In theory if prices are high it creates stronger incentives to build more housing which stabalizes prices.
In practice you have many situations where capitalists come in, see that a city has 5 vetranary clinics, buys up all 5 clinics and raises prices in all of them. The investor gets an unfair windfall profit from creating a local monopoly.
Similar things have started happening in housing markets.
Investors buy up housing to rent, then they all use the “recommended” pricing from the same app, which recommends high prices and keeps increasing the price that it recomments.
In theory markets should adjust on their own adding more vetrenarians or more housing.
But in practice there are numerous obsticles. Vetrenarians education is similar to medical doctors and the field is highly regulated, it is unlikely and impractical for a bunch of new vetrenary clinics to open up and create more competition.
Similarly appartment complexes can be nightmarish to actually get approved and built due to local regulations so someone trying to increase housing availbility to benefit from the artificially high prices and stabilize them may find it impractical to do, especially in the short term.
Just imagine you are in a blue state and need to evict people in order to tear down a small lower rent appartment building and build a much taller one with more numerous and more expensive units. Infinite red tape.
In the meantime the investors can just charge as much as they want in pure profit for existing mid to high end appartments because the competition isn’t getting units built.
In this scenario capping the amount of profit or the amount of yearly price increase on existing properties is not a bad thing but it also isn’t addressing the root of the problem.
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In theory if prices are high it creates stronger incentives to build more housing which stabalizes prices.
In practice you have many situations where capitalists come in, see that a city has 5 vetranary clinics, buys up all 5 clinics and raises prices in all of them. The investor gets an unfair windfall profit from creating a local monopoly.
Similar things have started happening in housing markets.
Investors buy up housing to rent, then they all use the “recommended” pricing from the same app, which recommends high prices and keeps increasing the price that it recomments.
In theory markets should adjust on their own adding more vetrenarians or more housing.
But in practice there are numerous obsticles. Vetrenarians education is similar to medical doctors and the field is highly regulated, it is unlikely and impractical for a bunch of new vetrenary clinics to open up and create more competition.
Similarly appartment complexes can be nightmarish to actually get approved and built due to local regulations so someone trying to increase housing availbility to benefit from the artificially high prices and stabilize them may find it impractical to do, especially in the short term.
Just imagine you are in a blue state and need to evict people in order to tear down a small lower rent appartment building and build a much taller one with more numerous and more expensive units. Infinite red tape.
In the meantime the investors can just charge as much as they want in pure profit for existing mid to high end appartments because the competition isn’t getting units built.
In this scenario capping the amount of profit or the amount of yearly price increase on existing properties is not a bad thing but it also isn’t addressing the root of the problem.
We need to make it easier to build dense housing.