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Comment by sjjshzvuiajhz | Hacker News Reader

I don’t understand how the behavior described in the post raises rents. Clearly demand from investors would raise sale prices, but why would renters pay more to rent in buildings owned by shady oligarchs? Seems like it would just push up the price-rent ratio, which we definitely can see in the data. If anything, that indicates renters are getting a better deal, paying a smaller portion of the capital cost of living in a scarce asset.

Ie. if big city real estate is a particularly good place for oligarchs to park cash illegally, they ought to be getting less real returns then they could get on normal investments like the stock market. If they are overpaying for these properties, they are transferring wealth (on net) to the domestic sellers and/or tenants.

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As sale prices go up, more people can no longer afford to buy but still need somewhere to live, causing the rent market to become more competitive, and the rents go up because owners charge what the market can bare. Which in turn justifies investors paying even higher prices, so it spirals up, until it plateaus when not enough people can actually afford to pay the rent. And if the behavior described in the post is real, it goes even higher because a decent investment return is not the goal.

>more people can no longer afford to buy but still need somewhere to live, causing the rent market to become more competitive

It seems like you are double counting here. If high prices result in units becoming investor-owned and rented out instead of owner-occcupied, that means the rental supply is larger, so the foiled-owner-occupiers shouldn’t be crowding out more renters.

To put it simply, we are fitting the same number of humans in the same number of buildings here, and just changing whether the person who lives there is the owner.

> and the rents go up because owners charge what the market can bare

Landlords always charge what the market can bear, how does the sale price of the unit move that number (other than the double counting argument above)?

Let's take a pass on the dingbat apartments and look at the single-family-home-wingdings, which can also be stuffed into REITs. The corrupt REIT doesn't care if it buys 1 or 10 houses, so long as they are bought. The local owners cheer the purchase even if the house sits empty. Anyone who wants to buy into that market has to make more money. So they negotiate salary. The companies then pay more in salary. Corporate profits are at an all-time high, so it's hard to justify not paying the salary, especially in the face of housing costs.

So now the would-be owner who finds themselves stuffed out of a remarkably expensive housing market (it increased significantly between the interview and the start date) moves into the rental market, which, while high, is nothing compared to the first few years of home ownership. Someone who could afford a house in the local market can afford the rent, particularly if they make the painful decision to forgo pets, or (as in our case) give their pets to their parents. "For a couple years, we'll be back".

At least in London, I have heard it claimed [1] that foreign investors buy properties and leave them vacant, as London's rising house prices represent a sufficient return on investment and remove the inconvenience and risk of dealing with tenants.

Of course, it's hard to measure this stuff precisely, because given the current attitudes, if you were doing that the last thing you'd do is report yourself to the government.

[1] https://www.theguardian.com/society/2017/aug/01/names-of-wea...

Yeah, that is certainly the reasoning that pushing prices up is based on in London.

Another angle is that more expensive properties are more efficient, so the bubble of foreign investment in property has lead to a rise in the construction of hyper-premium properties which the market does not especially demand, and a lack of construction of mid-range or lower tier housing, pushing the prices up in those sectors.

   rise in the construction of hyper-premium 
   properties which the market does not 
   especially demand,

If you look at the parts of London with extreme building activity over the last few years (Nine Elms, Battersea Power Stn, Docklands, Aldgate, Old Street, Stratford, Kings X), you'll find that almost everything falls into the studio, 1-bedroom or 2-bedroom range. There has also been a lot of development of commercial student accomodations, see e.g. [1]. Pretty much the antithesis of "leaving things empty".

[1] https://www.theguardian.com/education/2018/may/27/revealed-d...

I thought it was a way of moving your cash (whether it is legit or not) outside your country.

To stop your home government expropriating your money and also as a bolt hole if the peasants revolt and start hanging people from lampposts.

Why on earth would somebody who's interested in profit leave a property empty, rather than cash in on rent from tenants? In other words, why would investors choose loosing money over getting income? It's not like its hard to get tenants. It's not like it's hard to manage tenants, and it's even easy to get rid of them if you need to in the UK (unlike in some other countries). There's a whole support industry for finding and managing tenants. It's almost effortless.

