[amyres]

There's a fallacy going on with this kind of anecdote (observing both increases in housing and increases in pricing concurrently), namely not being able to observe the counterfactual of NOT adding housing (but keeping all other socio-economic factors constant). What would go on with rent in that scenario?

Yes, rents are going up today... but it's quite possible they would be going up MORE (on average) if the new housing wasn't being added. Unfortunately, not many Randomized Control Trials for housing economics.

Housing developers are incentivized to select locations for projects that will serve increasing rents, increasing population, increasing incomes, etc. They spend a lot of effort on understanding demographic and economic trends. Projects are often 3-4 years from conception to delivery. The causal chain is essentially: Do Market Research -> Select Project Type/Location Expected to Outperform (Financially) -> Build Housing (Hopefully Where Rents Go Up) -> Make $$. The observed concurrency of More Housing and Higher Rents is actually a "Thesis Proven Correct" thing from the perspective of the investors, lenders, etc. But the causality (more housing CAUSES higher rents) isn't quite as simple as outside observers sometimes think it is.

FWIW, there are real problems with having most of the housing creation/provision mediated through this profit motive. Developers stop producing housing once the profit expectations decrease to the point that capital is expected to achieve higher returns in other asset classes (capital is mobile, it will flee the asset class if there are better opportunities elsewhere). This point of slowing/stopping housing creation (at the margin) is often far short of what most people would consider socially optimal. But that's the logic of capitalism. I'm simply approaching this more from a "how things are" perspective not a "how things should be" perspective.

Disclosure: I'm a tech/stats/finance guy turned real estate developer