The housing crisis has become one of the most pressing economic issues in the developed world. It is no longer simply a matter of price inflation, but a structural crisis related to the nature of property ownership. In recent decades, there has been a radical shift in how housing is viewed; real estate has moved from being a "shelter commodity" to a "financial asset" traded on global markets. This shift, driven by the rise of Real Estate Investment Trusts (REITs) and institutional capital, has placed younger generations in near-impossible competition with financial entities possessing enormous cash surpluses.
Economic analysis of this phenomenon reveals that the real estate market today operates according to the logic of "asset management," not "housing provision." Investment companies purchase large tracts of residential properties and convert them into long-term rental units, thereby increasing demand and driving prices upward. For the institutional investor, real estate is not a roof over a family's head, but rather a financial instrument that, over time, generates returns exceeding those of government bonds. This reality has led to a significant decline in homeownership among young people (under 40), forcing them into a system of "perpetual renting" that limits their ability to save and build personal wealth.
Furthermore, the problem of "inelastic supply" is emerging. In major cities and high-functioning urban centers, local communities (NIMBYism – "Not In My Backyard") refuse to allow the construction of more high-density housing, citing the need to preserve the city's character. This, coupled with strict zoning laws, creates an artificial shortage of supply. Under these conditions, any slight increase in demand (due to a temporary drop in interest rates or immigration) leads to exorbitant price increases that are disproportionate to citizens' real incomes.
From a public policy perspective, governments are clearly unable to address these enormous market forces. Attempts to control rental prices often backfire, as landlords reduce the supply of properties on the market or cease maintenance, exacerbating the quality crisis. Proposed solutions focused on "demand subsidies" (such as housing vouchers) often end up lining landlords' pockets by driving up rents, rather than easing the burden on tenants.
A hidden aspect of this crisis is its impact on economic mobility. When the cost of living in major cities becomes prohibitively expensive, essential workers (teachers, nurses, firefighters) can no longer afford to live in the cities they serve. This leads to social fragmentation and forces cities to artificially inflate wages to attract workers, further fueling inflation. We are creating "ghost cities" run by wealthy residents and corporations, and served by commuters who have to travel long distances daily.
The housing crisis is not simply a passing economic cycle; it is the product of decades of encouraging "cementation" and inadequate taxes on real estate wealth. Addressing this crisis requires rethinking how we tax undeveloped property, encouraging the construction of smaller, more efficient units, and providing alternative ownership options that make homeownership more accessible to the next generation.
