Housing bubbles are universally destructive
There&#x27;s a kind of interesting way to think about this, especially in the UK. Because people don&#x27;t automatically think in terms of opportunity cost and don&#x27;t know eg. that the long term equity return is X, there&#x27;s a disconnect between reality and how people think of it.
People in the UK think of rent as &quot;wasted&quot; money. In an efficient market, it wouldn&#x27;t be wasted at all because the saving from lower rent vs mortgage could be put into eg. equity&#x2F;bonds. Someone will reply that there is no saving but that itself is a symptom of the way we run housing.<p>But because people think that, and think that no-one would ever want to rent, we tolerate super weird policies like a residency house being exempt from capital gains tax, poor protection for renters, government tax transfers (in the UK they will literally give you money to buy your first house, the government is so committed to the your-house-is-your-bank philosophy).
All these distortions then actually CREATE the conditions which mean that you&#x27;re consistently losing money if you rent, because the government is effectively taxing you much more.<p>So our misunderstanding of economics creates an economic system which conforms to our mistaken beliefs, it&#x27;s kind of amazing.