It’s amazing the wild and complicated theories people can spin up to explain the price of things. The boring reality is, it’s always dictated by supply and demand.
Now of course there are myriad reasons as to why the supply is what it is, and what drives people to demand more or less of things. These are complex and impossible to pin down precisely. They are worth exploring and trying to understand if you can.
But the number of times I see proposed reasons for prices, and proposed solutions that ignore supply and demand is startling.
“Housing costs far too much! It’s because builders and landlords are greedy. We should kill them or throw them in cages if they try to own more than a few properties!” says the ignorant or lying reformer.
Builders and landlords are likely greedy, just as their tenants and everyone else is likely greedy. But they didn’t start being greedy all of the sudden. It has always been so. Yet housing costs weren’t always so high. What happened?
Supply and demand.
More people demanding housing, and a smaller number of new houses being built.
It’s a pretty easy formula!
You may or may not like the implications in the same way you may or may not like gravity. It’s not going away. You have to navigate the world in light of its existence.
The beautiful thing is, you don’t really have to do anything. Mr. Reformer can pour a drink, sit back, and let things sort themselves out. Truly. All you have to do is stop doing something. Namely, stop using the guns of government to prevent individuals from creating more housing.
You don’t need to urge it, or incentivize it with speeches or subsidies, or create grand plans or special zones. You just need to get the hell out of the way — I mean that quite literally; remove the bureaucratic red tape, which is a genuine representative of hell on earth.
Let the supply and demand do their dance freely and you needn’t trouble yourself so much. In fact, you can seize the opportunity to benefit from their interplay with some entrepreneurial endeavors of your own!