>Even if the low income families can't buy the new units, the people who do vacate their old units and there is less demand for the unit those low income families currently occupy.
You're making the mistake I mentioned, confusing demand for actual housing with demand for real estate. It will indeed marginally depress demand for housing, but capital can step in and absorb the marginal supply, for rental or other purposes. As long as there is more demand from capital than supply, real estate prices will stay high even if actual demand for low income housing remains stable or even declines.
>This is like banning supermarkets buying from farmers.
Farmers are selling perishable goods, not income-producing assets. As long as real estate is income-producing, it will be a viable investment, and as the old saying goes, they aren't making more of it. So whatever the dynamics of the actual housing market are, the underlying dynamics of the real estate market will tilt the table toward capital. And the sharper the income gradient is in society, the worse the problem will become.
I ask this not to argue, but in the hopes that I might learn something:
> As long as there is more demand from capital than supply, real estate prices will stay high even if actual demand for low-income housing remains stable or even declines.
Wouldn't this be true of just about any good? I agree that an unregulated increase in supply is likely to result in increase of properties purchased for use as a rental property, but:
(1) The more property there is available for sale, the less I'm willing to pay for any given property. I'm not sure why real estate would be different.
(2) If your argument is that such property will be purchased predominantly by landlords, I don't see how that counteracts the economics of supply and demand. Why wouldn't this still drive down rent? Unless you're suggesting collusion by landlords?
> and as the old saying goes, they aren't making more of it.
I feel like I must be misunderstanding you, because this seems to contradict your argument? I'm suggesting the solution is more supply -- literally making more of it. What am I missing?
Again, not trying to be argumentative. I feel like you're seeing or understanding something that I don't, and I'd appreciate being able to understand your perspective here.
I think the gist of it is that real estate prices are driven by the average, while homelessness is driven by the median. In a static system where everyone's level of wealth is frozen, then increasing housing supply would trickle down as you suggest. In reality, average wealth is increasing as fast or faster than housing supply can be added. If new wealth were more or less evenly distributed, this wouldn't be a big problem ("a rising tide lifts all boats!"), because the median wealth would move roughly in step with the average. But it isn't. Over time, a steadily increasing fraction of new wealth is captured by people who are already wealthy, meaning that an increasing fraction of homes are owned by the wealthiest X% of the people, and an increasingly large proportion of the population must rent. And because, unlike most consumer goods, housing is not an option (ie, the market is inelastic), rental prices are constantly driven toward the limits of tolerance. So we see a greater and greater share of most peoples' income going toward housing, with the accompanying economic and social stress that creates, including homelessness.
You're making the mistake I mentioned, confusing demand for actual housing with demand for real estate. It will indeed marginally depress demand for housing, but capital can step in and absorb the marginal supply, for rental or other purposes. As long as there is more demand from capital than supply, real estate prices will stay high even if actual demand for low income housing remains stable or even declines.
>This is like banning supermarkets buying from farmers.
Farmers are selling perishable goods, not income-producing assets. As long as real estate is income-producing, it will be a viable investment, and as the old saying goes, they aren't making more of it. So whatever the dynamics of the actual housing market are, the underlying dynamics of the real estate market will tilt the table toward capital. And the sharper the income gradient is in society, the worse the problem will become.