There’s Only One Solution to the Housing Problem—And It’s Not About Price
The original (Spanish) version of this article can be found here.
Like almost everyone, I have a recurring pain in my upper back. Day to day, it feels like a sharp sting in my neck, but when it flares up, I end up as stiff as a Barbie doll, only able to move my neck robotically from side to side without changing my facial expression.
Since we all basically have a master’s degree in back pain, I know the issue isn’t actually in my neck—it stems from a muscle knot in my right trapezius, brought on by using my hand to write, work the computer trackpad, or use my phone.
Applying heat and painkillers helps when the pain gets intense, but that’s never going to fix the actual problem.
Something similar is happening in the housing market. In recent years, alarms have gone off because housing prices have risen so much that they threaten many people’s life plans—especially young people’s. The generations just now entering adulthood are on track to spend nearly half of their lifetime income on this basic necessity.
We’re in a phase of acute pain because prices keep rising, but price is only a symptom of a deeper problem we need to understand if we want to fix it. You don’t get rid of a muscle knot just by dulling the pain.
We need to go to the root: Where does the housing access problem really come from?
To answer that question, we need to look at the economic fundamentals behind what’s happening, and start by asking ourselves: where does the value of housing really lie? In other words, what exactly are we paying for?
I think it’s easy to see that the reason housing is such a profitable asset today has very little to do with the buildings themselves. A magnificent building, if you take it out of central Madrid and place it in the middle of a poppy field in La Mancha, isn’t worth even what it cost to build. Some properties—often hundreds of years old—gain value without their owners doing anything substantially valuable to them, while others, quite similar, lose value.
What gives housing its value—and what’s changing that value—is the city. For several decades now, there’s been an unstoppable trend toward mobility and urban concentration: people all over the world are moving to certain cities and abandoning others. As that trend plays out, urban land either skyrockets or crashes.
Do rising home prices in London have anything to do with the nature of the buildings themselves? Are London homes inherently better than those in Essex? Or does it have to do with their owners? Is anyone really willing to pay more for a home because of who owns it?
Clearly not. It has everything to do with investors believing that London will continue to attract demand in the coming years. And that perception stems from the city’s cultural, economic, and political pull—not the landlords.
It’s also not true, as is often claimed, that housing prices rise in big cities and fall in small ones. Housing prices aren’t simply a function of population change. Instead, they go up in cities that are succeeding and go down in those losing the global race for urban competitiveness. Just like a company’s stock rises or falls depending on its future prospects.
Glasgow and Edinburgh are Scotland’s two major cities. They’re just a few kilometers apart, have similar population sizes, and share the same administrative regulations. Yet housing in Edinburgh is 30% more expensive. Edinburgh is establishing itself as an attractive global city, seen as a rising asset thanks to its festivals, universities, and startups. Glasgow, on the other hand, has been in crisis for years, struggling to find a new identity after its industrial model collapsed.
New York has been a massive city for a very long time, but property prices haven’t always gone up. During the years when the city lost traction, housing prices remained flat.
A city is not a collection of buildings. It’s a collection of people. That group of people—with their ideas, their energy, their movements, their music, their businesses, their restaurants, their universities, their networks, their institutions, their changes, and their lifestyle—is what creates wealth.
That wealth is very hard to capture, because it can be consumed without competition. Many people can enjoy London’s dynamic job market or its cultural scene without paying a cent, so it’s very hard to seize that value and turn it into profit.
And this phenomenon is growing. As the industrial economy gradually disappears, more and more of the world’s wealth is found in the space between people: in their attention, and in their increasing tendency to gather in cities.
So what capital does—always desperately chasing returns—is to go where that value can be captured: the real estate market. It’s like a fisherman arriving at a river and casting a net across the current. He’s not creating the river, nor is he responsible for its ecosystem, its maintenance, its biodiversity, or its wealth—but he still takes a share of what the river produces. He extracts value from the river. Hence the real estate industry’s foundational motto: location, location, location.
In other words: the real asset is THE CITY, not the housing. Housing has become a mechanism for capturing the rents generated by cities.
The city is a common good. It’s like a river, a delta, or a forest. It generates wealth and allows us to capture and monetize part of it. But it must be managed with equity in mind, never losing sight of the fact that those profiting from urban wealth are exploiting a collective resource. Landlords—not just of housing, but also of retail and office space—are those fishermen placing their nets in the city.
Seen from this perspective, the housing market becomes much clearer: it doesn’t generate wealth, it only captures what others create.
