The Market Structure of
the Rental Sector
James W Hughes
Housing in the United States is in a period of rapid transition. Initially, after World War II, increases in the real purchasing power of America's citizenry supported a tidal wave of privately owned, single family housing. In more recent years it was sustained by the impetus of inflationary expectations. But the economy, with changes in financing, a decline in real purchasing power, and deflation, has fundamentally altered the housing market. The changes in the financial arena and the decline in real house buying power are both powerful forces, whose consequences are exacerbated by the potential for deflation.
This chapter presents a set of data against which alternative futures may be contrasted. The incongruity of historical events, in terms of the probability of their continuation and their value as guidance for the future, is analyzed in relation to rent control. While rent control is essentially a localized phenomenon, responding to particular conditions, the local conditions themselves have become increasingly dependent on national market factors. As rent control becomes more widespread, moreover, it is probable that it will have an independent influence on these factors.
During the course of the past twenty years, the housing shortage in the United States that had resulted from the Great Depression and World War II was greatly diminished. For every two housing units that existed in 1960, there were three units in 1980 (Table 2.1).