There’s a theory of housing that says the problem we’re facing is fundamentally not a lack of homes or restrictions on building and density. Instead, we face...
The results were not what I expected, definitely worth a watch. (From the youtube channel Oh The Urbanity)
I can try! I wasn’t able to copy the video’s transcript, but here is the initial summary:
There’s a theory of housing that says the problem we’re facing is fundamentally not a lack of homes or restrictions on building and density. Instead, we face a scourge of investors who buy homes not to live in but to rent out, taking away options from aspiring home buyers and forcing them into renting. As one comment on our channel argued, “the investors are the prime cause of this housing crisis let’s stop the gaslighting and verbal gymnastics”. What we really need, then, is to encourage homeownership and clamp down on investors who outbid first-time-homebuyers. “Take out the demand from investors and you have more than enough supply. Which drives costs down.”, according to another commenter on one of our videos. Well, clamping down on investors is exactly what Rotterdam in the Netherlands tried to do — here’s how it turned out.
After a year of this law, several studies came out examining the effects on the housing market. With investors removed from the equation, would house prices fall? The studies found that prices did not drop at all. But it did increase home ownership - however this came at the cost of the reducing the rental market.
So not only did house prices remain high, rental rates also increased significantly due to reduced number of rentals on the market.
It also changed the demographics of the neighbourhood as well. The neighbourhoods became older, wealthier with less diversity and fewer immigrants.
Overall it turns out that the problems of the housing market are more complicated than just banning investors. The only way to really make housing more affordable is to just build more new homes, and to increase the number of new rental buildings combined with government controlled rental buildings. (with stricter rules to keep rents reasonable and protect tenant rights) There may be other ways to too, of course, but it just turns out banning investors didn’t have the desired result and actually made things worse.
I’m sorry if my summary is lacking, no doubt I left out some info and missed stuff. But it’s really worth a watch if you can somehow access their youtube channel, they produce excellent docs examining the housing crisis.
Investor owners are only half the problem. Profit driven developers are more interested in making fewer sales at a higher margin than volume sales for lower margins. This keeps the average home value climbing and less likely for first time buyers to be able to get out of the rental trap.
Sorry, several generally means two, but I apologize if that made it sound like more, hehe. But you’re 100% right, many more studies are needed after a longer period to see the long term effects.
But I think the main idea was that more and varying interventions are needed to lower the cost of housing (such as building affordable rentals) Its a complex and ingrained problem, and a single step like eliminating investors in such an inflated market is still not going to benefit low income people, and may in fact backfire. But at least other regions can learn from it in their approach.
Can you post a summary for the video-impaired, OP?
I can try! I wasn’t able to copy the video’s transcript, but here is the initial summary:
After a year of this law, several studies came out examining the effects on the housing market. With investors removed from the equation, would house prices fall? The studies found that prices did not drop at all. But it did increase home ownership - however this came at the cost of the reducing the rental market.
So not only did house prices remain high, rental rates also increased significantly due to reduced number of rentals on the market.
It also changed the demographics of the neighbourhood as well. The neighbourhoods became older, wealthier with less diversity and fewer immigrants.
Overall it turns out that the problems of the housing market are more complicated than just banning investors. The only way to really make housing more affordable is to just build more new homes, and to increase the number of new rental buildings combined with government controlled rental buildings. (with stricter rules to keep rents reasonable and protect tenant rights) There may be other ways to too, of course, but it just turns out banning investors didn’t have the desired result and actually made things worse.
I’m sorry if my summary is lacking, no doubt I left out some info and missed stuff. But it’s really worth a watch if you can somehow access their youtube channel, they produce excellent docs examining the housing crisis.
Investor owners are only half the problem. Profit driven developers are more interested in making fewer sales at a higher margin than volume sales for lower margins. This keeps the average home value climbing and less likely for first time buyers to be able to get out of the rental trap.
Thanks, I appreciate it! Not the results I would’ve expected, which makes it all the more interesting.
One study came out. And a master’s thesis.
Sorry, several generally means two, but I apologize if that made it sound like more, hehe. But you’re 100% right, many more studies are needed after a longer period to see the long term effects.
But I think the main idea was that more and varying interventions are needed to lower the cost of housing (such as building affordable rentals) Its a complex and ingrained problem, and a single step like eliminating investors in such an inflated market is still not going to benefit low income people, and may in fact backfire. But at least other regions can learn from it in their approach.