Apartments in large cities such as toronto ottawa and...

Apartments in large Cities such as Toronto, Ottawa and Vancouver are often hard to find, one of the major reasons is that there are, or were rent controls. What would be the likely effects of eliminating Rent Controls?

Transcript

00:01 So let's start about the classic microeconomic case of what a rent control does, right? normally in a market you have demand equals a supply, and in this case the rental cost would be set by the intersection of demand and supply.

00:12 But now the government is going to go in and say, actually, there's a ceiling, there's a max rent, right? we are going to let the rent go no higher than this amount.

00:24 Well, what does a low artificially imposed rent do? it means that a lot of people are going to want housing and not many people will supply housing, right? and you're going to have a shortage.

00:39 This is the housing shortage that results, right? because the market is not being allowed to find its natural home.

00:48 And you may say, look, everyone only needs one home.

00:52 What do you mean a shortage? the price doesn't affect how many people need a home.

00:56 It's true.

00:57 But think of housing to find a home.

00:59 More broadly.

01:00 For example, how many square feet, how many bedrooms and how many bathrooms, how nice, how luxurious a home you want.

01:07 Cheaper rent encourages people to want bigger homes and more luxurious homes and all the rest of it because from their perspective, the price is cheap.

01:15 But not everyone can have that.

01:17 There's just not enough homes to go around, right? so this shortage is why housing is often hard to find, right? there is a lot more demand for housing than there is supply.

01:30 So eliminating rent controls would do a bunch of things.

01:34 First of all, rents will rise.

01:37 Absolutely, right? rents are going to rise to the free market point indicated on the graph, right? the law is forcing rent to stay low, and now when that law is removed, rents will rise to the free market rate.

01:52 But the shortage will end.

01:57 So it's going to be easier to find a place, right? if you're willing to buy.

02:02 Pay, of course, right? the increase in rental cost is going to drive some people out of the market, right? so you're going to see that people are, you know, there's not going to be this excess demand for housing anymore, so you should see it a lot easier to find a place.

02:19 And that might mean less discrimination, for example...

Question

Apartments in large Cities such as Toronto, Ottawa and Vancouver are often hard to find, one of the major reasons is that there are, or were rent controls. What would be the likely effects of eliminating Rent Controls?

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