It is not a mystery why there is not enough affordable housing. We have not built enough houses. There has been a multiple decade-long process of urbanization and population growth. There are not enough houses in the cities.
More specifically, there are not enough houses close to the quality jobs and quality schools. Houses get smaller. Prices go up. Borrowing is provided to people to buy (if they can prove they have an income to support interest payments) which means more money chasing the same physical buildings. Interest rates are lowered so that borrowers are subsidized, and savers are penalized.
Those holding cash have a wasting asset, being paid almost nothing for their savings, so that those borrowing that cash can inflate the cost of housing. The idea of borrowing to buy with 30-year paybacks matching our working lives, and tied to earnings, is as natural as breathing. We lend to people who can prove they don’t explicitly need the money. We lend as front loading of work-for-pay income.
People who have bought property have seen “growth” for such a long time, we collectively think of homes as “safe as houses” investment. We are all forced buyers of somewhere to sleep. Whether we rent or buy. We can see the bricks and mortar. So the cycle continues. If we want to bring down the cost of housing, there need to be more houses.
That would bring down the price of those with houses as investments.
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