Want the price of something to rise? The formula is simple: increase demand or decrease supply. In part 1, I suggested a way to immediately increase demand for vacant homes - immigration. Legalizing some of the 3 million people living in the US today - if they bought 1 of the 1 million vacant homes currently clogging inventories, and filing 2 years back income taxes.
Another way to increase demand is to reduce supply. People want scarce things, things that are scarce are ‘valued’.
So, in part 2, let’s explore some easy ways to limit the supply of homes:
1. the banking system has already stopped lending to new construction projects, heck, we aren’t even lending to many half finished projects. This has constricted supply of new inventory and will for the foreseeable decade to come. No new building.
2. Municipalities have a wonderful chance to create new park land, consolidate development areas, increase density (walk-ability), land use and conservation, and revamp zoning. Governments should ‘buy up’ strategic property now, as these actions will increase the value later.
3. Creative deconstruction. The US housing stock is on average 45 years old. My opinion is that many homes built before 1970 are actually better made, but this statistic does lead one to wonder if ‘recycling’ much of the housing in our country isn’t warranted? For every new home that is permitted, maybe one somewhere should be taken apart? Much like wetland mitigation.
4. Encourage vacation home ownership. Yes, many of the homes that are vacant today were envisioned to be ’second homes’ (condos). Seeking out foreign citizens to buy these homes as their ‘cottage in America’ using a special Visa and may be an incentive that would sell thousands of condos. Foreign buyers are the best, because each offshore dollar into US real estate balances our trade deficit, pays US property tax burdens and increases their spending in our retail market. The US railroads were built by foreign capital, and the railroads served the growth of our Nation well.
Real estate is the one product that can’t be imported or exported. When some one buys real estate, the US Government (local & federal) is assured that tax payments will be made.
Real estate is also the largest employer in the US. Creating new jobs to ‘recycle housing’, finish partially constructed housing, redesign/configure (green) old housing, or turn existing housing into parkland, green space or ethanol fields is good work for Americans.
All of this increases US government tax receipts without increasing the burden on tax payers.
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