Housing isn't expensive because we don't build enough. It's expensive because we decided homes should be investments, and everything else follows from that.
Adam Smith, Mill, George, and Friedman all agreed land was the ideal thing to tax. But we did the opposite, and that's why housing is unaffordable.
The root cause is a single belief almost no one questions. That your primary home is supposed to grow in value forever.
If homes are investments, prices have to keep rising. So you protect prices with zoning. In 2019, 75% of San Francisco's residential land was restricted to single family homes. Vancouver was 81%. You can't build, so supply stays tight and prices climb.
Then you keep the taxes on that asset absurdly low. A million dollar home in Vancouver pays around $3,000 a year in property tax. A similar home in Dallas pays closer to $19,000. Low carrying costs mean people hoard property and prices stay detached from wages. On top of that some countries (Canada, Australia and New Zealand) charge zero capital gains on the sale of a primary home, and you can use that exemption over and over. You work, you get taxed 30 to 50%. You sitt on a piece of land that quadruples, you pay nothing.
Since property barely gets taxed, cities have to fund themselves somehow, so they tax new construction instead. For example, Toronto's development charges add 20 to 25% to the cost of a home. That cost lands on the buyer, not the existing owner. The people who already won get protected, the people trying to get in get screwed.
Then governments juice demand even further. In Canada, the CMHC backstops mortgage risk, which prices home ownership like it's nearly risk free and pulls in more capital than a rational market would. Layer on foreign capital programs (Quebec's investor visa funneled tens of thousands of wealthy migrants into Vancouver and Richmond instead of Quebec lol) and you get asset prices completely detached from local incomes.
The reason none of this gets fixed is incentives (shoutout to my boy Charlie Munger). Homeowners vote and they're the majority. Young people mostly don't. No politician on the left or right will let prices fall, because falling prices lose elections. So the system keeps inflating until something breaks, and then you get the bailout like when Japan injected ¥60 trillion when its property bubble burst.
The uncomfortable part is this whole structure exists to protect people who already own. The ones who get crushed are younger buyers, often the same people voting for the politicians keeping it running. Truly sad...
Anyway, that's my two cents. Btw I make videos on this stuff if you're into economics and geopolitics. Curious where people think this argument is weakest, especially on the property tax stuff.