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Uh, rental properties absolutely compete in price. That is in fact why prices are so relatively consistent- no sane tenant on the market is going to pick a more

Uh, rental properties absolutely compete in price. That is in fact why prices are so relatively consistent- no sane tenant on the market is going to pick a more expensive apartment when the complex a couple blocks away costs less, so they end up about the same. That’s different then your assertion that a minimum wage increase would be disproportionately taken up by housing- that’s probably true, but that’s not due to a lack of competition on price, it’s due to more money chasing the same supply. And it’s quite possible that a minimum wage increase could see new entrants chasing rising prices on the low end side- perhaps enabling more people to rent houses as a multi family household rather than apartments. What we are seeing is an underlying demand shock (the effects of stay at home orders and WFH causing people to want to consume more housing on per person basis, combined with more money from changed consumption patterns and government programs ) that combined with a supply issue (historically low housing construction after the 2008 recession combined with global supply and labor issues) that has created a situation of historic demand chasing historically little supply inventory. If we finally see sufficient housing construction then you’ll see prices stabilize and possibly even come down, because those new units compete with the existing units.

Sohcahtoa82 5y ago
> That is in fact why prices are so relatively consistent- no sane tenant on the market is going to pick a more expensive apartment when the complex a couple blocks away costs less, so they end up about the same. It's a reasonable assertion, but I'm a bit more cynical. I don't think prices are consistent due to competition based on price, I think it's consistent because they've all figured out what the maximum rent is the market will bear. Again, the important thing to remember is that people need housing. The sellers of housing are taking advantage of that and will charge the absolute highest price they can. There's no reason to compete on price when you're essentially guaranteed a customer. > If we finally see sufficient housing construction then you’ll see prices stabilize and possibly even come down, because those new units compete with the existing units. I've seen first-hand people arguing against construction of new housing. They try to frame it as worrying about traffic, but the quiet part is that they know the higher supply could cause their home value to level off. We need to stop looking at real estate as a form of investment. It creates extremely perverse incentives that result in housing scarcity for the lower classes.

Sohcahtoa82 5y ago

> That is in fact why prices are so relatively consistent- no sane tenant on the market is going to pick a more expensive apartment when the complex a couple blocks away costs less, so they end up about the same. It's a reasonable assertion, but I'm a bit more cynical. I don't think prices are consistent due to competition based on price, I think it's consistent because they've all figured out what the maximum rent is the market will bear. Again, the important thing to remember is that people need housing. The sellers of housing are taking advantage of that and will charge the absolute highest price they can. There's no reason to compete on price when you're essentially guaranteed a customer. > If we finally see sufficient housing construction then you’ll see prices stabilize and possibly even come down, because those new units compete with the existing units. I've seen first-hand people arguing against construction of new housing. They try to frame it as worrying about traffic, but the quiet part is that they know the higher supply could cause their home value to level off. We need to stop looking at real estate as a form of investment. It creates extremely perverse incentives that result in housing scarcity for the lower classes.