Well if you recall, there was a year where general inflation was far above 3%. Inflation is also not uniform and can be higher in some cities than others. And this is not inflation + 3%, it is 3%. Many people also have to borrow to build which means they are not simply paying the rate of inflation but what the banks are charging to borrow. Currently that is around 7%. So anyone looking to build units is looking at a negative return if they borrow to do it which means they simply will not.
Make no mistake, I do agree with caps but something that is not static makes more sense. Having it a static rate will lead to large unintended consequences.
Do you mean the year 2008 when there was too much investment in real estate? Or the year 2020 when there was a moratorium on evictions and lumber prices soared?
Well if you recall, there was a year where general inflation was far above 3%. Inflation is also not uniform and can be higher in some cities than others. And this is not inflation + 3%, it is 3%. Many people also have to borrow to build which means they are not simply paying the rate of inflation but what the banks are charging to borrow. Currently that is around 7%. So anyone looking to build units is looking at a negative return if they borrow to do it which means they simply will not.
Make no mistake, I do agree with caps but something that is not static makes more sense. Having it a static rate will lead to large unintended consequences.
Do you mean the year 2008 when there was too much investment in real estate? Or the year 2020 when there was a moratorium on evictions and lumber prices soared?