- cross-posted to:
- canada@lemmy.ca
- cross-posted to:
- canada@lemmy.ca
the housing crisis has been created by banking practices that have directed excessive amounts of credit into the property market, and especially residential mortgages. As a result, buyers can bid prices up to ever-higher levels, resulting in a market where people must pay more for the same type of housing. Hence financialization can be defined as an inflationary tendency in the housing market that is induced jointly by banks’ desire to expand mortgage lending and buyers’ confidence that the value of their properties will rise.
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However, the image of a bubble bursting and prices returning to a more rational “equilibrium” level does not seem to apply to the housing market. Because housing is a necessity, people are willing to pay high prices for it. Bidding wars can therefore persist even when relative supply grows, so long as credit markets enable them.
Housing is not fungible. It doesn’t matter how much supply there is in the middle of nowhere; lack of supply in the places people actually want to live is a shortage.
Also, it has fuck-all to do with financialization and everything to do with restrictive zoning laws that enshrine single-family. Y’all are literally prohibiting building more density; WTF did you think was gonna happen?!
THANK YOU!!!
2020 had that effect, where work from home spurred people to move to some of the extremely low cost areas but that just meant that the absolute cheap houses under 80k were all bought up and 100k is the floor. But that was a one time adjustment.
It def is both financialization and zoning. Restrictive zoning increases the value of housing hence line goes up.
Rezoning is framed as increasing supply and affordablity, instead of decreasing values of existing homes. When both will happen.
The irony is that decreasing the value of homes really is the inevitability. Because rezoning encourages redevelopment, that redevelopment generally includes more dense and theoretically more affordable housing types. But developers still want to make money, so they are built to maximize profit, not affordability. So it suggests that if they sell, other houses have less demand, and demand will fall. But that hasn’t been borne out.
The difference is that financialization is a symptom of the problem, not the cause of it. It is enabled by the imbalance between supply and demand caused by the zoning laws restricting the supply.
“Increasing affordability” and “decreasing value” are mathematically equivalent statements, so yeah. Obviously.
(In fact, that’s why the problem is so hard to solve: NIMBY homeowners will claim to be all for “housing affordability” in theory, but in reality they absolutely hate it because they benefit from prices being high. Zoning that restricts density is a symptom of society being held hostage by the already-privileged, demanding ever more subsidies for themselves)
Financialization occurs irrespective of supply and demand by making more credit available. It’s literally injecting money into that specific market. Once people see prices rising, the rising prices become part of the product - people buy as much housing as they can as an investment vehicle. It’s like the effect of people buying a stock because it goes up. Everyone I know has either bought additional property as investment or wanted to but couldn’t afford it.
What is the reason, besides finacialization, that restricting supply makes sense?
Zoning laws are made by people elected by those who financially benefit from stricter zoning laws.
You literally say this in your parentheses statement.
Stricter zoning preferences come after one has a financial stake in housing.
Financialization is the root cause.
It sounds good to voters. Zoning is basically a promise to keep the neighborhood free of things you don’t personally care about under the guise of thoughtfulness. Current owners like that, and it’s too abstract for most of the people who lose from it to care about.
Same reason they scream bloody murder when it goes away. Calgary’s zoning just got forced back in.