200,000, a figure that includes the cost of construction, what land would cost in a lightly regulated market, and a modest profit for developers." Another quotes the economic loss from local land use regulations at $1.5 trillion.
It may be a pipe dream, but a nationwide "rethink" around housing might also mean an end to all these bubbles. "Housing is particularly prone to bubbles because, in contrast with other products, we seem to want it more when it is expensive and less when it is cheap."