Restrict Supply, Subsidize Demand

The Los Angeles Times reports,

Home builders are not keeping up with demand for homes in California. There just aren’t enough homes being built relative to the growing number of households in California.

What is the “solution” to this supply problem? Subsidize demand:

a lot of local municipalities have first-time home buyer-assistance programs, and people should look at those programs in their area. You also may be able to qualify for additional assistance as a first-time home buyer based on your occupation, for folks like teachers, firefighters and law enforcement.

And people wonder why housing in California keeps getting less affordable.

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9 Responses to Restrict Supply, Subsidize Demand

  1. Rich Berger says:

    Next thing you know, California will be Little Venezuela.

  2. Edgar says:

    And as for restricting supply, how about a bill requiring “prevailing wage” on residential construction?

  3. Thales says:

    …and yet given that exclusive pricing is the only thing keeping the “good schools” and “good neighborhoods” good, as a California homeowner, I really can’t get upset over this.

  4. Curt says:

    Great example!

  5. Lord says:

    New construction always enters at above average so supply is limited by assets and income to pay for it, demand. Subsidizing entry increases assets, demand, and thereby supply of new construction. It is the means of increasing assets with income.

  6. Jack PQ says:

    To play devil’s advocate: what if the subsidies, increasing prices for houses as we know will happen, lead some older (or more mobile residents) to sell and relocate? I agree that economically, the municipalities’ strategy is stupid, but essentially might the strategy amount to paying some residents to leave? Yes, it’s a simple wealth transfer, and it doesn’t solve the real issues. But I wonder if it might nonetheless help.

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