Not everyone can afford a Bentley or a condo in Manhattan. That is not some terrible injustice that needs to be fixed. Living within your means and buying a place where you can afford to live is also an alternate approach. Or you can moan about capitalism and how unfair life is.

We wouldn't tolerate the price of food going up by the same percentage.

If food costs went up substantially, but you could eat the food and then resell it for more than you paid for it (and sometimes a lot more than just inflation-linked increases), I suspect we'd tolerate that too.

It's also concerning that housing is a government-supported investment, it's an unproductive asset. That's not how you encourage progress and development. Even if you just have a field you can grow crops but no such luck with housing.

(Maybe there's change on the horizon, a collegue who lives somewhere in the Rust Belt complained that her 25-year old daughter can't move out. She has a regular job, but the rents have become so high that she cannot afford an apartment on her salary. So there's hope that civil unrest will be averted.)

This is the result of supply and demand. How does demand for housing increase? Falling mortgage, downpayment assistance programs, government guaranteed loans. That increases demand.

And housing is also larger than 20 years ago.

> We wouldn't tolerate the price of food going up by the same percentage.

This is just silly. It is not something you "tolerate" it's something you cause.

Food prices also rise when demand increases.

The public has 100% control over demand as they are the ones bidding up the house prices! Now they do not have 100% control over supply. But house prices have not risen because of a decline in supply.

Also growing population and people moving to areas where the jobs are. Most recently: pandemic refugees from NYC and California settling in adjacent areas. When demand changes for a good with inelastic supply you see large excursions in price.

And housing is also larger than 20 years ago.

That's a problem right there. Everyone needs a roof over the head. Some people would like a palace. There is not enough entry-level housing being built to keep up with demand, meanwhile the existing stock has reached the end of its serviceable life. There's a good chunk of 70's construction which has deteriorated to a point that it needs rebuilding. The shortage at the low end causes high rents for those who can least afford it.

Food prices also rise when demand increases.

Food prices mostly rise in response to missing supply, either because the harvest fails and the government can't secure imports or because of political upheavals. Either way, it's a political problem, food riots are what starts revolutions. and food price instability is a hallmark of banana republics.

Right, when there is a disruption. Say there is an increase in jobs in city A and wages rise by 10%. Say there is a decrease in jobs in city B and wages decrease by 10%.

Now what must happen is some kind of population transfer from B to A. We also know that rents will rise in A and fall in B.

But how does this happen? Via evictions in B as people can no longer afford the existing rents and move out. That adds to the rental supply in B as landlords struggle to find tenants, which causes rents to fall. Similarly in A, there is a bidding war for apartments and rents rise. This is how the market adjusts to the new reality of jobs and wages in both cities.

Now covid had lots of these disruptions. Entire job markets were shutdown, others thrived.

So what happens when the government puts a freeze on evictions in both A and B. Then everything is frozen except for the handful of new construction in A and B, so you get massive price spikes and rent too high in city A as well as rents being too high by not adjusting downward in city B.

The effect of this is that prices are always much higher than the market clearing price, which is what this paper demonstrates.

This is also what happens when you try to make economic interventions based on sentimental intuition -- "it's not fair that you should be evicted if you are laid off" -- often the exact opposite of what you want ends up happening, as housing becomes too expensive for everyone. What has to happen is that people must live in the housing they can afford. Attempting to live in housing that they can't afford always causes excessively high prices for the majority.

We pay people unemployment compensation because the knock-on effects from someone taking the next-best job are serious, and it's immensely difficult to recover from an eviction. There's volumes of research on that. The "sentimentality" has vast economic benefits.

We have unemployment insurance not because of sentimentality, but because insurance is economically useful. A person cannot insure themselves from loss of wage income, so paying some overhead to have the government do it makes sense.

Freezing evictions does not make sense. We do not freeze layoffs, for example, in our unemployment insurance program. We let employers make the layoffs they need and then have an insurance pool that the laid off can draw from.

A proposal to have rental insurance that you contribute to and can then draw from for temporary eviction assitance might be a good idea -- it depends very much on how it's implemented.

One of these has economic benefits but the other does not. Both are sentimental in nature, but that is not a sufficient condition to adopt a policy -- actual economic outcomes has to be the deciding factor.