It is always a matter of time before housing conditions change - unless government interferes with the market.
Looks like the "need" for rent control is easing. Actually, there is never a need for rent control because it is a political scam and doesn't work. The popularity of rent control lies in the fact that so few people are taught basic rules of economics like supply and demand. If one believes that government can manage a real estate market (or any other market), they are willingly delusional and close-minded about learning new facts. How does the real state cycle work?
- Demand went up and created a shortage of housing units.
- Short supply drove up the price of all types of housing.
- For many reasons, the lag in new supply could not keep up with accelerating demand and housing prices pushed higher.
- High housing prices finally created a positive economic environment for [expensive] new construction, and housing supply began to increase.
- Because of the cost of new construction, new housing units have been been in the luxury and high-end category. Affordable units are still on n short supply.
- High-end housing units have reached a saturation point in many cities where rents are stabilized. Concessions lower prices further.
- As high-end housing prices stabilize, so do the moderate and low-end units.
- Supply reaches an equilibrium then over-supply before new construction stops or slows.
- New supply will not return until rents are again on the rise and the market supports it.
This is the real estate cycle - a continual chase for economic returns, and retreat from oversupply and low returns. Perfect equilibrium in pricing (supply and demand) is fleeting and impossible to maintain. Conditions today are at or nearing the peak of the cycle. The last trough was 10 - 15 years ago when appartment owners struggled to be profitable. When concessions (free rent) come back, we are at or near the trough where pricing is decreasing. No government action is needed to cure the housing crisis - the market will respond. Rent control only shuts off supply and makes things worse.
Q: How will a changing rental housing market affect new construction in Lake Oswego?
Wall Street Journal, January 3, 2017 By Laura Kusisto
Luxury Apartment Boom Looks Set to Fizzle