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If rent no longer rises then the profit doesn't rise commensurately with demand, so the money isn't there to build supply. Rent control crushes supply to the d
by Espressosaurus 18d ago
If rent no longer rises then the profit doesn't rise commensurately with demand, so the money isn't there to build supply.
Rent control crushes supply to the degree that the rent control caps rents below the actual market rate.
If you're lucky enough to get rent controlled housing then you're in good shape. But good luck getting it when things get far enough down the timeline.
Rent fixing is the other side where supply is manipulated to extract the maximum profit. In this case the coordinated rent pricing action behaves like an oligopoly.
- tyre 18d agoIf rents can’t rise quickly, then the expected profit of a building goes down, which means prices for land go down, which means it is cheaper to build, which means it balances out. If the balance is far enough off that everything turns into commercial real estate, that can be solved, too.
- rcpt 18d ago> prices for land go down, which means it is cheaper to build By this logic San Francisco should be one of the cheapest places in the world to build
- StevePrefontain 17d agoYou’re misunderstanding 2 fundamental things. First is that it’s very expensive to build anything in major US cities with the high cost of labor, materials, and permitting. Rent control completely tips the balance against building housing that you’ll rent out. Second is that the value of land is not going to depreciate in these premier US cities just because it’s not profitable to build rental units. There’s many valuable things you can do with that land, rental units will just stop getting built in favor of other things.
- tyre 17d agoNot if we zone them for residential.
- jupp0r 17d agoIf there is not enough supply for the demand in housing then nothing but meeting demand with new supply will solve that.