A student-debt bubble fueled a housing bubble
I wonder how the American student debt explains how the same thing is happening to housing in Denmark. Now, I’m not arguing against the article, having high student debt is certainly going to impact your ability to own a home, but it’s certainly not the only factor which is at play.<p>Our sister company develops housing for renting. Which was a very lucrative business back when interest rates weren’t evil. What they really do, however, isn’t to rent out homes, it’s making investors money. Keeping rent high is a bigger part of that journey than actually renting out homes, because ultimately the end goal isn’t to own the building, it’s to either sell it or use it as leverage in other projects that makes our investors money. In the city I live in, we have 10.000 empty dental right now, which is quite a high number in a city of a quarter of a million people, but the rent isn’t going down. It’s not going down, because it’s hard to increase if once you lower it, and since the goal isn’t really to rent out these homes but rather to make investors returns, it’s better to ride a decade of empty rentals than to lower the rent. It’s better because the finance data looks better when the potential profits are higher, and as long as that is more important than actually realising that profit then rent isn’t going to come down. Now, obviously there is some competition in the rental market, but every investment bank developer is sort of in our shoes and while it’s obviously a little bit of a game of chicken, it’s not really, because there is still a housing shortage in popular towns. But because we’re playing chicken, the smaller sized rental companies don’t actually need to compete that hard on pricing because we won’t lower ours, and there is enough of a demand that they can get a way with just being in our slipstream.<p>I’m not sure if that’s a thing in America, and there is a lot more to it than this. Here in Denmark we have the same urbanisation and population decline as many other places, so housing is very uneven with urban areas increasing prices while rural areas see theirs plummeting to the point that some homes are frankly unsellable. But it’s mainly due to general debt, and how we let people borrow too much money, which student debt is part of, but not the single contributor to.