A recent news article supports the claim that increasing the “supply” of “market-rate” rental housing will make rental housing more affordable.

A rental housing market is driven by the supply of tenants who are financially able to pay the maximum rent that rental housing owners charge. Note that the purpose of a rental housing market is not to accommodate as many parties as possible at the lowest possible cost (that is, efficiently), but to maximize the rents that rental housing owners can extract from the productive economy.

The neoliberal housing economics taught at UBC’s Sauder School of Business is based on the principle that homeowners will charge the maximum price a home seeker is willing (or can) pay. Increasing “supply,” according to this economic theory, will limit the maximum that homeowners can charge. How this relationship between supply and price limit works seems never to have been precisely quantified.

Public housing pricing, on the other hand, is precise. Whatever it costs to build and maintain a given public housing unit, if everyone who does useful labor to produce and provide that unit is paid a fair wage, plus the monthly portion of the interest-free or low-interest government loan that financed its construction, that is how much that unit costs. No fiddling around, no owner, no demanding the maximum rent the owner can get.

The neoliberal solution involves “increasing rent subsidies and other support measures for low- and middle-income residents.” Translated into the real economy, this means passing subsidies on to the owners of grossly overpriced rental housing. “Rent subsidies” subsidize the owners of rental housing. Renters only touch these dollars as they flow from the public coffers to those owners. What “other support measures” the neoliberal has in mind is not clear.

A market driven by owners demanding maximum profit cannot possibly provide affordable rental housing.

Bill Appledorf

Victoria