It’s the other way around. Residential properties are used as investment vehicles, because it’s profitable. It’s profitable because the prices are high and rising. The prices are rising because of the housing crisis, which is caused by lack of supply. Lack of supply is caused, in large measure, because of restrictive zoning.
If there were a glut of housing on the market, prices would crater, and it wouldn’t be profitable, investors wouldn’t buy residential properties. They could still try to buy up all of the properties, and create artificial scarcity that way, but the idea is to make a profit, not just collect residential property for the sake of having it. As soon as they started selling or letting properties in large numbers, supply would rise and prices drop again.
It’s the artificial scarcity mandated by law that’s driving the high prices. This explanation is confirmed by many cities, like mine, that have a very low rate of private equity ownership, and still have a housing crisis.
It’s the other way around. Residential properties are used as investment vehicles, because it’s profitable. It’s profitable because the prices are high and rising. The prices are rising because of the housing crisis, which is caused by lack of supply. Lack of supply is caused, in large measure, because of restrictive zoning.
If there were a glut of housing on the market, prices would crater, and it wouldn’t be profitable, investors wouldn’t buy residential properties. They could still try to buy up all of the properties, and create artificial scarcity that way, but the idea is to make a profit, not just collect residential property for the sake of having it. As soon as they started selling or letting properties in large numbers, supply would rise and prices drop again.
It’s the artificial scarcity mandated by law that’s driving the high prices. This explanation is confirmed by many cities, like mine, that have a very low rate of private equity ownership, and still have a housing crisis.