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AI Engineering
Hacker News·Jun 26·5 min read
Foreign funds help make housing unaffordable: research
TL;DR
U.S. housing has become increasingly unaffordable, with average prices rising 60% from 2019 to 2025. Research from the McCombs School of Business highlights that foreign investment significantly contributed to this trend, particularly in areas with high foreign buyer concentration.
✦ Why It Matters
Engineers and researchers can explore how foreign investment impacts local housing markets and supply chain responses.
Key Takeaways
- Investigate local regulations affecting housing supply.
- Analyze foreign investment trends in real estate.
- Develop models to predict housing price responses.
- Collaborate with urban planners to address supply issues.
Full Summary
Housing affordability in the U.S. has deteriorated, with average home prices increasing by 60% from 2019 to 2025, as reported by the Harvard Joint Center for Housing Studies. Research conducted by Caitlin Gorback at the McCombs School of Business identifies foreign investment as a key driver of rising housing costs, especially in regions with significant foreign buyer activity.
The study reveals that from 2009 to 2018, the elasticity of housing supply—how quickly builders respond to price increases—was notably low, with only a 0.26% increase in supply for every 1% rise in prices. This contrasts sharply with the responsiveness seen before 2000.
Gorback emphasizes that the dynamics of housing supply in U.S. cities have shifted significantly over the past two decades, leading to insufficient new construction to meet demand. These findings suggest that foreign investment and regulatory environments are critical factors influencing housing affordability.