A generation of runaway prices
In major cities around the world, an average home now costs eight to twelve times an average yearly income. A generation ago it was three to four. At a 10% savings rate, a downpayment that once took six to eight years to save now takes sixteen to twenty-four — and that’s if prices stand still while you save.
Something has clearly broken. But what?
It isn’t the cost of building
The price of constructing a house — the timber, the concrete, the labor — has risen roughly in line with everything else. It is not what’s driving the crisis. Strip a house down to its parts and you’ll find the runaway cost isn’t the building at all. It’s the ground beneath it.
As a community grows — as it adds jobs, transit, schools, and shops — its land becomes more desirable, and the price of that land climbs. The building depreciates; the land value is what soars. Most of what we call “the housing market” is really a market in location.
Speculation pours fuel on the fire
Because land is taxed lightly, holding it costs almost nothing, so idle lots and empty homes become winning investments. People buy land not to use it but to wait for its price to rise — land speculation. That withholds supply from people who actually want to live and build, and pushes prices higher still.
Worse, cheap-to-hold land is the perfect collateral for ever-larger loans. Most bank lending no longer funds businesses; it funds bigger mortgages against the same fixed supply of land. Higher land prices mean bigger loans, which bid up land prices further — a cycle that ends, again and again, in a crash.
Why building more isn’t enough on its own
Building more homes helps, but as long as the gains from a growing community flow into private land values, much of the benefit of new supply is captured as higher land prices rather than lower housing costs. You can’t out-build a system that rewards holding land idle.
What would actually change it
If communities collected the rental value of land — through land-use rights — holding land idle would stop paying. Speculation would lose its reward, land prices would fall toward what land is worth to use, and homes would cost closer to what they cost to build. Because wages and buildings would go untaxed, working and building would be rewarded again.
That is the heart of Unitism. Read more in the chapter Affordable Housing, or compare approaches in Unitism and Georgism.