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Renters Are About to Get the Upper Hand | The Wall Street Journal (archive.ph)

submitted 1 year ago* (last edited 1 year ago) by [email protected] to c/[email protected]

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[–] [email protected] 0 points 1 year ago (1 children)

Hypothetically, could a city or other regional government, or even larger scale one, create a state run development company, under mandate to build up the housing supply in a given area even if investors won't do it?

[–] [email protected] 1 points 1 year ago

Yes, but without money from investors they'd have to cover the construction costs from taxes, so it's not free either.

And government run initiatives have to be very careful with how they set their goals. If the legal mandate is to maximize the number of apartments constructed, and the people in charge are rewarded based on the number of apartments they created on paper, then the result will likely be the bare minimum of what counts as "apartment", even if it's not something most people would want to live in. That means that government initiatives need to specify in high detail what the quality of the apartments should be.

Investors have the goal of getting their money back through rent, so they will usually ensure that what they pay to build is something people will actually want to live in and pay money for. If the housing shortage is severe enough they too can get away with pretty crappy places, but if there's enough housing available that renters can be a little picky, any investor who built bare minimum apartments would regret their choice.