Saw this post on Instagram (https://www.instagram.com/reel/DAjCAJYusg6/?igsh=djRsOGh3ZzhyY2Zr ) which claims that the removal of rent control in Buenos Aires led to an increase in available housing and a decrease in housing prices which seems counter-intuitive to me.
Is the increase in availability due to landlords raising the rent and forcing existing renters out ( thus more availability)? But how then are the prices of these places somehow lower?
What am I missing?
In: Economics
If there aren’t price caps, people will build more housing. If I need to invest $1m to build an apartment building with 10 units, I may be willing to do so if I can rent for $2000/mo each, but not if I’m capped at $1000/mo since I would lose money. and the older apartments vacated by my new tenants probably are more affordable than the new units I built, for those who cannot afford my new building’s rents.
Also, you may see situations where people give up now oversized units. Say some elderly woman still living in a 4BR apartment that was necessary when she had a husband and 4 kids, but is unnecessary now except the rent controls make it way cheaper for her to stay put than relocate to a more appropriate sized unit and allow a young family to rent the space they need.
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