Question

Prior to posting to this discussion, make sure you have completed the associated Learning Activities and Practices Exercises in the module. Your initial post and all required replies need to be submitted by the listed due dates. In this module, you learned about government-imposed price controls and the theory behind them. These price controls are often the subject of political debates, which you with explore further in this discussion. In your initial post to this discussion, address ONE of the following prompts based on what you've learned in this module about how the price system is impacted by supply and demand: Why do you think governments frequently attempt to control apartment rents but not house prices? OR Are there methods other than a higher minimum wage that could raise the incomes of low-wage workers without reducing employment? In addition to posting your own response to the question posed, you are required to read and respond to AT LEAST TWO of your classmates' posts. For this discussion, make sure to respond to classmate's who chose a different prompt than you. When responding to others be sure to engage your classmates by providing different examples of why you agree or disagree with what they have shared or discuss something that relates to what your classmate has stated. Be sure to support your comments. We want to have a meaningful thought-provoking discussion and that can't happen if we all just say how much we liked the other person's comments.

Answer 1

Prompt: Why do you think governments frequently attempt to control apartment rents but not house prices?

Governments often attempt to control apartment rents rather than house prices for several reasons:

Rental Market Vulnerability: Rental markets are often considered more vulnerable than the market for houses. Renters typically have less bargaining power compared to homeowners, as they might be more mobile, and finding a new place to live can be expensive and time-consuming. This makes renters more susceptible to price increases or exploitation by landlords, which can lead to political pressure for rent controls.

Affordability Concerns: Governments are concerned about housing affordability, especially for low and middle-income individuals and families. Since renting is more common among these groups, controlling apartment rents is seen as a way to ensure that housing remains affordable for those who cannot afford to buy a home.

Urbanization and Population Density: In densely populated urban areas, where the demand for housing is high, rent controls are often considered to prevent rapid and unaffordable rent increases. This is particularly true in cities with limited space for new housing construction.

Social Stability: Housing instability can lead to social issues, and governments have an interest in maintaining social stability. By controlling apartment rents, they aim to prevent sudden and extreme rent increases that might lead to evictions and housing insecurity.

Historical Precedent: Rent control measures have a historical precedent in many countries, and they might be easier to implement or justify politically compared to controlling house prices, which are closely tied to property values and individual homeowners' wealth.

However, it's important to note that rent controls can have unintended consequences, including reduced investment in rental properties, deterioration in housing quality, and distortions in the housing market. They can discourage new construction and lead to housing shortages in the long run. As a result, while governments may implement rent controls with good intentions, they should carefully consider the potential negative impacts and look for alternative ways to address housing affordability and stability, such as subsidies, housing vouchers, or promoting affordable housing development.

Overall, the choice to control apartment rents but not house prices is often influenced by the specific challenges and political considerations of the rental market, but it's a complex issue that requires a careful balancing act to ensure both affordability and a functioning housing market.

Step-by-step explanation: