Rising Prices, Lower Rents; Rising Rents, Rising Prices (Kevin Erdmann; Mercatus Center Fellow)
Rising Prices, Lower Rents; Rising Rents, Rising Prices Monday, June 24, 2019 Authors: Kevin Erdmann (Mercatus Center Fellow) (Part 5 of 5) https://www.mercatus.org/bridge/commentary/rising-prices-lower-rents-rising-rents-rising-prices To understand the importance of supply for housing affordability, and to understand why home prices and rents became so disconnected before the crisis, one must view the US housing market as the combination of two very different markets. There is the Closed Access market, where political obstructions prevent supply from responding to price. And there is the rest of the country, where price increases can generally trigger new supply. Where supply is blocked, rising demand just keeps pushing prices higher. Where supply can come on line, it presents options for buyers, and keeps prices near the cost of new building. During the pre-crisis housing boom, focusing on home prices in a national market , Americans ...