> I'm not speculating at all. The article has the data to back the facts : house prices went down in Berlin.
but supply has dropped as well. Freezing food prices would also drop food prices, but won't stop bread lines.
>Yes, homes can go up on speculation alone, but this is a bubble that will pop. In North America, rising rents act as a backstop that prevent the bubble from popping, because of guaranteed rental incomes that protect you.
Not exactly. Price-to-rent ratios are above 30 in major north american cities, reaching as high as 50 in SF. While future cashflows might provide some backstop in terms of your investment, that's really not much of a consolation when you can be doubling your money roughly every 20 years with stocks.
>In the real world, free markets lead to rent increasing right up until the level where too many people are in poverty due to high rent. That's because the natural increase in rent is simply too high to be counterbalanced by supply.
>The only solution is to make real estate a barely profitable or depreciating asset. This is done here by aggressive rent control. As renting stops being so affordable, apartments are sold, homeownership increases, and renting becomes something you do to prevent depreciation, not to make profit.
I'm not sure how rent control fixes this. If you have 1M families but only 100,000 plots of land, they're going bid up the price until enough people can't afford it. This dynamic is in play regardless of whether there are landlords or not.
Nowhere does it say that supply has dropped. If renting is less profitable, then supply of houses to be sold will actually go up.
The ability to rent is not the primary driver of speculation. But it drastically lowers downside risk, which gives less incentive for anyone to pop the bubble.
>I'm not sure how rent control fixes this. If you have 1M families but only 100,000 plots of land, they're going bid up the price until enough people can't afford it. This dynamic is in play regardless of whether there are landlords or not.
"If renting is less profitable, then supply of houses to be sold will actually go up."
You wrongly assume that the landlord gets to make this choice. In this situation, the landlord does not - the tenant does. If renting is made more attractive by rent control, then fewer renters move out and supply is thus lessened.
> when you can be doubling your money roughly every 20 years with stocks.
With housing, a poorly-capitalised speculator can get a mortgage to buy property, and pay it off using rental income, with a deposit of maybe 15-20% of the value of the property. This lets them capture the price increase on a multiple of their deposit.
It is much harder to do something similar with the stock market and loans. Amount loaned would be lower and interest rates higher.
but supply has dropped as well. Freezing food prices would also drop food prices, but won't stop bread lines.
>Yes, homes can go up on speculation alone, but this is a bubble that will pop. In North America, rising rents act as a backstop that prevent the bubble from popping, because of guaranteed rental incomes that protect you.
Not exactly. Price-to-rent ratios are above 30 in major north american cities, reaching as high as 50 in SF. While future cashflows might provide some backstop in terms of your investment, that's really not much of a consolation when you can be doubling your money roughly every 20 years with stocks.
>In the real world, free markets lead to rent increasing right up until the level where too many people are in poverty due to high rent. That's because the natural increase in rent is simply too high to be counterbalanced by supply.
>The only solution is to make real estate a barely profitable or depreciating asset. This is done here by aggressive rent control. As renting stops being so affordable, apartments are sold, homeownership increases, and renting becomes something you do to prevent depreciation, not to make profit.
I'm not sure how rent control fixes this. If you have 1M families but only 100,000 plots of land, they're going bid up the price until enough people can't afford it. This dynamic is in play regardless of whether there are landlords or not.