I agree with you, that's a whole other problem. But housing like many goods is still subject to supply and demand. The investors buy the properties because they are actually good investments in situations where housing is in demand, and that's true in all the major cities where we're not building enough housing and appropriately sized housing. If we increase the supply, if we make smaller housing units so there are also affordable units for poorer renters. The investors will move on to more lucrative investments. They can only extract so much wealth from housing before people move for alternatives.
Everybody has a place to live. Housing isn't scarce. When housing is scarce, people are homeless or living in extremely tiny spaces. They are not. The problem is that people wouldn't be able to afford to own the places where they live.
Housing is only "scarce" in desirable places, and that's simply tautological. The sum of unfulfilled desires is the contrapositive of scarcity.
Housing is a market in which a very tiny percentage of goods are up for sale at any particular time, and the projected prices of those goods are heavily shared among a huge network of people who profit when the prices are high. The owners of those goods are often heavily leveraged, and can't afford to lower the price significantly, and the transaction and mortgage costs push them to raise the price to cover those costs at the next place they buy.
> They can only extract so much wealth from housing before people move for alternatives.
No such alternative, which is why the market is as lucrative to exploit as health care. Finding an "alternative" to health care is just to find another type of health care, and if you find an alternative to being housed, you've just found a new kind of house.
Which is why California needs to fix the policies that led to its housing shortage. There is no inherent reason for California to be so expensive, it is a deliberate policy choice driven by local governments.
> Which is why California needs to fix the policies that led to its housing shortage. There is no inherent reason for California to be so expensive, it is a deliberate policy choice driven by local governments.
There's a lot of truth in that, but it's also an oversimplification.
There is plenty of cheap land in California, here, have a quarter acre lot for $15K:
Of course it's cheap since nobody wants to live there. If everyone wants to live in San Francisco, it's going to be much more expensive. Building more helps but in the end there's only so much that can realistically be built in 50 square miles. Some people will always be left out so there will always be some unmet demand, so it'll never be dirt-cheap.
So yes policy obstruction is a thing, but there are also inherent reasons why popular places will never be cheap.
By this logic oil & gas will never run out because rising prices will incentivize new extraction technology and formerly too expensive reserves will come online. Or supply will dwindle and the price rationing system will ensure it goes to the most productive use and energy consumers will switch to cheaper substitutes.
I actually think this is what will happen to oil and gas. It will become less and less of a feature of our lives over the long run. We will have to find alternatives (hopeful!) or cut back (painful!)
