Fixed income renter in Makiki, ( a wonderful place - NOT Waikiki - a concrete jungle)
Continues at: http://ptosis.blogspot.com/
A Honolulu Hawaii saga of the Land of Aloha on the island of Oahu where there is a shortage of consonants and rental units.
capitalists see the rising rents as an opportunity to make money by building new rental housing to satisfy the higher demand. Knowing what the construction costs of the new housing will be, it doesn't take an MBA to figure out what the rents have to be in order to give a reasonable return on investment. Right now constructions costs are high so any new building is NOT going to be cheap to live in unless someone - like the government - steps in to put up some of the money or offer some type of tax incentive. If the developer believes that people will pay the rents he has to get to have a viable business deal, he'll move forward and the building goes up. The extra supply of housing causes a ripple in the dynamics of the market but again if nothing else changes, rents will stabilize at some level
and the market will again be in "equilibrium".