Building more housing is a way to address the housing shortage and affordability crisis. At the same time, lots of people are suspicious of developers thinking they are profit hungry. This drives some of the nimbyism against new construction.
I got to thinking that new construction may be less profitable than the reselling of existing homes and buildings that have appreciated in value. Existing real estate can bring big windfall profits. New construction is likely to be a more risky investment due to the cost of construction and the possibility of short turn market downturns soon after construction.
Reselling, sometimes even flipping, existing real estate seems overly profitable. This idea just popped into my head a few days ago while biking somewhere.
This idea relates to a thought I have about interest rates and the talk about the Federal Reserve. I've often thought that there should be at least two different interest rates rather than a "one size fits all" rate.
Couldn't there be a lower interest rate for creating new assets and a higher interest rate for reselling existing assets? This could help to curb speculation on existing assets whether they be homes or stocks and it would encourage the creation of new assets, such as housing. It's one thing that might make it easier to create more housing in areas experiencing population growth. also the creation of new sources of jobs.
Bottom line is new development may not be as bad for affordability as reselling of old developments in a housing market that experiences significant appreciation.
Lots of existing homeowners do benefit from market appreciation so that makes it easier to point fingers at new construction, thus driving some of the nimbyism.
Also, I realize that there could be more trust of new developments from non profits and systems such as Kulshan Land Trust than from private landlords, so there are several ways to think about this topic.
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