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Comment by beautifulfreak | Hacker News Reader

I'd like to see an overlay showing which red areas are also college towns. Did easy student loans help fuel the increase in rents? That's what happened where I live, where dormitories are mainly for new undergrads. After a year or two, students are expected to find apartments. (And I wonder if something similar would happen if Universal Basic Income became a thing.)

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It's not even about student loans. A group of students can always outbid the average family for housing. They need less space per person, because it's a temporary phase of life and most of their activities are elsewhere. And because students must afford studying and living on their own, their income per person needs to be on the same level as for the average family with kids.

It would absolutely happen and this is why I don’t believe in UBI. Inflation would just catch up.

UBI combined with abundant housing could have a different outcome.

Prices are not determined in a vacuum. Sellers price things as high as possible based on what they think buyers can afford. If buyers can afford more, sellers will find a way to absorb the extra liquidity in the market. We will end up where we started. The solution is not UBI, it is to make certain things basic rights, like housing, food, transportation, infrastructure, education, but not excessively cheap. So people can afford to live, but need to work harder to live better. New housing development, prices need to be reasonably anchored to what people there earn. If what people earn in that location goes down next year? So does rent/housing prices. Exceptions for higher end housing and things can be made.

This is what I think anyway, don't really have any hard science to back this up, but I have a feeling UBI will not work like we expect.

It could work with abundant housing, say 20% more housing than the number of people that want to live there. If there's always a lot of empty units, landlords are encouraged to reduce rents to not be stuck with too many vacancies. Rents can go up so much now because there are more qualified applicants than units. That number likely requires about 200% more housing in large cities, which is unlikely to ever happen.

But that's the whole idea - the only reason sellers can do this is because there is a shortage of homes. If you have more homes than people looking for them (and you should always have some vacant homes for flexibility and to handle people mid-move, etc.c) then you can tell any seller who tries to raise prices to take a hike.

You forgot the supply part of supply and demand. If units are left vacant sellers have to lower their prices.

No, they don’t, the optimal amount of units vacant is not zero to begin with, and in fact the profit-maximizing number of vacant units is likely considerably higher than the market-optimal price.

Sellers like a market with constricted supply, it’s like nobody remembers OPEC. And with a computer program to tell them when to leave units vacant and when to raise the price, they’ve outsourced the cartel actions.

Anyway, this is another "thinking econ-101 charts are real" oopsie. Everyone likes the nice single-line supply/demand charts. But profit-maximizing often isn't the same thing as market-clearing for a variety of reasons. The whole point of the rent-cartel program was that it's better to raise 95% of rents and leave 5% of units vacant than to have 100% of units with a lower more competitive rate. But also things like the materials used to produce goods having their own price curves with prices rising as their own demands increase etc. A "market clearing" price in an efficient market leaves zero profit for producers by definition, nobody wants that, so we inherently live in some combination of inefficient market and above-clearing prices.

Vacancy rates across the country are at all time lows. Im sympathetic to the collusion with realpage argument, but with vacancy rates this low Im not buying it.

We should be enforcing laws against collusion, of course. OPEC works because it's not subject to laws against its behaviour, being supranational.

Extra students were financed by (student) debt, ie. made up money, which could lead to inflation. Whereas UBI could be done without any money printing - just via taxation.

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