What goes unexplored in the blamestorm that ranges from hipsters in bike lanes to filthy rich property owners "inflating" rent (no single actor can cause inflation, no matter how greedy they might be) is the theory of supply and demand.
What? Here's a refresher if, like me, you somehow got out of taking Econ 101 on your first pass through the American higher education system:
- Rising cost (of living, in this case) is a reflection of a market out of equilibrium.
- If the supply of housing is constrained, it will remain so, with no lower bidders forcing suppliers to come down to the price at which similar products are being demanded.
- If it is sufficiently fluid (meaning barriers to new suppliers coming into market are low), new supply should enter the market and re-balance things.
Here in Seattle, people seem to worry about gentrification out of one side of their mouth, and then worry about the "overbuilding" of new apartments all over town out of the other side of their mouth.
I don't understand whose side these people are on. Maybe they don't either. Let's look at Miami - a frenzy of condo tower building ran right into the brick wall of the Great Recession.Guess who benefited from that oversupply when developers went bankrupt and banks sold at dramatically reduced prices? A totally different demographic than the northern U.S. baby boomers who saw their life savings decimated in the crash.
As a renter, I hope none of the apartment builders considering jumping into the Seattle market count the cranes in our skyline before they do so. But maybe others will. Or better yet, maybe count the number of new housing units existing zoning will allow popular neighborhoods to add for all those fixie-riding, faux-hawked gentrifiers.
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