He definitely got the “I don’t know” part right.
He definitely got the “I don’t know” part right.
You’re right, I had not considered the impact of the gorram apple hoarders. As an individual, I tend to look at things from an individual perspective.
Check out all of the ways government is subsidizing construction of units.
Why are they subsidizing housing? To prop up prices? Supply shortage? Probably both.
They can’t suddenly sell for less
If you mean “Less than it cost to build”, then yes, that’s true. They could certainly lower their margins, if they needed to, but there is no incentive for them to do so.
I don’t think housing prices,in general, are tightly coupled to building costs. The price tends to exceed the cost because a large part of a house’s value is subjective (location, proximity to desirables, price of other homes in the area etc.).
Government doesn’t want all these companies to fail, so they prop up the prices.
How do they prop up prices? A quick google search indicates that one way the govt. props up prices is by buying mortgage backed securities. They do this to stimulate demand:
(https://betterdwelling.com/canada-is-spending-75-of-its-forecast-deficit-to-prop-up-mortgages/)
The GoC policy will only stimulate mortgage demand and therefore apply positive pressure to inflate home prices.
Ultimately, a house is worth the most that an individual is willing to pay for it, and I can’t really see how that is not a function of supply and demand.
If people did not have to compete for housing from the same, limited pool of houses, wouldn’t the price of houses necessarily drop in response?
This thing is far too complicated for supply and demand economics.
I agree it is more complicated than “just” supply and demand, but I think it is safe to say that supply and demand play a not insignificant role.
Scarcity and competition for a scarce resource increase the value of that resource.
If we needed apples to live, and you had 1000 people wanting to buy your apples, and only had 10 of them, you can basically set the price to the highest amount 10 of those 1000 people are willing to pay. If you suddenly have 1000 apples, their value is eventually going to go down to the lowest price one of those 1000 want to pay.
This sounds like the opposite of a correction. If no one is building housing, the existing supply will become more valuable.
Why do they put any stock into what a psychologist has to say about climate science? He’s not remotely qualified to speak on the topic.