Property Location Rent and Investment
There are certain factors which affect how rent interacts with the rest of the economy (274):
1. Housing shortages lead to higher profits for construction companies, which leads to more people investing in construction.
2. If there is a lot of housing space, then less people will be investing in construction, which will continue until there is a shortage again.
3. Because of low interest rates and a shortage of housing space, there will be a construction boom until demand is met.
4. When interest rates are low in comparison to house building profits, there will still be a boom in construction even though there is a lot of housing available.
Rent Gap
Rent gap is the difference between the amount that is actually charged to inner city residents and the amount that could be charged if there was actually money put into renovating those buildings. If the differential is great enough, the renovations will actually be made, and this actually has the effect of harming those who needed this cheap, inner city housing because they can no longer afford it.
Growth Machines
Growth machines played a huge role in the development of some cities. Oftentimes it was between the public and private sector individuals who tried to improve the city. Usually, they were companies such as banks and construction companies, who, by investing money into the city, would also increase their own profits.
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