People like housing. It is where they keep their stuff and escape inclement weather in order to watch Netflix. So they tend to want some of it. This is a problem these days in many places. Certainly most places in Europe where people want to live. There may even be a place or two in the US where real estate prices are a wee bit on the high side. It is, I would say somewhat complex with multiple issues at play. But I notice, on various political sides, the usual temptation to oversimplify and find one unified cause for everything, and it surprises me to see this with people that can be insightful in general.

In Europe, at least the sides are pretty clear. Libertarian right blames not enough building and NIMBY. The conservative right blames immigration. Some in both camps of the right also blame money printing and manipulated interest rates, and things like affordable housing mandates for larger developments. The socialists blame private property. The social democrat left blames greedy developers and not enough social housing.

The right, as usual, is more broadly ehmā€¦ right. The socialists are the most wrong. Blaming greedy developers is rather silly, as it seems the greed waxes and wanes based on other economic factors. But I would say the cause is a combination of factors and not a single one.

New real estate in old Bucharest

In general it is mostly correct that increased supply fixers a lot of issues, and that nimby is out of control these day. Here I would also venture some criticism with the example of Romania. In 2004-2008 period, Romania had one of the most epic bubbles in history when it comes to housing. Maybe not quite as bad, but current prices are outrageous relative to incomes and I am amazed on how much not that great apartments in not that great areas go for, at least in a few large cities. We got 100 sq meter 2 bedroom apartments going for 500k in the more upscale developments. Though most go for round 200k in new developments and you will find some at around 100k. US dollars that is. Given the average wage is like 12k after tax per year.

Romania is not really a target for immigration, and has large emigration, so the population is dropping quite fast. So there is 0 blame on external immigration here for housing costs. Although it is a poor country (relative to the EU at least) with an economy very polarized around a few large urban centers, so there is internal movement which can be functionally equivalent to immigration. NIMBY is not really an issue as a lot build with little regard to regulations, and the infrastructure leading to good neighborhoods ā€“ streets and schools and such ā€“ is lagging behind. There are no affordable housing mandates and more onerous regs can be bypassed with a bribe or two.

My conclusion to this is supply takes time. Even when a bunch is poorly built and without the needed additional infrastructure, like in Romania, it takes time. So on this topic, the truth is in the middle, yes you need more housing, but large population movement puts significant pressure on housing stock till new one gets built. While one cannot do much about the internal movement unless one is China, unrestrained external immigration can clearly exacerbate the demand side.

I would say the money supply / credit is also quite clearly a factor because otherwise many people would not afford to pay the kind of prices that are paid. Money supply also leads, I would say, to some Cantillon effect issues, with money going unevenly towards housing and with certain large rich investment funds getting lots of cheap credit to buy massive amounts of housing.

Of course, the time it takes for the supply is extremely dependent on ease of building. And whatever the demand increase, any increase in supply makes things better. So blaming the NIMBY is also broadly correct. Even if you end immigration, there will still be movement inside the country. London and Paris and Bucharest will still attract many more people than housing availability without new building. And there is clear correlation between places with lots of zoning and difficult planning process and very expensive housing. So obviously, if it is impossible or takes years to get the permission to build, many people will stop trying and stop building. This will be a massive constraint on supply which means the area will not handle even modest population movement.

The NIMBY is enhanced by the ā€œwe need to maintain old buildings due to history / neighborhood character/etcā€ crowd which will also have the effect of not only no new housing, but the existing ones being shitty. England is a good example, the housing derriĆØre because it is almost impossible for the owner to improve the house due to ruining historical character or something.

So what causes the problem? NIMBY and easy credit and immigration somewhat. What is the solution? As I assume you have not forgotten you are on a libertarian website and our little chats are mostly for our own entertainment, I assume you realize I cannot give a solution because, as in most things, there isnā€™t one. There are too many political interests for there to be. But as in most things, end money supply inflation, end silly government regulations and yes, very un-libertarian, but keep in mind open borders do not help the issue.