Rent-Seeking Behavior and Its Impact on Housing Prices

Episode #37

The COVID-19 pandemic triggered an urban exodus. In the US, many city dwellers fled to rural and suburban areas after the pandemic hit in early 2020. Data from the US Census Bureau shows that many of them have stayed, putting down roots in smaller, more affordable cities and suburbs.

Despite that, rent prices continue to go up, even as the depopulated American downtowns of 2020 and 2021 see more rental units being built by the day. That’s not at all how the law of supply and demand should be working, so what gives?

In today’s episode of Fiscally Savage, Dylan turns to Adam Smith’s The Wealth of Nations for answers as to why housing is expensive and why there doesn’t seem to be enough of it.

Show Highlights

  • [04:31] Why optimization is great for business but seems terrible for everything else
  • [06:12] How middlemen take advantage of inefficiencies in a business
  • [13:26] Rent versus economic rent
  • [18:24] How landlords optimize profits and create an artificial shortage
  • [25:06] What a free market is, according to Adam Smith
  • [27:19] Other examples of rent-seeking behavior

Links & Resources

Books Mentioned



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