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Affordable Housing

Apr 19, 2025

Affordable Housing

One of the leading financial problems, especially for younger generations, is the cost of housing for buying and renting a home.

If we want to improve the quality of life and societal buy-in of the young generation, this is the first problem we want to fix. We want the new generations to work hard, pay taxes, and start families, so we need to offer them a shot at buying a home one day.

The best solution to decrease the price of real estate is to increase the supply. However, this is easier said than done because strong forces work against it.

In the most expensive cities, a lot of bureaucracy is working hard to make building impossible. This bureaucracy is not simply the incompetence of local authorities but also represents the desire of the part of the population that already owns homes. Think about it: if you bought a house for $200k and it is now worth $800k, do you want new homes built that would decrease prices and make your house worth $400k? If you’re a bank and you have given out loans of $800k for homes, if those homes drop by 50%, you might not get paid back (would the client want to pay back $600k left on a loan for an asset worth $400k?). Real estate developers also need prices to remain stable or increase, or they could sell the homes they built at a loss.

So these actors are working hard to keep supply constrained and have a NIMBY (Not In My Back Yard) attitude towards new projects.

However, local authorities need to prioritize the long-term development of their communities, even if it means causing owners short-term pain.

At the same time, governments need to set taxation to discourage real estate hoarding and not rented properties. Legislators thus need to protect landlords from renters or squatters abusing renter-protection legislation. If renting out their property carries the risk of such abuse, they are less likely to have their property up for rent.

In the past 5 years, the real estate markets have reached absurd levels in many places around the world. If that doesn’t change, people will leave these places for more affordable options, and those places will lose development and eventually have their markets decline anyway.