New Data: Building Multi-Family Housing Makes Rents More Affordable

I have a new post up at Forbes taking a look at some recent data from Rentonomics that demonstrates it isn’t more money that helps solve increases in housing prices, but more housing.

The data is from the latest report by Apartment List, a national apartment finding service, and has a graph that helps tell the story.

As the caption notes, the “slowdown in rent growth is partially attributable to an increasing supply of new rental inventory in many markets…spending on construction of new multi-family housing—most of which are rental properties—is close to its pre-recession peak.”

In the Forbes piece, I conclude:

You see, when there is more housing, not more regulation and money, prices fall. That’s because when the number of housing units available starts to outpace the growth of the number of people that want those units, renters have an advantage. With more choices, renters aren’t competing with each other for scarce units by bidding up their price. It’s landlords who have to start to compete because their vacancy rates go up and their costs stay the same. They need tenants, so they lower their rents. Want to lower “stratospheric rents”? Allow more and more housing to be built.