General Discussion
In reply to the discussion: Why not outlaw landlordism? [View all]True Blue Door
(2,969 posts)First, I don't think we know exactly how far prices would fall, so it's premature to say that building houses even with current practices would fail to be profitable - we can only say that it would be less profitable. And let me reiterate that other part: Less profitable with current practices.
Secondly, since plenty of people can already afford to buy houses, that's not going to go away - the people who buy houses now to live in themselves would just buy bigger ones (or more of them) under the lower prices, so the profits they represent would not disappear. Only the profits related to purchases made to make money rather than utilize the property themselves would go away - i.e., speculation and renting.
Thirdly, higher-volume sales create economies of scale that reduce input costs, and that would at least somewhat offset the reduction in profits. As a matter of fact, it may not be the case that builders would experience any loss of profit at all - merely real estate companies, speculators, landlords, and other middle-men between the product and the end-user.
Plus, since more people own the homes at a lower price, and aren't losing money on rent, people have more to spend on repairs and maintenance.
Basically I think you're over-generalizing one part of the real estate economy to the entirety of it.