Private Equity is bad but it isn't the only villain of the housing crisis story.

With Salt Lake City hitting the top 10 list of the most expensive cities to live in that are within the borders of the United States, I think I'd like to weigh in on the housing crisis. So, the narrative around housing from Republicans and from the news is always around "high interest rates" and "private equity is buying up all the property" and "immigrants are stealing housing from people who were born in the United States, making it impossible for them to live in the places they were born." Here's what I think is actually what's going on.

A company or a person in American capitalism is always going to charge whatever they need to in order to increase profits as much as possible. Everyone likes money, right? If a person or a company ever charges less for a thing, it's only because they believe it will lead to more sales which will make up for the lower revenue. That's it. That's the only driving factor of capitalism. In such a thing as housing where you don't have a huge supply of things, this is your first problem. And it is as true today as it was in 1950. There was never a time when the country was full of George Baileys, lowering the prices for the good of the consumer. People never have done the right thing, and you shouldn't expect it. In the United States, it is and always has been done...for profit.

I've read comments from people who believe that sellers are raising prices in a coordinated way, so that they all make more money be agreeing not to undercut one another. I think that this depends on the market. In a market with relatively few sellers, this absolutely can and does happen. In a highly competitive market where buyers have a lot of sellers to choose from...not so much. Rents are too high and landlords are absolutely making too much money off tenants, but there's another problem here, and I'll diagnose it for you.

The problem is that housing supply is very low compared to demand. Home builders are not meeting demand because we've made it illegal for them to build new developments where they're needed. And any time people try to fix the problem, rent-seeking property owners show up to Zoning Board of Approval meetings to shut it down. The reason? None of them are good at saving money, and they have become rich over the values of their homes and that wealth allows them to sit around and do nothing and complain that "people just don't want to work anymore."

The property owners don't want to let go of their dollar signs that reflect off their retinas. They've seen their property values double in recent years. Is this enough? Nope...they want more. Making housing cheaper necessarily means giving up wealth. So they have a vested interest in keeping the housing crisis going. This group includes not only corporate landlords, but regular landlords, and family home owners as well. These are all of the people who got in the boat and then pulled the ladder up right after them, even if it stranded their own kids. People do not give a crap about anyone but themselves. This is very American.

I'm not sure what the solution is. I feel like there needs to be a fundamental change in the attitude of people. But barring that, there needs to be laws and consequences that force people to be good and moral because they won't choose this if left to their own devices. And in the current fascism wave that's sweeping the country, it feels a lot like the collapse has already started and the wolves are in the house. Trying to assess what paint you want on the walls while the roof is on fire seems...I don't know...a bit useless. So I guess we'll see where it all ends up. But really...you can blame private equity all you want for the housing crisis. I just don't think that they deserve being labeled as the only villain of the story.