[dwallin]

Landlords are also competing with each other and tenants have limits based on what they can actually afford to pay. At some point they can be forced to move out of the city to a lower cost of living location, dropping demand. In fact it's entirely possible for a significant increase in tax rates to make rental units a poor investment, causing housing prices to plummet and rents to drop.

Your mistake is assuming that people who bought up housing stock are guaranteed future profit on their speculative investment.

[disillusioned]

Step 1) Raise taxes on rental properties astronomically.

Step 2) Force out investor class and/or repossess properties out of tax adjudication.

Step 3) Public housing!

[Manuel_D]

> In fact it's entirely possible for a significant increase in tax rates to make rental units a poor investment, causing housing prices to plummet and rents to drop.

How does this logic work? Building apartments becomes a bad investment. Then developers don't build apartments. And somehow constrained supply is supposed to result in lower prices?

[IX-103]

What if developers built too many apartments so there is no shortage? What if the builders all decided to tear down the cheap apartments and build a bunch of Luxury Condominiums when the the housing market is full broke college students who can't even afford to cover the taxes on individual units?

You can say the market won't let it happen, but the second case is the current real estate market for the town I went to school in.