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Could construction of more housing actually raise rents?


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Nov 23, 2007
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A question pondered and an argument that that "build build build" and YIMBY philosophies only use up scarce land supply while also inducing further demand (much like new highways induce more traffic) and that in-turn causes rents to rise, not to fall.

Libertarian Economist Tyler Cowen debates it and concludes it is unlikely, but also notes Seoul would be a possible example as density has been allowed to increase there relatively unfettered but rents have never gone down on a real inflation basis, they have in fact only gone up even at more accelerated rates that match accelerated building.

Either way, it's an interesting idea to ponder. Maybe the province needs to use a heavy hand to hard disperse growth out of the GTA. Do we need new mid-size cities? Should we try to focus on making Peterborough and Windsor more like Mississauga (names picked at random for examples only, it could be any small Ontario city vs. Mississauga) than focusing on more extreme mid-high density in downtown Toronto? Is Kitchener-Waterloo an example of this in progress?
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If the century initiative (to get Canada to a population of 100M by 2100) comes to pass, that likely means 40 or 50M people in Ontario and 30-35M of that in S Ontario, GGH, etc. We really should be planning HSR and regional rail that is supportive of S Ontario becoming a string of urban centres rather than a continuous sprawl of suburban development.
It’s really quite simple - what needs to be done is to increase investment to build up small towns on existing rail lines like Guelph, Brandtford, Hamilton, Niagara, St Catherine’s and greatly improved rail service not just to Toronto but to other areas. There should be some regional centres like London to act as hubs. We’d need to encourage not just residential growth but to re-invigorate those towns with commercial and industrial activities to enable them to be somewhat more self sufficient rather than large commuter towns only.