The “it’s all just supply and demand” argument is overly simplistic and strikes me as coming from people who have taken first-year Econ, if that, and literally nothing else.
Does supply and demand affect housing prices? Yes, and the fact that supply has been constrained is affecting prices.
Is it the only factor? Probably not.
Even basic economics classes will teach that there are several ways that supply and demand breaks down.
For one, if there are imbalanced implications for both the supply and demand parties. For a landlord, rent is a purely economic transaction. Not taking a tenant means losing money. For a renter, not having a place to live is far more damaging. You lose shelter, safety, social standing, etc. The article touches on leaving an apartment empty for a couple months to find a tenant that will pay what you’re asking. But would anyone really go homeless for a couple months to save on rent? Not only that, but peoples lives revolves around where they live, and it’s not easy for a lot of people just to pick up and move to a different market.
Another way supply and demand might break down is if there is price collusion between parties on the supply side. This is relevant especially in this case because if there is a single party setting prices (eg the algorithm) and there is a constrained enough market, then you can in fact force people more than what typical supply and demand would imply.
Have you ever looked at how long it takes to get a building permit in one of those high-rent areas? Years, if you get it. And millions of dollars in plans, approvals and preparations. God forbid if you must involve some union people.
We’ve outlawed construction. Any other factor besides this is far far behind.
> Any other factor besides this is far far behind.
Ok based on what? Like I think there are supply problems, but there are plenty of examples where the demand isn’t increasing much or is even decreasing but housing is still getting more expensive.
Does supply and demand affect housing prices? Yes, and the fact that supply has been constrained is affecting prices.
Is it the only factor? Probably not.
Even basic economics classes will teach that there are several ways that supply and demand breaks down.
For one, if there are imbalanced implications for both the supply and demand parties. For a landlord, rent is a purely economic transaction. Not taking a tenant means losing money. For a renter, not having a place to live is far more damaging. You lose shelter, safety, social standing, etc. The article touches on leaving an apartment empty for a couple months to find a tenant that will pay what you’re asking. But would anyone really go homeless for a couple months to save on rent? Not only that, but peoples lives revolves around where they live, and it’s not easy for a lot of people just to pick up and move to a different market.
Another way supply and demand might break down is if there is price collusion between parties on the supply side. This is relevant especially in this case because if there is a single party setting prices (eg the algorithm) and there is a constrained enough market, then you can in fact force people more than what typical supply and demand would imply.