International investment and local rules push prices up faster than supply
6 days ago
- #foreign investment
- #supply elasticity
- #housing affordability
- U.S. housing affordability has decreased, with average home prices rising 60% from 2019 to 2025.
- Foreign investment in the 2010s drove up housing costs in areas with high concentrations of international buyers.
- From 2009 to 2018, housing prices rose faster than supply even in markets with fewer foreign investors.
- Supply elasticity declined after 2000, with a 1% price increase leading to only a 0.26% supply increase.
- Areas with more foreign-born residents had housing prices 6.7% higher than other neighborhoods from 2011 to 2018.
- Supply elasticity varies by city; e.g., San Francisco has low elasticity (0.06%), while Charlotte has higher elasticity.
- Cities have control over housing supply through zoning and permitting, impacting affordability.
- Policy changes, like Baltimore's permit overhaul, can improve supply elasticity and affordability.