There is no reason why housing cannot be much much cheaper than it is now -- so cheap that it is nearly free. Larry Page, in an interview in 2014 discussed how. "Rather than exceeding $1m, there’s no reason why the median home in Palo Alto, in the heart of Silicon Valley, shouldn’t cost $50,000" [1] and attributed this entirely to a policy problem.
The answer is continuously increasing supply in a manner that outpaces population growth dramatically.
If we reorganized the market such that there were incentives to massively build new housing, this would be a solved problem. The price of housing could effectively be the marginal cost of construction as opposed to the market power driven pricing derived from scarcity.
Couple that with remote work and efficient high speed transit both within cities, to the suburbs, and to other cities, and we should be able to enable the demand to spread out (enabling more diverse supply to compete) and to add significantly more supply everywhere.
It is infuriating that a simple problem of supply and demand has not been able to be solved by developed governments. I recognize that it isn't as simple of a market problem as say a true commodity because location matters -- causing heterogeneity in the goods. But that location difference is alleviated by the increasing supply in high demand areas and by empowering more competition across areas through transit and remote work.
$50,000 for a house in Palo Alto sounds implausible, simply because there are a lot of people who want to live there and not enough land to satisfy demand. But, I agree that houses can and should be a lot cheaper. We could just build houses in the middle of nowhere, but without jobs and infrastructure it's not attractive to most people. Desirable cities exploit network effects. People want to live there because other people they want to be around also want to live there. We need more of these desirable cities.
Sometimes I wonder if one possible solution would be a sort of kickstarter-type deal for bootstrapping new cities. In other words, find a large plot of cheap rural land big enough for a few tens of thousands of people that's close enough to another town to have access to basic necessities but not where it's going to become a suburb of some other city. Get a bunch of people who want to live there to put down an up-front deposit. Create a non-profit to manage the deposits and handle the logistics of buying the land, installing roads and utilities, creating lots, and so on. The people who put down deposits are given lots that they can build on. Leftover lots are sold over time to finance more infrastructure development. The non-profit is replaced by a city government once there's a sustainable population.
My assumption is that if you can buy rural land cheap (like a few thousand dollars an acre or something) and then convert it into residential lots that are still cheap by urban housing standards for a few tens of thousands per lot, maybe 3 or 4 per acre, that generates the necessary funds that can then pay for the infrastructure needed to turn that rural lot into a buildable city lot. Another assumption is that this is being done purely as a non-profit venture; I don't think it would work as a real-estate get rich quick scheme because the temptation to not put enough money back into the town would be too high.
Another necessary component is having at least a few employers who are willing to set up shop in this new city. (Perhaps a branch campus of a major university would be ideal.)
Housing can at most grow as l^3, population can grow as e^n. If you want to be withing t hours of place x then you need transport systems that travel at l/t km/h.
Until people have two children or less population will always outpace housing. Anything else is wishful thinking.
Population growth is slowing worldwide and is below replacement in all major developed countries. Thus, your e^n is only applicable if n is between 0 and 1!
Sure, desirable cities can grow faster than the overall average, so let's put that at somewhere between linear and quadratic -- heavily towards the linear.
Even so, the ability to build at I^3 can easily outstrip that demand with the right policies.
Furthermore, remote work can spread out demand. We are seeing that right now with the pandemic. I believe that the pandemic will be one of the greatest accelerators of globalization due to it's enabling remote work.
As further proof of the slow pace of population growth in developed countries eventually causing an impact on the housing market, look at Japan.
"Government statistics as of 2018 consider 13.6 percent of properties in the country to be ghost houses. Put another way: By 2040, the total size of abandoned properties in Japan is estimated to equal the land size of Austria." [1]
Space only grows as l^3 and the speed of light. Any species that does not limit the number of surviving children per parent to two will run out of space no matter what they do.
the absurdity of that argument can be shown by demonstrating that if the rate of population grows so fast that it outstrips the l^3 at the speed of light, the biomass would just collapse into a black hole.
the point is that human's growth is slowing, and the fact that space can open up means that as long as humanity reaches being a space faring species, it won't really be a problem.
The answer is continuously increasing supply in a manner that outpaces population growth dramatically.
If we reorganized the market such that there were incentives to massively build new housing, this would be a solved problem. The price of housing could effectively be the marginal cost of construction as opposed to the market power driven pricing derived from scarcity.
Couple that with remote work and efficient high speed transit both within cities, to the suburbs, and to other cities, and we should be able to enable the demand to spread out (enabling more diverse supply to compete) and to add significantly more supply everywhere.
It is infuriating that a simple problem of supply and demand has not been able to be solved by developed governments. I recognize that it isn't as simple of a market problem as say a true commodity because location matters -- causing heterogeneity in the goods. But that location difference is alleviated by the increasing supply in high demand areas and by empowering more competition across areas through transit and remote work.
This honestly doesn't have to be that hard.
[1] https://www.ft.com/content/3173f19e-5fbc-11e4-8c27-00144feab...