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I think you are missing the point: if there is "little-to-no purpose-built rental construction" I guarantee it's because of laws and regulations preventing comp

I think you are missing the point: if there is "little-to-no purpose-built rental construction" I guarantee it's because of laws and regulations preventing companies from fulfilling demand. Think whether people or companies can purchase any land and build whatever they want on it. No they can, local governments must zone it as residential, and then they usually have strict restrictions on how many units can be built on each area, licenses, permissions, building codes... You are right to complain about this issue, but don't blame free markets, because they are not free: government intervention prevent the necessary competition for the market to work and fulfill demand.

jacobr1 6y ago
Also consider financing. Buying a home for owner-occupancy is often subsidized while purchase for an investment property (rental) is not. I don't think this is wrong, but certainly the incentives shape the market.
throw0101a 6y ago
> No they can, local governments must zone it as residential, and then they usually have strict restrictions on how many units can be built on each area, licenses, permissions, building codes... Which are exactly the same for condo or apartment. The reasons are economic AFAICT: > For a long time, the economics of constructing a rental made little sense compared to a condo. Condo builders get a significant portion of their financing directly from future unit owners, who give hefty deposits to secure their spot and therefore assume some of the risk. Rental landlords, on the other hand, need to front the majority of the equity, assuming all the risk themselves. When a condo building is complete and all the units have been sold and paid for, the developers quickly reap the returns on their investment and move on. For a rental building, the returns take many, many years longer. * https://nationalpost.com/life/homes/is-this-rare-new-rental-building-the-answer-to-torontos-rental-housing-woes https://nationalpost.com/life/homes/is-this-rare-new-rental-... Toronto has had vacancy rates <2% for decades, so it's not like rental demand wasn't there. In fact prices peaked just before the pandemic and are now falling because the Airbnb folks are switching to long-term rentals. The price of condos is dropping as well since plenty of people are just selling their Airbnb units and flooding the market to certain extent. A good number of rental buildings are actually being constructed in partnership with insurance and pension funds, as they need long term cash flows and baby boomers aren't getting any younger.

jacobr1 6y ago

Also consider financing. Buying a home for owner-occupancy is often subsidized while purchase for an investment property (rental) is not. I don't think this is wrong, but certainly the incentives shape the market.

throw0101a 6y ago

> No they can, local governments must zone it as residential, and then they usually have strict restrictions on how many units can be built on each area, licenses, permissions, building codes... Which are exactly the same for condo or apartment. The reasons are economic AFAICT: > For a long time, the economics of constructing a rental made little sense compared to a condo. Condo builders get a significant portion of their financing directly from future unit owners, who give hefty deposits to secure their spot and therefore assume some of the risk. Rental landlords, on the other hand, need to front the majority of the equity, assuming all the risk themselves. When a condo building is complete and all the units have been sold and paid for, the developers quickly reap the returns on their investment and move on. For a rental building, the returns take many, many years longer. * https://nationalpost.com/life/homes/is-this-rare-new-rental-building-the-answer-to-torontos-rental-housing-woes https://nationalpost.com/life/homes/is-this-rare-new-rental-... Toronto has had vacancy rates <2% for decades, so it's not like rental demand wasn't there. In fact prices peaked just before the pandemic and are now falling because the Airbnb folks are switching to long-term rentals. The price of condos is dropping as well since plenty of people are just selling their Airbnb units and flooding the market to certain extent. A good number of rental buildings are actually being constructed in partnership with insurance and pension funds, as they need long term cash flows and baby boomers aren't getting any younger.