Is there any possible way to break the American addiction on housing as the primary investment / wealth for a family?
As long as existing homeowners are incentivized to drive up the price of their home, none of our housing supply woes are likely to change. And who can blame them? For most people their house is worth more than all their other possessions and investments combined.
Besides the incentive issue, the fact is that most increases in home value are not created by the homeowner. They're created by the city who provide streets, infrastructure, security, etc. They're created by small business owners who make a neighborhood attractive to live in. They're created by nearby employers who bring in wage earners who create demand. The new bathroom the homeowner puts in is a minor matter. Yet all of the value (minus property taxes where applicable) is captured by the private home owner.
> As long as existing homeowners are incentivized to drive up the price of their home, none of our housing supply woes are likely to change.
I'm not sure it's that logical. If you own land and tomorrow it's upzoned to allow more density, the value increases immediately. Once the density creates enough foot traffic to support cafes and restaurants in a walkable space the value goes up again.
People are stuck on the idea that urban means blight so they need to zoning rules to keep out "the riff raff".
Raise property taxes and you suddenly have a lot of people who don’t want home values to go up any more. This is a common phenomenon in the sun belt, especially the Houston, TX area where you’ll see public meetings crashed by people opposed to projects they think will raise property values and thus their tax bill.
One way would be to encourage alternative investments. It's actually really tough for non-wealthy Americans to invest in capital markets in an efficient way.
Another would be to encourage them to really commit to the value of their homes (instead of the price). If property taxes in California rose with the value of homes, many more people in San Francisco would have found it expedient to (a) sell to developers or (b) let out their homes or (c) remodel their homes as denser housing. Well...(c) could have happened, if it were not so difficult to build in San Francisco, but that goes back to helping people find better ways to invest, by not discouraging commerce.
Most investments work the way you describe: "...most increases in home value are not created by the homeowner." It's the same when you put money in a 401k or an index fund. Investing is putting capital out there and hoping it comes back. Doesn't make sense to advance this argument against home ownership as an investment.
As long as existing homeowners are incentivized to drive up the price of their home, none of our housing supply woes are likely to change. And who can blame them? For most people their house is worth more than all their other possessions and investments combined.
Besides the incentive issue, the fact is that most increases in home value are not created by the homeowner. They're created by the city who provide streets, infrastructure, security, etc. They're created by small business owners who make a neighborhood attractive to live in. They're created by nearby employers who bring in wage earners who create demand. The new bathroom the homeowner puts in is a minor matter. Yet all of the value (minus property taxes where applicable) is captured by the private home owner.