[ethanbond]

Rents are set by only two things: 1) the tenant markets’ ability to pay and 2) competition with other landlords.

If every single landlord knows with certainty (2) that every single tenant in their market has increased their ability to pay (1) by $1000/mo, then every landlord independently will come to the conclusion that they can raise rents by $1000/mo.

They know the tenants are able to sustain it, and they know other landlords know the same thing.

[bee_rider]

The landlords will still be in competition, anyone who breaks with the conventional wisdom will have an easier time getting tenants. It would probably raise prices, but the laws of supply and demand don’t just go away.

[ethanbond]

Huge amounts of the demand just moves $x up the price curve, but that doesn’t suddenly conjure supply into existence, so you have the same demand willing to pay higher prices across the same supply: that’s just higher prices. In HCOL areas the vast majority of rent prices stem from land rent, and that supply is not just less elastic than demand, it’s totally fixed.

Most insidiously: the demand that will move most aggressively up the price curve is lower income people seeking better lower/middle income housing. So those prices will move the fastest.

[bee_rider]

You are making a lot of predictions from basic principles and very simple models, I’d be amazed if the market was really that simple.

[ethanbond]

It really is that simple. Here's an analogous example of minimum wage increases: https://www.sciencedirect.com/science/article/abs/pii/S00941...

Evictions went down for 3 months, then rose again back to their prior level after as rents increased.

[pixel8account]

Can you link to some study that confirms it? This sounds far too simplistic to be true, especially for something as complex and unpredictable as the economy.

[ethanbond]

It’s a special case of this: https://en.wikipedia.org/wiki/Henry_George_theorem?wprov=sft...

This says public investment will just increase aggregate land rents to at least the cost of that investment. UBI is effectively a gigantic “public investment” that is everywhere. It’ll get baked into land rents, which will then propagate into actual rents.