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Except, if you'd ever paid any attention to housing markets in any major city they don't work this way. There are too many other factors and incentives at play

Except, if you'd ever paid any attention to housing markets in any major city they don't work this way. There are too many other factors and incentives at play. Not least of which is that the profit motive drives developers and landlords to keep costs as high as they possibly can, and they all share that motivation, so you end up with convergent price fixing - where they all just naturally compete on things other than price with out actually colluding to do that. Markets rarely actually work as advertised.

luckylion 5y ago
They do though. It's just that there's so much regulation and other problems that they can't adjust fast enough. I've lived in Hamburg, Germany, adjacent to an expanding hipster area. Rents rose steadily and every vacant lot was being built upon, industrial zones were repurposed for more housing etc. It's just that that still only gives you a fraction of the apartments you'd need to satisfy demand. If there was no incentive for investment, I'm sure we'd see even fewer new houses being built, because there's no incentive for the state to move, neither fast nor at all.