And it becomes clearer, too, how it can be regulated beyond price controls, because we already have many examples of how common goods are managed: from shellfishing licenses on Galician beaches to irrigation rights.
How should housing be managed, if it is essentially a means of extracting value from a common good—the city?
If we conclude that urban land—or put another way, the space between us—is our primary common good, something we all share but no one owns individually, then it logically follows that cities should be managed like common goods.
Common goods are governed by two core principles: access and sustainability. When we think about water, for example, we recognize that good water management means ensuring access for all (on equal terms), and also ensuring we don’t dry up the aquifer.
Store of value vs. investment asset
So the idea that got us here—that we should be a "nation of homeowners"—can still make sense, as long as everyone can be a homeowner and thus have access to the common good. Citizens should be able to own a piece of the city. The idea that each of us owns a home, or that social groups hold housing for a collective, fits this model.
It also makes sense as a store of value. Over time, people save money by investing in a home, and when they sell it, they recover that savings and can use it for other goals—such as passing it on to their children or funding their retirement.
This is still common sense for most people. People want to buy homes because they understand the deal: you buy in, participate in urban life, your home increases in value, and when you sell it, you recover a lifetime of savings.
But when we shift from the idea of a nation of homeowners storing value, to a nation of rentiers, people seeking profits by charging rent to others, because some own property and others don’t, we go against the management of the common good. Now, some have access, and others don’t.
Worse yet, we begin to accept a dual society where some own the goods, and others live to pay for access to them.
And it doesn’t matter who the owners are. It doesn’t matter if it’s the sweet old lady on the fifth floor or a Saudi investment fund. If we accept that some actors can profit from real estate, we are also accepting that another social group will work just to pay rent.
That’s why the problem isn’t about price. Even if we manage to control prices, in a model where some own homes and others don’t, we condemn part of the population to pay a kind of tax for not having bought—while others earn income without generating value, simply because they had capital to invest. That’s a feudal society, regardless of who the landlords are or how high the “levy” is.
The idea is that city dwellers—citizens—because we are part of that wealth generation, because we are fish in that urban river, should not only be able to access the portion we need to live in, but also own a share. We should be co-owners of the city. We should collectively benefit from the wealth it creates. The right to housing is not just about having a place to live: it’s a right to save, to invest your life’s income in a place. And this should be true for everyone, not just those who can afford it.
Providing services
There’s still the question of how to serve people who, due to their circumstances, don’t want to own a home. Maybe they’re still deciding where to live, or are in the city temporarily.
In that case, it would make sense to have a rental housing stock to meet this demand. But housing offered for this purpose should be regulated like other urban economic activities: with a license.
City councils should, as they do with any other service, regulate the number of rental housing licenses and monitor those providing this service to ensure quality standards—which, unfortunately, are currently lacking.
It makes no sense that every economic activity in the city—from opening a bar to driving a taxi, operating an Uber, or running a dental clinic—requires a license, yet anyone can take a portion of the common good that is the housing stock and exploit it as a business, whether for tourist rentals or long-term leases. When someone rents out a home, they are withdrawing part of a resource that citizens demand—not just a roof, but the chance to own a proportional part of the city.
That dynamic leads to overexploitation of the common good. The business of rental housing is what’s drying up the aquifer: there are no homes to buy because they’re all being used for profit.
Let’s consider what happens to each type of property owner under this model:
Someone who owns a home to live in is unaffected. Nothing changes.
Someone who owns one or more homes for rent must apply for a license—or stop renting. They could leave it empty, but many would likely choose to sell, since it would no longer be an income-generating asset. If they sell, given how much housing prices have risen, they’d likely make a profit and could reinvest that money in the productive economy—which we badly need.
Someone without a home could now rent one—with a license and guarantees—or buy, now that many homes held by large landlords are returning to the market.
Requiring a license for landlords who want to rent out properties would have several positive effects:
It would expose the black market in rentals, as no one outside of a family could legally live in a property without a rental license.
It would enable price monitoring and enforcement of the rent caps currently being proposed, which are difficult to implement now.
It would prevent real estate agencies from charging illegal fees and stop other abuses of power, since landlords would risk losing their license.
It would send a clear message to international investors that Spain is not a place to extract profits from housing—and it would help cool price escalation.
Local councils could regulate the number of rental homes per neighborhood based on demand—just as they do with all other economic activities.
Most importantly, it would align with what most people want: to own a home, and to feel like full citizens, participants in the life and value of their city.