I'm afraid I don't believe stories like that quoted above. As an edge case it may occasionally happen (especially at the high-end, e.g. flats that cost > £2 mil), but the normal case is that buyers cash in on rental income. Moreover, I posit that the number of properties left vacant is so marginal that it doesn't affect London's housing market.

For example there has been lots of building activity in Aldgate, near Old Street, around Stratford (former Olympic area), and in the Docklands. They are mostly studio flats, 1-, or 2-bedrooms, all tiny, and all quickly snapped up. London public transport (e.g. Central Line) is insanely busy now in parts because so many new people have moved to e.g. Stratford.

Source: Anecdotal, I speak with a lot of builders, property developers, and architects in London.

> Why on earth would somebody who's interested in profit leave a property empty, rather than cash in on rent from tenants? It's not like its hard to get tenants. There's a whole support industry for finding and managing tenants. It's almost effortless.

Wear and tear.

Cost of wear-and-tear is marginal in comparison with lost rental income.

Moreover, there is (some) wear-and-tear even if unoccupied, especially if not heated properly. Unoccupied properties are also more likely to be squatted, and vandalised.

Those are the tales people told by people who are not landlords. The real estate investment money comes from two different categories:

1. Landlord leverages the cashflow to acquire property and bets on appreciation of real estate. Margins are very thin. These are the people who buy buildings when the asking price is less than 10x of a yearly rent roll and sell building at 12x-13x of yearly rent rolls ( longer for commercial). They are leveraged to the max. Think Trump Organization or Kushner Companies or your average landlord/slumlord.

2. Purely investment plays. Buildings/units are owned outright. Those typically are multi-hundred thousand to multi-million dollar condos. They are either used for hedging, money laundering or diversification. Tenant in this cases is irrelevant unless it is a specific kind of a tenant. One can see this all over NYC for example. Storefront and condos that sit empty or years.

- An investor's margin on appreciation of real estate will be much higher if it's rented out rather than empty.

- An investor who owns whole buildings/units has massive economies of scale from renting out.

- Hedging, money laundering or diversification are orthogonal to letting/leaving-empty, see also the original article.

- I don't see empirical evidence of buildings/units are are owned outright and left empty in London and a substantial scale. Please supply quantitative evidence to the contrary if you have any. Where are all those empty building in London?

- Regarding landlord/slumlord. As far as I'm aware, most large developments are done by investment funds insurance etc. Names like Trump and Kushner are too emotionally charged to lead to a serious discussion, and I'd appreciate if you could quantify what fraction of the London property market is left empty for speculative purposes.

I've worked with letting agents as a tenant, and it gave me the impression they're all borderline scam artists whose business model revolves around charging BS fees and penny-pinching with shoddy workmanship.

Do you suppose, when you're a foreign landlord with a poor command of English and no ability to visit the property in person, that the letting industry somehow becomes honest and straightforward?

Yes, there are a borderline scammers, I've been working with such people myself, as a tenant and a property owner.

   foreign landlord

Why on earth would you buy in London in these circumstances, why not put you money in an ETF?

Let's quantify: what fraction of the London property market does that apply to? My hypothesis: < 0.2%

  Why on earth would you buy in London in these
  circumstances, why not put you money in an ETF?

Because you're a money-laundering oligarch (or a upper class person in an oppressive regime, worried the state will appropriate your assets) and if you're spending £10 million or so on a property, you can afford to conceal your identity with an intermediary in Jersey, Guernsey, BVI, Panama...

    conceal your identity

You can also conceal your identity when buying an ETF. An EFT almost certainly has a higher ROI than empty property.

And if you are investing via intermediaries, then they can handles the letting process so as to maximise the ROI.

> Why on earth would you buy in London in these circumstances, why not put you money in an ETF?

Historically London property prices have risen much faster and fallen more rarely than ETFs, before even beginning to think about the possibility of rental incomes

> Why on earth would somebody who's interested in profit leave a property empty, rather than cash in on rent from tenants?

