US will ban Wall Street investors from buying single-family homes

And as if it was ordered, a news story[1] on exactly that this morning. Last year alone the average price for a rental unit went up 6.3%, and simultaneously a record number of apartments were sold. So very unlikely to come down.

[1]: https://www.nrk.no/norge/leieprissjokk_-nesten-20.000-kroner...

1. Politically, this issue is a winner and it's crazy that the Democratic Party has refused to bang the drum on this, basically because it potentially upsets corporate donors. They have instead ceded this poopulist political ground to the Republican Party. The Democratic Party does not want to win elections and this should never have been more obvious than the 2024 presidential election;

2. Hoarding housing is state-sanctioned violence. You need housing to live. Housing affordability is the number one factor in homelessness [1]. That then subjects people to violence and danger that we, as a society, are allowing to happen. There is no reason that the wealthiest country on Earth can't provide a roof over the head of every man, woman and child within our borders;

3. The private sector will never solve the housing crisis because solving the housing crisis involves devaluing, definancializing and decommodifying housing. Wealthy people and large corporations who own a lot of real estate won't on their devalue their holdings. Things like Ezra Klein's Abundance claptrap are simply putting a Democratic bow on Reagan era trickle down economics and deregulation. This requires state action. That means the state needs to build significant amounts of housing to provide to people to regulate the housing market. The poster child for this policy is Vienna, Austria;

4. Voters have fooled themselves into thinking that increasing house prices are good for them. They're not. They're bad in virtually every way. There are people who bought a house for $100k in 1990 where that house is now worth $2M. Are you $1.9M richer? No. Because if you sell it what happens? You have to buy another house. And if every other equivalent house costs $2M you still only own one housing unit's worth of wealth;

5. Increasing house prices are simply stealing from the next generation and suppressing wages. Why suppressing wages? Because if you're laden with debt, you'll be a complaint little worker bee. You need that paycheck to not be homeless. You are in effect a debt-slave, particularly combined with student and possibly medical debt; and

6. The next wave of antitrust action will involve the use of AI as a means for market collusion and manipulation. A great and relevant example is RealPage [2]. If all the landlords use the same software and that software is designed to algorithmically increase rents, then that's market collusion. Honestly, dynamic pricing in general needs to be banned.

[1]: https://www.pew.org/en/research-and-analysis/articles/2023/0...

[2]: https://www.justice.gov/archives/opa/pr/justice-department-s...

China did "over" solve it by building loads of houses, so everyone's house value just crippled down like crazy.

If buying a house delivers 5–10× the ROI of the S&P 500, that’s not “smart investing” then there is a huge problem to be addressed ... (preferably by building more)

That's true of most of the Western world, unfortunately.

> a primary mechanism for wealth creation

I don't disagree but this needs to be correctly framed publicly as simply stealing from the next generation because that's what it is.

> Tax incentives

For anyone unfamiliar, Australia has a system called negative gearing. In the mid-2010s the then Labor party proposed scrapping it and lost the election. It really is the third rail of Australian politics. This is a shame because it needs to be scrapped.

It allows you to deduct losses on property against your ordinary income. So if you have a mortgage payment of $3000/month but only earn $2000/month in rent then your income is reduced by $1000/month. That's waht drives a lot of small investors to essentially speculate on property.

The US actually has a better system than this, which is that if you earn over a certain income level, you cannot deduct passive losses (like the above situation) against ordinary income. That would be better but still not enough.

So many upper income Australians essentially end up just hoarding property. They'll call it "investment properties" but really it's speculation. Historically, property was treated as an income producing asset, not a speculative capitals gains asset.

Oh and capital gains on non-primary residences should be like 70%. If you want to stop rampant speculation, that's how you do it.

> Tangent: how should we approach changing the housing mix in a city like Perth where 95% of new homes are large four-bedroom detached houses?

Perth like every Australian city is an urban planning disaster. It's just endless sprawl up and down the coast and inland to the hills. A generation or two ago it was a quarter acre block. Those days are long gone unless you're wealthy or you're 50km+ from the city (less if you go east).

So it's a car-dependent soulless hellhole. I say this as someone who knows Perth well. So even now if you build higher-density housing along transit routes, as they're doing, you still need a car (or 4) to go anywhere but work. And high land values make infrastructure projects incredibly expensive. Like imagine trying to build the Perth to Mandurah train line now instead of 30+ years ago when it was actually built. I guess they could utilize the Freeway they already had but what about the fremantle or Midland lines?

What you should do as you build out is reserve space for future infrastructure. AFAIK no Australian city, especially Perth, has never done. So Guildford Road or Great Eastern Highway should really be a freeway. Same with Albany Highway.

In 2024 Western Australia did really relax ADU (granny flat) development rules. The rules used to be really strict. Now you can basically always build one with normal building approval if you meet the minimum lot size requirements (generally 450sqm, sometimes as low as 350sqm, depending on the council).

Single family home zoning is really cancer to any decently sized city.

Anyway, the truth is, I'm not sure it can be fixed now. Big infrastructure projects are prohibitively expensive even with tools like eminent domain. We need to look at why it's so expensive to build apartments.

I think the only thing you can do now is for the government to become a significant suplier of housing to increase supply and stabilize rents.