I’m going to respond by parts. Let’s see how this goes:

If you improve the building, thus increasing it’s value, you’ve increased the proportional value of this house compared to the market.

Yes

Now, since this house has increased in value, the average price of housing goes up and this house is less affordable.

No: the demand for housing stays the same, thus the amount of money to be had for housing stays the same, and hence if the same number of units exist then the average unit does not change in price by one unit improving. It’s only that this unit moves up within the mass of units, while all the others move down a little.

But also some yes: There is the fact that the improvement could be so good as to convince someone to switch a portion of their spending from some other luxury to the housing feature, like someone might decide to go for the house with the pool instead of the corvette. Then overall housing demand goes up, and hence average housing price goes up.

If everyone does this then the same effect takes place of average housing increasing in cost but now there’s a large quantity of very nice unaffordable housing. You no-longer increase it’s proportional value and the average price still goes up. Your house is in the same class as other housing bought at the same time.

No, because this stuff all follows from the previous sentence which I NOed too. The sum of a lot of average zero changes is zero. It doesn’t cause contagion to the rest of the market.

Except for rich people’s luxury money coming into the housing market, but that’s going to affect pricing of housing full of luxuries, because that demand is targeted to a different market tier than the one you’re worried about which is the cheapest housing for the people with the least money.

If all landowners continually improve their housing in order to increase profits the profits must increase to a point where the cost to improve is matched and exceeded. This means that all property one wants to profit off of must still increase in price quicker than inflation. Under your proposed solution this only means the housing is nicer.

Well, this is one way in which people with money can decide to invest it in housing: improving the housing. But they can also invest by building new housing. You do cover this here:

The outcome is the same, less affordable housing. If more, cheaper, housing is created then the value of these improved properties must decrease as well (supply and demand) and these cheaper houses if the price stays tied to inflation the profit gained is stagnant. There is no incentive to increase housing.

Well, if the set of players in the market stays the same this is true. But if new players can enter, then it’s not. I’ll try to demonstrate with the simplest scenario: one player controls all housing. Big Boss Casamio owns all housing and he’s the only guy who can build new housing. What are his incentives? Well, it’s like you said. If he builds new housing it just dilutes the value of his existing housing and he’s just spent money for nothing.

But what are someone else’s incentives? What if there are two big property owners in town? Then they gain something when they get more of the town’s population living in their houses: a higher portion of that housing demand becomes cash to them. That’s an incentive to build new housing. Yes, ALL housing’s earning potential drops, but you get 100% of the new property and only lose say 50% of the existing housing value to dilution.

And that’s when there’s two players.

If there’s 100 players, and someone owns 1% of the housing, they can build a new house and get the value of that house in terms of earning potential, while their other houses only lose 1% of their value to market-wide devaluation.

This is why free markets are important. The incentives are different for monopolies than they are for market players. A free market is like a market without strict border control. Each person is allowed to come and go, to bring their money into or out of the market, if and when they see fit.

Big Boss Casamio’s crackdown on housing construction is a corruption of the free market into a controlled market, a suppressed market.

Currently though this is not happening. Most investment properties increase in value without improvement.

I agree, and that’s a serious problem. Even the increase in quality witthout increase in number would be a problem, though slightly less. Only increase in number can bring prices down.

Incidentally, this steady increase in price is because of population increase, not property improvement. The improvement of properties isn’t pushing average pricing; only individual pricing up and the whole thing balances due to demand being finite. But the demand itself increases with population (I mean, with money in the system, and each person anywhere is going to be pushing a certain amount of cash toward housing, by necessity).

As the number of empty houses dwindles toward zero, the amount each person has to pay rises super fast. The result of supply and demand ratio shifts are nonlinear; population doesn’t have to double for the price of housing prices to double.

Most landlords simply profit off of ownership of this land and housing not in their added value.

True. I think that happens because we subsidize that by using government force to slow the building of new housing. I think that the government is taking the profit away from those who work to make new construction happen, and is giving it to the people who simply own existing buildings. I think this happens through building code enforcement.

And I think that’s okay. Building codes are important. If they skew the market so as to produce non-consensual homelessness, that’s a serious cost. But the thing they avoid is scenarios like the Chicago fire, where 1/3 of the city died.

I also don’t think that’s entirely a bad thing. If we have to suffer the existence of homelessness as a possibility in human life, in order to avoid some kind of Chicago fire scenario where shit safety planning led to 1/3 of the population dying, maybe it’s worth it. Anyway.

If all landlords were to improve housing instead of simply raising price then that would increase investment price while not increasing overall profit. They’d make the same amount of money they would if they simply didn’t improve it. There is no incentive to improve as this adds risk for no reward. This is only possible on a small scale, and why we see few companies making profit off of buying housing, improving, and selling.

Yeah we do have the Big Boss Casamio scenario, to a degree, due to both totally valid building codes, and totally invalid straight-up corruption and NIMBYist gerrymandering of building codes to protect certain wealthy people’s property values.

On rentals, even if they did cause value to be added, it would be through the money of the tenents and the labor of the workers. They are simply a middle man who adds no inherit value to this process. They produce no value, they simply take money from one hand, pocket some, and place some into another who adds value for them.

There are many types of valuable things.

Like, imagine if a worker wanted a house, but didn’t have time to build one himself. He works all day driving a bus. Another worker happens to build houses for a living. So the bus driver hires the house builder.

Even if the bus driver makes way more than the house builder per paycheck, he’s going to be in a tough situation to have to pay the house builder’s income during the time it takes to build the house.

Even so, I think they can figure out how to make a deal that works. Maybe the house builder is taking his time, doing an hour or two a day on multiple houses. So his living is spread out among the others’.

I hope you can see where I’m going with this because I don’t. I think it was something about how it’s valuable to have the opportunity to just rent a place instead of investing all that energy to build a house, just to have a place to live. Houses are costly even if there’s no capitalist middleman taking a cut, and it’s nice if there’s an option to pay for a place that isn’t going to be your house, just to get a roof over your head.

Rentals are a value to the renter, by virtue of being rentals, and it’s a value that houses don’t have when you own them. It’s simply the lower cost of entry to the living situation.

Like having a cabin for new villagers to live in while they get their own cabin constructed. It’s a source of value to have a building where people stay, but they don’t have to take ownership of it just to sleep there. Maybe the ownership in the village is the entire village. Like, nobody lays claim and everyone just pitches in to fix it when needed, because it’s valuable. The owner is the village, not the villager staying there.

Obviously, our current situation is fucked up and way too skewed toward being trapped. I personally think that would get better if we cut back with the suppression of new construction. Some building codes are good, but ours are bloated and that’s economically inflaming the homelessness crisis AND the declining mental health of the entire lower and middle classes.

I hope that didn’t get too incoherent toward the end. I’m quite tired.