>The idea that higher prices (rents) should lead to more construction is based on the premise that there is a functioning market based mostly on price alone.
It's also just very very wrong in most places.
The "development" companies in my area already own all the housing stock. Why would they spend any money on new builds when they can reliably keep ticking the rent cost up 7% YoY forever? It doesn't matter how high demand gets, nobody else can build because if you try to invest in a new development, they can just temporarily drop rents and wipe out any ROI you might have hoped for and ensure you fail and then buy up your property. Like, this stuff is literally how city real estate has always worked.
Instead, rent stabilization ensures that they can't dump the market like that to kill new entrants, so it encourages people to invest in building.
Meanwhile, people like my dad who are also technically "builders" are busy serving the far far far more profitable "We moved here with a billion dollars from SV and have no idea how money works so we don't notice your 100% profit margin" market, and no average people can ever compete with that. Builders want to make the highest profit they can, and that does not come from commodity housing in the city. It comes from catering and pandering to rich 2nd gen assholes who think they are gods gift to the world and can't tell the difference between quality and expensive. These people will continue to insist the free market would fix this and blame city regulations and zoning that they don't even know, because at no point have they even pretended or thought about building housing for the city. There's not enough profit in it.
It's also just very very wrong in most places.
The "development" companies in my area already own all the housing stock. Why would they spend any money on new builds when they can reliably keep ticking the rent cost up 7% YoY forever? It doesn't matter how high demand gets, nobody else can build because if you try to invest in a new development, they can just temporarily drop rents and wipe out any ROI you might have hoped for and ensure you fail and then buy up your property. Like, this stuff is literally how city real estate has always worked.
Instead, rent stabilization ensures that they can't dump the market like that to kill new entrants, so it encourages people to invest in building.
Meanwhile, people like my dad who are also technically "builders" are busy serving the far far far more profitable "We moved here with a billion dollars from SV and have no idea how money works so we don't notice your 100% profit margin" market, and no average people can ever compete with that. Builders want to make the highest profit they can, and that does not come from commodity housing in the city. It comes from catering and pandering to rich 2nd gen assholes who think they are gods gift to the world and can't tell the difference between quality and expensive. These people will continue to insist the free market would fix this and blame city regulations and zoning that they don't even know, because at no point have they even pretended or thought about building housing for the city. There's not enough profit in it.