A recent news article gives voice to the claim that increasing the "supply" of "market-rate" rental housing will somehow make rental housing more affordable.
A rental housing market is driven by the supply of renters financially able to pay the maximum rent that holders of rental housing demand. Note that the purpose of a rental housing market is not to house the maximum number of parties at the lowest possible cost (that is, efficiently) but to maximize the rents that holders of rental housing are able to extract from the productive economy.
Neoliberal housing economics, taught at the UBC Sauder School of Business, rests on the principle that holders of housing demand the maximum price a party seeking housing will pay (can pay, actually). Increasing "supply," according to this economic theory, is supposed to limit the maximum that rental housing holders can demand. How this supply-limit pricing relationship is supposed to function seems never to have been precisely quantified.
Social housing pricing, on the other hand, is precise. However much constructing and maintaining a particular unit of social housing costs when everyone who performs useful work to produce and provide that unit has been paid fair wages, plus the monthly share of the no- or low-interest government loan that financed its construction, is how much that unit rents for. No hand-waving, no holder, no demanding the maximum rent the holder can extract.
The neoliberal solution includes "boosting rental subsidies and other supports for low and middle-income residents." Translated into actual economics, this means pass-through subsidies to the holders of ruthlessly overpriced rental housing. "Rental subsidies" subsidize rental property holders. Renters merely touch those dollars as they flow from the public purse to those holders. What "other supports" the neoliberal has in mind are not clear.
There is no way that a market driven by holders demanding maximum profit can supply affordable rental housing.
Bill Appledorf
Victoria
