It’s one thing to build a house and sell it, it’s another to build it for the sole purpose of renting it at peak market rate.
Corporations use to build company towns and rented them at higher rates than they paid the workers.
People fought to stop this but there are always people who insist on relearning these lessons the hard way.
There’s nothing wrong with the concept of renting. It only becomes a problem when companies are manipulating the market or price gouging. If companies are renting out units are peak market rate, then the issue there’s way more demand than supply. The solution is fairly easy, build more units to flood the market and bring down the prices. It’s a tried and true method. Want to see in action? Look at how Texas managed to get all of its major cities to have a big decrease in their average rents compared to last year:
Austin managed to slash rent prices by 9.3%, San Antonio by 8.2%, Dallas by 3.7%, Houston by 3.2%. It’s not just Texas, Nashville managed to slash prices by 8.3%, Atlanta by 5.2%, Baltimore by 5.5%, and the list goes on and on. What’s the thing common with all these cities? They build more units. They flood the market with so many units that landlords have no choice but to bring rent prices down.
It’s not just rents, housing prices are also down in places that build more:
https://www.realtor.com/news/trends/home-prices-falling-cities-where-prices-dropped-most-past-year/
Home prices went down by 11.2% in Miami, Denver by 6.3%, Seattle by 5.5%, Kansas city by 4.9%, and the list goes on and on.
Want cheaper rents and houses? BUILD MORE HOUSES. Can’t do that? Update the outdated zoning laws to allow for multifamily buildings, mixed zoning properties, and higher density. This is the path forward.
These articles are speculative on the cause. I don’t see any data on the supply increases.
Some of these cities, didn’t increase supply. For example San Francisco saw similar decreases it they offer to exploration there.
The rents decreases are year over year but are flat over a two or three period of time, it’s just as likely the rent increases were a bubble that popped and not because of some unspecified change in supply.
I mean every city is different. In the case of San Francisco, it could be that city is shrinking and that is driving down prices. However, in the case of the Texan cities, which are all growing, the decrease in rents is indeed due to flooding the market with new housing units:
Though the price housing has gone up considerably which is slowing down construction, which might bring up the rents again. However, this still shows that building new housing units in mass does bring down prices.
