[1_2__3]

Never have to look far in a thread like this to find the kid who thinks economies work like Econ 101. Here's a piece of advice: anytime you find yourself concluding with "it's that simple" you're probably not thinking critically about the issue.

[a_c]

"For every complex problem there is an answer that is clear, simple, and wrong." - H. L. Mencken

[randomdata]

Supply and demand really is that simple. Trying to understand everything that leads to a given supply and a given demand at a given point in time is where economics becomes incredibly complex, but supply and demand does not concern itself with those matters.

[ExactoKnight]

This was a really good article that shifted my thinking away from simplistic Econ 101 thinking about real estate: http://www.theglobeandmail.com/report-on-business/rob-commen...

[qznc]

Yes, but the actual question is: How could you lower demand or raise supply?

[randomdata]

The cure for high prices is high prices.

People are willing to pay increasingly high amounts of rent because they see value in occupying that space. Perhaps because the area provides high paying jobs that, even after having to pay those costs, more than justifies the expense. Whatever their reason, they have evaluated all their options and have determined that this place is to their greatest benefit. When people stop seeing value, they will stop spending.

At the same time, as rents go higher and higher, the incentive to provide more rental properties increases. Maybe not yet, but at some point it becomes too much to ignore. Hypothetically, if the going rate for were $1M/month, I'm sure there would be many people would would be quite happy to vacate their houses to let you fill them that would not be so happy at the current rate. As the saying goes, everyone has a price. Maybe government would also improve zoning after a certain threshold, allowing new dwellings to come onto the market. A declining population would be something for government to stand up and take notice of. There's no indication that anything needs to be done when growth keeps on climbing.

People need a place to live, but I'm not convinced shelter is universally out of reach. Look out into small towns and rural areas and it is a whole different world of pricing. Yeah, maybe you will have to take a $20k/year job instead of a $150k/year job, but if you are hypothetically spending $130k/year more on rent to have that $150k/year job, your income is going to be the same in either place (ignoring the differences in other costs, including taxes, for ease of discussion). If you are paying less than $130k/year in rent in our hypothetical situation, it is easy to see where the money is coming from. Why shouldn't they pour it into housing?

[Aeolun]

I think there are some extremely straightforward answers to those problems :P

It's just that people don't want to for some reason (e.g. regulation), if it had been pure capitalism, I'm fairly certain someone would've built more houses by now.

[jstanley]

OK, how about this. Buy a house, and offer it up for rent at twice the going rate. See how easy you find it to get a tenant.

[antisthenes]

You do realize the action you described reduces the aggregate supply of housing and drives up prices by itself, right?

[mhermher]

Now repeat that with not just one house, but let's say thousands of houses.

[maxsilver]

> OK, how about this. Buy a house, and offer it up for rent at twice the going rate. See how easy you find it to get a tenant

You say that as if it's ridiculous, but that is literally happening in many cities right now, word-for-word exactly as you described.

"OK, how about this. Buy up the municipal water supply and offer it at twice the going rate. See how easy it is to get people to pay the water bill" -- it turns out everyone who can possibly pay, will still pay. Because water, like housing, is a basic human necessity.