Quote:
Originally Posted by Spork
Except we aren't producing economic widgets. There are constraints to supply (regulation, physical land, labour/material capacity to build) inherent effects on their own input costs, and the echo of price going up causing further demand. Not to mention the effect on the rental market, where investors who would like to purchase and rent the property out (rather than keep it empty) are blocked out of the market, driving up rental costs for the remaining supply. This will eventually incentivize full rental buildings by various organizations interested in a return, but they are also driven by their return on capital, which is affected by the amount that they have to invest, thereby not insulating the rental market from such rapid rent increases. A virtuous cycle.
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I would agree with your point on single family homes. There is a fixed amount of land.
Condo. There is no shortage of building going up. Developers need to pre-sell to a certain percentage to secure financing to build and then they build. If there are projects that are in pre-sale, I don't see the issue.
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