Newsgroups: can.politics
Path: utzoo!utgpu!jarvis.csri.toronto.edu!db.toronto.edu!jdd
From: jdd@db.toronto.edu ("John D. DiMarco")
Subject: Re: rent review
Message-ID: <1988Feb29.173313.13345@jarvis.csri.toronto.edu>
Organization: University of Toronto, CSRI
References: <1988Feb24.140628.28040@jarvis.csri.toronto.edu> <1433@looking.UUCP> <1988Feb26.225840.21116@jarvis.csri.toronto.edu> <1437@looking.UUCP> <1988Feb28.002014.29461@jarvis.csri.toronto.edu> <1443@looking.UUCP>
Distribution: ont
Date: Mon, 29-Feb-88 17:33:13 EST

In article <1443@looking.UUCP> brad@looking.UUCP (Brad Templeton) writes:
>Many factors have driven up rents.  Perhaps the strongest is the arrival
>of the two-income couple, or the D.I.N.K.  This strong, unforseen
>increase in the demand for quality appartments *must* drive the price up.
>There's nothing that can be done to stop it. 
This is not correct. Increased demand only drives prices up if the supply
remains static (or increases at an insufficient rate). If industry and/or
government commit themselves to a large increase in the supply of housing
units, then prices will remain at a reasonable level. This is basic 
economics, no less.
 
>With high DINK demand for luxury appartments, homes and condos, and
>a large base of run-down rent controlled appartments, who's going to be
>idiot enough to build lower middle class dwellings?  Even MURB tax
>breaks didn't help.
You're correct in saying that high DINK demand for luxury housing will 
result in a greater supply of such housing, perhaps at the expense of lower
income housing... but ONLY if housing construction is left entirely to the
free market. Industry is interested in maximizing profits, not providing 
affordable housing.

>> The price dictated by the free market is too high.
>As noted, the prices today don't come from a free market, but a heavily
>controlled one.  And markets don't "dictate" prices.  They arrive at
>them, through the aggregate of consumer demand and producer supply and
>profitability.  Only rent control laws dictate prices.
The prices dictated by the market (free or not) are high. And the term
'dictated' is an anthropomorphism - no more. Prices set by the market are
no less absolute for having been arrived by means other than legislation.
Anyhow, everyone seems to agree that prices are too high - but the means
of dealing with this problem are being debated. You seem to be avocating 
abolishing rent control. How will that prevent the prices of units now
under rent control from increasing dramatically?

>> Speculators are driving the price up.
>To some extent, but only because it works.  Most of these speculators
>are ordinary people, though.
Speculation doesn't work in a market with sufficient supply. Who the 
speculators are is irrelevant.

I believe that the answer to increased prices is an increased supply of housing
units, yet unfortunately, I am convinced that the 'free market' will act only
to maximize profits. Because of the Dual Income family phenomenon, the most
profitable housing construction in the future will be high-income level. 
That leaves Government housing.... and since the government is responsible
for the well-being of its citizens (including the fundamental need for 
adequate and affordable shelter), it should step in to ensure that everyone
has reasonable housing. Since affordable housing is profitable (yet not
as profitable as high-income housing), this won't involve a long-run drain
of tax dollars... in fact, it will provide income for the government, 
supplementing tax dollars. 

And rent controls? Toronto with rent controls is much more affordable for
middle class people.... if you can find a place to live. Toronto without
rent controls would be much more expensive (New York is a good example).
The best alternative in my opinion is Toronto with increased gov't housing.
If there is sufficient moderate-income housing, rent control will not be
necessary.

>Brad Templeton, Looking Glass Software Ltd. - Waterloo, Ontario 519/884-7473

John
-- 
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    John DiMarco           Hard work never killed a man ...
jdd@csri.toronto.edu          ... but it sure has scared lots of them! 
{uunet!utai,watmath!utai,decvax,decwrl,ihnp4}!utcsri!jdd      jdd@utcsri.UUCP
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