> Surprisingly housing is so constrained at this point that in a major city like Boston you could purchase all outstanding homes for <200 Million dollars.
And then do what?
And then do what?
This actually happens in the art world; there's a guy who goes out of his way to overpay for Warhol paintings, because a) he can corner a finite market and b) when a Warhol painting sells for a record amount, the value of his entire collection goes up even if he's the buyer.
It is possible that Boston houses are underpriced, but it is also possible people will start looking elsewhere. Probably have to dig into income trends and more data rather than just “Boston has limited housing, so it will always be rentable/sellable at a higher price”.
Not something you can do with a house, I grant you. You'd more likely end up in a bubble situation where property just churns through the hands of investors until the bubble pops and someone is left holding the bag.
Hence attempting to buy all the houses is an impractical business plan, unless, of course, it becomes possible as a side effect of government mismanagement.
The Warhol example is fundamentally different, as Warhol isn't painting any more.
Real estate is not a secret business, and it is not like there is a massive population of buyers ready and able to pay top dollar. There are already many local players arbitraging real estate at any given time.
It would be one thing if it was free or cheap to hold onto houses indefinitely, but not only is physical security a problem, but politically it is a minefield too.
1) Housing is a leveraged asset and can't fall substantially without a lot of individuals, banks, and institutions going bust. Historic government interventions serve as a hedge against this.
2) If housing is expensive enough then individuals can't afford to sell their own home. If buying a new smaller home requires 2x the equity of my existing home then I probably can't reasonably move. This means that new homes are less likely to be offered for sale.
It's clearly an unstable set of incentives, but it could be unstable for a very long time. My suspicion is that the only way for housing to exit its current cycle is a protracted period of high inflation in wages/goods/services which makes individuals more able to pay and depresses the financial returns on housing.
2) it is true that people may not be able to afford to move, but people will keep dying and their houses will keep opening up.
But the biggest thing is developed (buildings) real estate is very expensive to just hold empty, so there is incentive to keep it moving.
I am not talking about foreign millionaire and billionaire apartments in tier 1 cities, those are obviously bought and sold under a different set of constraints and goals. But your general purpose houses in 99% of communities across the US need to be lived in and property taxes paid.
I do agree with you that housing prices will not go substantially down nominally. Politically, all voters like to see their position improve, which means land and public stock market prices need to go up. But that does not mean Zillow will earn any decent risk adjusted return on buying and selling suburban tract built houses at scale.