James K. Boyce and Léonce Ndikumana write:

The nation’s housing affordability crisis has become so acute that even our presidential candidates are paying attention to it. Former President Donald Trump blames immigrants for driving up prices and vows he will reduce demand by banning mortgages for “illegal immigrants” and deporting them. For her part, Vice President Kamala Harris promises to increase supply by building 3 million new homes.

But the number of  housing units in the nation has grown faster than the number of households since the turn of the century. Something else is happening here. It is not just a supply problem. And it is not just a demand problem caused by an increase in households, whether they are immigrants or not.

That’s because demand for real estate is not just about the number of people who need homes, it’s also about the amount of money buyers are bringing into the market. People without money cannot push up prices. It’s the people with money — especially those with a lot of money — who drive up prices for everyone else.

The truth is that there are a lot of people buying luxury real estate who have a lot of money. Dirty money. And that money is distorting the market for ordinary homebuyers. [Continue reading…]