• cheery_coffee@lemmy.ca
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    1 year ago

    Nobody here is mentioning that the cost to build just increased significantly with interest rates.

    Builders take out loans to acquire land and line up supplies and contractors, they sell the unbuilt plots to buyers, then start construction.

    It just got a lot harder to buy land and acquire resources, and the price buyers will pay has and is currently decreasing.

    They’re seeing higher costs and lower profits, that’s not something their investors will want to pour money into, which reduces their liquidity and ability to build even further.

    The clear solution to builders is to limit potential losses by reducing new expenditures until the macro environment stabilizes.

      • cheery_coffee@lemmy.ca
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        1 year ago

        That’s an entirely separate issue, real estate speculation is not the same as development speculation, which is a necessary part of the system.

        The government needs to actively build houses or their subject to matter fluctuations, which this is. But if they do build houses then they need to be careful they don’t build first cities like China and over invest too.

        • folkrav@lemmy.world
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          1 year ago

          Development… of housing. Play with definitions all you want, I still hold that this is what happens when you treat housing like a commodity. It’s a necessary part of the system, as a side effect of said system.