Thinking back on my Academia days when I used to teach financial feasibility studies for real estate development projects to young architects. The textbook method to determine market demand for housing was to look at the census data, population growth, and household income.

But a few years in, the calculations would always retuen a negative demand for new housing projects, not enough people are moving into any areas, people are not earning enough to afford a house but new housing projects were still popping up all over the place like it didn't care, and most projects would sold out within days of opening.

We have chalked these phenomenon up to 'fake demand' in the housing market and real estate market in general but did not pay them any more thoughts other than accepting that whatever it is, it's beyond our understanding and no one really knows why people are buying up properties like candies. Instead of looking to the census data for demand calculations, housing projects price their offering based on their relative position to other projects that are in the same neighborhood, just going by averages and pray that the project will sell.

I also encountered this phenomena earlier while I was working on my master thesis. My thesis question was how do we get people to buy houses that are 'greener' than others. The thesis concludes that people buys what they have the ability to afford, not what they want but I discovered a few other details while I was working on it.

Controlling for neighborhood and price brackets I surveyed residences of different housing projects on what they are looking for when buying a house, the meta data that didn't make it into the thesis showed that over 80% of people living in the 'normal' housing projects were not owners of the property, they are tenants. On the other hand, more than half of the 'green' project residences (with 10-15% premium in price) are actual owners of the property, (and many have been long time friends or aqquantance with the project's developer) and even though the houses were priced similarly, the neighborhood has a markedly different feel.

I paid it no mind back then and also chalked that up to 'fake demand' thinking that that data is actually interfereing with my reasearch results as most of the residence I interviewed did not make the purchase decision.

It took me years after that to understand what the fake demand was, and it's not, by any means, fake.

What happened was that people were using real estate as a store of value, introducing a monetary demand and monetary premium into real estate marlets. Money, fiat money, was losing value fast and people were finding ways to get rid of it in exchange fot whatever might be able to do a better job of holding value. This causes a huge surge in demand, the wealthy are buying up houses and other real estate to store their wealth, driving up the price, the rising price then attracts others looking to make profit by mimicking the former's action. House prices went through the roof but most houses remained empty and people needs housing are forced to rent them from owners at exorbitant prices.

The monetization of consumption goods such as houses and realestate have rendered a whole generation homeless, forced to living on rented properties, owning nothing, and tricking themselves into thinking they are happy.

But how do we fix this? how do be bring the housing market back to 'normalcy?' Well we can't. There are a large amount of wealth locked up in these inflated goods, and its owner would do everything to keep it that way, because it's their wealth and they have the rights to protect it. Left alone, housing will only aggregate into the hands of the few, living the many with nothing to call their own, but we need to understand that it's not their fault. Anyone will do anything to protect their hard-earned wealth, the problem is that they can't use the one thing they should have been able to use and that is money.

If you look at the problem in isolation, one might come up with idiotic socialist policies like limiting the number of properties one can own or by taxing the ownership of properties but that will only worsen the situation.

What we need is a store of value that works. A call on human time and energy that is limited in supply and cannot be altered.

Bitcoin solves this problem, as money becomes, well, money, spilled over monetary demands will flow back into the monetary medium as it should, bubbles will burst and only those who realizes the mistake of their malinvestments in time will survive the inevitable crashes of .. everything else.

Fix the money, fix the world.