IANAL, but I did read once (apologies, can't find the citation), that depending on the ownership model, you can write down the cost of "no rent" on your tax bill. So if you have revenue from other sources other than property, it's not much of a hit to leave it empty and make the gains elsewhere in your portfolio.

Besides all that, TFA explicitly says that the rent is the clean money that was laundered.

How does buying a building with dirty money and later selling the same building clean the money anyway?

> At least in London, I have heard it claimed [1] that foreign investors buy properties and leave them vacant,

Maybe it's just hearsay, but a friend of a close friend of mine works as a project-manager (not sure what the exact term is) on several construction sites in and around London. According to him the vast majority of the real owners behind said projects is unknown, as in he doesn't really know for whom he builds said projects.

I lived in London and saw that first hand - also houses bought to rent out, but with no rush to bringing to market - they get to the market eventually, but this can take months.

I now live in a small seaside town and one of the issues here is people buying 'cheap' houses to own as a holiday house. They might be here every weekend, or maybe just a few weeks a year. This is taking away a house from a 'local' - someone who would either buy or rent to have as their main residence. To this end I'd rather see them on AirBnB than just empty - at least that way people are enjoying the house/location and spending money in the area. (Though I'd obviously rather see someone who lives and works here able to afford the houses in the area).

I've been thinking about this lately because I want to rent out my flat and move abroad.

It turns out that, if I take into account my mortage, building charges, and expected empty time between tenants the minimum I can charge for rent is... actually kind of similar to the market rent.

It would seem like there is a floor to London rents, and it is related to the mortage payment, which is related to the value. If the value was 50% lower, then landlords renting at the current level would be undercut.

I understand why you think that is the minimum. But, let's say that your mortgage is 100, building charges 10, and expected empty time cost another ten, 120 in total. How is charging 0 (not being able to rent it because no one is willing to match your minimum) better than, say, renting it for 110? I assume that you already own the property, so you have no choice of directing that mortgage to other investment opportunities.

Do you pay income tax on the rental income as well? This would add about %30-45 to your mortgage payment breakeven as well, no?

If your mortgage payment is $1000/mo, you need that in after-tax dollars in addition to gap months and maintenance. This pushes rents up for single property landlords in the top marginal rate, or am I missing something.

You only pay income tax on your net profit (in the US at least).

Net expenses, but the equity in the property seems like income (as you can tell iana landlord).

Income taxes likely contribute a significant percentage of the difference between mortgage payments an rent prices. For a REIT, this is different, but for an individual owner renting out a second property and paying income taxes on the rent income, would this not create a significant difference?

This is all predicated on the idea that somebody else should pay your mortgage for you no doubt ...

Well if they rent it out without paying for their mortgage the renter will be evicted as well.

Yes, but I just wanted to be clear that’s what we’re talking about. The expectation that you should be able to claim the capital gains that somebody else has paid the maintenance on.

Rental value sets the sale value, not the other way around!

Not only that, some of the people who prefer to buy rather than rent and can afford the higher prices may buy other properties that would otherwise have been rented out, reducing the supply of available rental properties and thereby raising rents. Rents are essentially always proportional to real estate prices, otherwise there would be an arbitrage opportunity one way or the other.

Meanwhile the way a normal market responds to high rents is by building more rental properties, because when rents are high doing so is profitable. But that requires buying existing land and constructing new housing on it. If the existing land is owned by people who are neither developing it further nor selling it, that can't happen.

Which is particularly problematic in places with restrictive zoning, because they could be sitting on the specific properties that are zoned for higher density than what they're currently built to -- and those are exactly the properties you would want to buy if you were an oligarch speculating on real estate.

> Rents are essentially always proportional to real estate prices, otherwise there would be an arbitrage opportunity one way or the other.

This is empirically false. There is an incredible range in the price-rent ratio across different real estate markets - from 50 in Hong Kong to 5 in Detroit.

