Your Questions Answered
At Ashlar, I firmly b that an educated home buyer or seller is best equipped to make their own decisions. That’s why I take time out of my day each and every day to answer someone’s real estate question. And, when I think the answer can be useful to you as well, I share it here. So without further ado:
Rent control (really, ANY price control in a marketplace) is at best a temporary fix and at worst a long-term drag on housing.
The reasons are as you mentioned: supply and demand.
While rent control would fix/set rents at an “affordable” level, they would also stifle investment and development as there would be a cap on the rate of return someone would receive on an investment property.
The true problem is this: The pandemic has caused huge disruptions in the supply chain and caused many, many people to make changes to their living situation… and it’s not just people moving here, this is a fact all across the country.
It’s like… Playstation 5s. When everyone wants one, they get really, really hard to buy and prices skyrocket. That’s where we are at with housing currently. Eventually, demand relaxes and you can go pick one up at target on a whim. Main difference is real estate is a lot more inelastic in supply than electronics production so it takes for-ev-er…. it takes a lot to buy a house and to sell a house someone usually needs somewhere to go.
Eventually, the market will correct itself, through a combination of people bowing out of buying or deciding not to move, more people deciding to sell because of the extremely high prices they can get, and investors seeing the potential for large ROI and building more units.
All of this is already happening to lesser and greater degrees. It just takes *time*. And until it does correct it is short-term pain, for sure.
Also the iBuyers, foreign buyers (yay we’re back to that boogeyman now) and large-scale investors buying up entire neighborhoods are just that… convenient boogeyman that makes for great scapegoats but isn’t really having a major impact on the market.
What IS having the biggest impact is your neighbors deciding not to sell, the rest of the country still want to buy here even at current prices.