> Makes me wonder: aren't rents prone to rise to the level that people can bear? If people can bear 30%, rents will rise to that level in attractive locations.

> Makes me wonder: aren't rents prone to rise to the level that people can bear? If people can bear 30%, rents will rise to that level in attractive locations. In econ this reasoning is related to the diamond-water paradox: http://en.wikipedia.org/wiki/Paradox_of_value http://en.wikipedia.org/wiki/Paradox_of_value The gist of it is that it's only accurate to assume so when supply is very low. But like water, despite being crucial if housing supply is high enough it should decrease in price until it approaches the marginal cost of production. In this case, it's almost always laws and regulation that prevent he supply from increasing; this in part because (a) most voters (in the US) are home owners who have a vested interest in increasing home value, and (b) people are resistant to change and don't want new housing developments in their towns.