> Unlike most services and commodities, the price tag on rental units has no real relationship to the cost of providing housing. Rents are determined by “what the market will bear,” as economists say.
Although I would argue that the price tag of rentals has a strong relationship to what it costs to build/operate additional units of rental space. While one landlord might have had their unit paid for 3x, where would a new entrant to the market be?
At least in Toronto, the answer is, losing money.
https://www.cbc.ca/news/canada/toronto/gta-condo-investors-l...
Same with fruit and oil. When avocado soared in popularity, new people entered the market until there was a price equilibrium.