My gut feeling is that wealthy people buying up the housing stock to rent out is not actually as common just supply restrictions not meeting the demands of individuals.

I used to live in Vancouver, and on my street almost all occupants were owners. But guess what, the number of houses on that street has not changes in 100 years, and the number of people who want to live in Vancouver has probably increased tenfold.

The issue wasnt that all the housing stock was bought up, the issue is that housing stock did not increase to satisfy demands.

Additionally, a place like Vancouver is really a global real estate destination. People with money who are not from Canada come to Vancouver and drop a few mil on a single family home and outprice all the locals. If you are buying a house in Vancouver you are competing with wealthy people local, but also the top wealth from across the globe.

BC did pass legislation to make all single family homes qualified for quadplexes, but I think it is too little too late.

Anything short of taxing every residence which is not a primary residence AND banning foreign ownership AND reducing permitting toil AND raising interest rates, is going to fall short.

I gave up a few years ago and moved somewhere else. Vancouver is no longer for Canadians.

Piketty logic assumes infinite demand. Housing demand is very large, large enough to seem infinite when North American cities have spend 100 years banning every form of housing imaginable except the single family house, but it is not actually infinite.

If Piketty was correct, then inflation adjusted housing cost per sqft floor would always go up everywhere all the time. But we see dramatic differences in different periods of history, between different cities and we see rents stabilize & decline after building booms. We see housing costs go up the most in the places that build the least and the least in places that build the most.

If Piketty was correct, rich people could do this with things other than housing - they could buy cars and rent them out and then reinvest the profits to buy more cars. Ofc this doesn't actually work because there is no scarcity of cars - for better or worse we have chosen to place almost no limits on the quantity and density of cars in any city, state or country, while placing extremely tight & arbitrary limits on the quantity & density of floorspace in every city. For every car a rich person buys up to rent out, a car company reinvests the profits to build 1 more and then some. There is no functional reason residential floorspace cannot be exactly like that.

You haven't actually worked this example out. Try it. The wealthy buy the extra supply; they now compete with all the existing supply for tenants. What happens next?

    What about wealth inequality as the root cause of housing shortage? 

Eventually there are more houses than people who want to be in them, regardless of whether or not they're being rented or owned.

When that happens you'll see the prices fall. After all, if nobody wants to rent your house, you'll either rent it for lower or sell it.

If nobody wants to buy it, you'll lower the price.

Ad nauseum.

Where's the evidence that wealth inequality is the root cause of housing shortage, as opposed to say, the real and factual lack of building?

Even if the wealthy did buy up extra supply to rent out, that would only mean increased supply of rentals, which would lower rents.

When interest rates were rock-bottom a bigger chunk of new builds were purchased, but they're not anymore. Vacancy rates in cities, though, are very low, and if you constrain supply of rental units, rent prices go up. That impacts the poor demographic far more. People who rent entire houses are not typically poor, unless maybe you count places where houses are cheap like Mississipi.

The actual data does not agree with you at all. In places that have implemented zoning reform, housing gets cheaper. In areas where it's easier to build (red states), housing is cheaper. There is no reality at all where supply of housing jumps high but prices do also.

> Personally I'd like to see legal constraints on investment in primary, single-family homes, and fewer legal constraints on building them.

Where investors are concerned, these are purchased to flip, or with the expectation that prices would rise. Given that we had inelastic supply but perpetually growing demand, that was a good bet. So, if you build way more, an investor wouldn't be so confident about that price increase. Now compound that with the risk of borrowing at higher interest rates to buy those properties.

Who owns housing is orthogonal to the rent or imputed rent for an owner occupied unit. The effective monthly rent is supply and demand.

Higher supply still means lower prices. Even if "the wealthy" buy it all and rent it, they are still competing with all the other wealthy who are doing the same thing and that will limit how much they can charge for rent, and will make it a less profitable investment than other things the wealthy could invest in.

Housing is not really a great investment. It's great for small investors because it's the only place where they can invest with leverage via a mortgage. If you have billions there's much better things you can invest in.

>will buy the extra supply and rent to the poor.

The wealthy are generally monetarily shrewd, and building homes makes home ownership a worse investment. If there is a deluge of homes being built, the wealthy will take their money elsewhere. Being a landlord typically has ~10% annual return. Compared to just sticking money in the stock market, it's actually been worse as of late.

The goal of the wealthy isn't to make people suffer, it's to maximize their ROI.

If there’s 1 million people and 2 million houses then the wealthy aren’t going to be. Using up to rent out as the return on investment will trend to zero.

If there’s 1 million people and 500k houses they will buy them up because everyone needs somewhere to live and will keep paying more and more to avoid the overcrowded slums that someone has to live in.

Rental stress is a bigger problem than price appreciation, though. Investors cannot cause rents to increase by buying stock.

The causality is in the other direction, see (as I posted in another comment) https://www.brookings.edu/wp-content/uploads/2016/07/2015a_r...

To the extent that housing speculation exists, it's because of the lack of supply. So you have the cause and effect reversed.

So why are rents falling in Austin for multiple years in a row?

Why did the wealthy simple didn’t buy all of it to extort more rent?

If general housing is abundant enough that it has very low ROI compared to other available investments, then no they won’t buy up housing. One pretty simple way to do this is to raise property taxes high enough that a vacant condo is a very bad investment. This is what it would mean to commoditize housing.

I think it’s a realistic goal for apartments/condos. Single family homes will always be constrained by land.

(Edit): I think you, and a lot of people who are anti-capitalist on housing, make the implicit assumption that all housing is a fixed good. There is only so much housing and our political goal is to allocate that fixed amount. In a lot of major US cities this is sort of true because we have regulated the construction of new housing to the point where even the government can’t build it. But the anti-regulation perspective is that if we get rid of the regulations preventing housing construction, then enough housing will be constructed that the allocation problem isn’t much of a problem. (Or something in between, ie it’s a lot easier to build/buy social housing to give away to people if housing is already made very abundant, and the fact that even governments like California have to spend truly ludicrous amounts of money just to get a few crappy studios built)

Why is it OK to constrain investments on SFH but not apartments or condos?

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