Epic market fail

As part of the new debate over rent control and public housing development, the Saskatchewan NDP has rightly pointed out that Manitoba has done well in keeping rents down while encouraging construction. But the more important point looks to be the flip side, as the argument that we can't interfere with the market rings entirely hollow when the market is so obviously failing on its own.

For anybody looking to make a case that the market shall provide if we just have enough faith, the last few years (featuring a corporate-friendly government, a growing population to occupy any new units, and none of the rent controls that are supposed to make building more difficult) would seem to have offered a golden opportunity. But rather than seeing some influx of innovative builders meeting the obvious demand for rental housing, Regina has seen vacancy rates plummet and rents soar. And aside from plenty of owner-unit construction, the most obvious shift in the housing market has been...condo conversions, with even more rental units being taken off the market and sold off until the City of Regina stepped in with a moratorium.

Now, it's not hard to see how the incentives involved for builders and landlords have led to that outcome. Given the choice as to what to do with a new construction project or existing building, it's entirely rational to look to make quick and easy money in a booming market, rather than waiting for rent payments to offer a return on investment over a period of decades. And with the vacancy rate so low, it's equally obvious why landlords are taking the opportunity to push rents upward.

But the end result is that the market is failing miserably when it comes to the needs of citizens who are either looking for rental units, or trying to afford the ones they now occupy. And the gap between Manitoba's success with rent controls and Saskatchewan's failure without them should signal that it's the height of folly to leave such a basic necessity at the mercy of market-based decision-making.

[Edit: fixed wording.]