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YayforFriday t1_j2a40w6 wrote

Although I won't comment on the flawed data used to compile this map, the Federal Reserve, using a much higher quality data set, determined that housing is in a crisis of demand more than supply. While under-building over the last decade+ did contribute to the quick jump in housing prices, it is just one of the contributing factors.

Arguably much more important was the massive drop in interest rates and the willingness of the FED to purchase unlimited mortgage-backed-securities from the issuing banks. This gap between interest rates and inflation rates spawned a massive rush of capital into real estate as an investment, from the acquisition of investment properties to the purchase of second, third and fourth homes, all too common across this state.

If I was to change one thing to most help with housing affordability, zoning wouldn't even be near the top of the list. I would remove some of the tax advantages which are unique to real estate as an investment class. After all, the housing market has actually been hot since the Tax and Jobs act of 2017 introduced a host of tax benefits. The Fed simply poured gasoline on the fire. Unlimited 1031 exchange, cost segregation, pass through deductions, all of this should go long before it expires in 2026.

Unfortunately, it is human nature to seek simple solutions to complex problems, and anyone who believes we can simply build our way out of the housing problem absent any systematic change is subscribing to a fallacy.

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Maine-iac_207 t1_j2alrzd wrote

This post should be pinned for this subreddit and anyone posting complaints about the housing issue need to read this before posting. The tax incentives, like 1031 exchange, need to be phased out asap. As long as you treat housing as an investment, you’re going to have housing issues.

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HIncand3nza t1_j2bnotb wrote

Wtf an educated reply to a post on housing?

You’re exactly right though. It was rates + QE + real estate as an investment. The whole thing is a feedback loop straight out of “Irrational Exuberance”.

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MrsBeansAppleSnaps t1_j2cb2b3 wrote

>While under-building over the last decade+ did contribute to the quick jump in housing prices, it is just one of the contributing factors.

Last decade? Try 75+ years. Even before the covid boom housing had been outpacing incomes for decades. Of course everything is multifactorial but you can't dismiss zoning's role in that. It stands to reason that mandating a house be built on 2 acres is going to make it more expensive than a house on 1/10 acre.

And you can't tell me that a majority of towns in Greater Portland not allowing housing to be built doesn't have an effect on prices. It's common sense that it does. If there were 1,000 new apartments online tomorrow current landlords couldn't charge what they are charging (unless you buy into the idea that there is virtually unlimited demand for housing in Portland, which some here seem to think).

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guethlema t1_j2e0r7l wrote

Fucking thank you so, so much for explaining so clearly what so many people see as a problem with zoning. While zoning regionally is a problem, it is not the only problem nor the cause of the investment class of houses being gobbled up.

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