The popping of speculative bubbles needs nothing but a surplus of irrational exuberance, but there may be an interesting cross-over effect with immigration. The NY Times today talks about a national decline in the price of the average house. The Post today discusses declines in the DC area. Interestingly, Manassas Park, which I just highlighted as having turned majority minority with an impact on its politicians, is expected to have the steepest drop in home values in the area.
I don't think it's accidental. Politicians and government leaders tighten the screws on immigration, making it harder to get in. That cuts the demand for both temporary and permanent housing for the immigrants. (Which has often been met by group housing, which is a centuries-old pattern--look at Jacob Riis at the turn of the 1900's and his book "How the Other Half Lives".) And, we know in a free market, a cut in demand will cause a cut in price.
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