The proportion is different, because different areas have different borrowing costs, risks, regulatory environments, etc. The proportionality is always there -- if you make it more expensive to buy property than it used to be in the same place, rents will go up. Because the landlord has to pay the mortgage on the building. If you double the mortgage payment, what happens to the rent?

Not always. If interest rates go up, house prices go down but rents go up. The opposite is also true if interest rates go down.

That's kind of cheating though, because you're still de facto raising real estate costs (higher interest rate -> higher mortgage payment on the same loan principal).

Changing other components of real estate costs doesn't destroy the proportionality with prices, it only changes the ratio. The same is true of property tax -- raise the tax rate and sale prices decline while rents increase, because rents are also proportional to every other component of overall housing costs, not just the initial principal amount.

It's like saying retail prices aren't proportional to wholesale prices because if you raise commercial rents then the ratio changes. They're still proportional. If you raise rents then retail prices may increase because the retailer has higher costs. If you then raise wholesale prices, the retail prices don't stay the same just because they've already increased, they increase even more.

Any 2 numbers are always in proportion, but if the proportion isn't consistent (i.e. changes with location, time, etc) then your argument is just wrong.

https://data.oecd.org/price/housing-prices.htm

Check e.g. historical data (untick "Compare variables") for "Price to rent ratio" for "United Kingdom" from 1990 to 2018.

There are dozens of variables. The argument is that the proportion is constant with respect to a small fluctuation in one of the numbers over time. The fact that the proportion is not constant over the dozens - 1 other variables isn't particularly surprising or pertinent.

No the argument was

> Rents are essentially always proportional to real estate prices.

which is demonstrably not true in any way shape or form.

See e.g. [0] pages 13 and 15 (pages 15 and 17 of pdf) for "median house prices by London borough" and "median monthly private rents by London borough". Westminster has higher rents but lower prices than Kensington. So, yeah, sure, if you include "desirability" in your variables, then you can probably get a regression fit but then the argument "rents are proportional to prices" no longer really makes sense (i.e. you're taking the proportion to be a proxy for desirability and then adding it back to the regression).

[0] https://www.london.gov.uk/sites/default/files/house-prices-i...

>The proportion is different, because different areas have different borrowing costs, risks, regulatory environments, etc. The proportionality is always there

That holds for everything. Only if they necessarily also move in the same way does this have any meaning, else it's like saying two points connect to a line.

There is an anthill in Brazil. If you pour honey near it, the ants will make more ants. The number of ants in the anthill is proportional to the amount of honey. If you pour pesticide near it, some of the ants will die. The number of ants in the anthill is inversely proportional to the amount of pesticide. If you pour honey and pesticide near the anthill, and the number of ants stays the same, you haven't disproven either of these things, they're both still true, you're just adding the lines together.

If you kill all the bears in Montana, or add a thousand more, the number of ants in Brazil doesn't change. They are not proportional, they're completely unrelated.

You keep using this word, proportional. I don't think it means what you think it means.

"having a constant ratio to another quantity"

Inversely proportional too is a mathematic relationship with specific meaning (for one the product must be a constant). It doesn't just mean "more pesticide, less ants" (that's a more general statement than inversely proportional).

Perhaps you merely meant correlated with respect to the rent. But even so, in this thread there were so many provisos added, that the relationship is nebulous at least.

The relationship we're actually talking about is proportional using your definition. Rent is proportional to housing prices, all else equal.

If all else isn't equal, i.e. you change interest rates or tax rates, then you're changing the constant. But they're still proportional with the new constant. You're only changing the ratio, not the nature of the relationship.

That's true and also they don't always rent out the houses/apartments that they buy; if someone wants to launder a lot of ill-gotten money and buy many apartments/houses, it may be too much hassle (and draw too much attention) to deal with tenants and real estate agents so they just leave them empty, wait for prices to go up and then sell for a low-tax capital gain.

They don't necessarily need to receive rent payments to 'clean' the money. It's possible that what is regarded as money laundering in their country of origin is not regarded as such in the country where they are buying the property.

2 reasons:

- increased demand: wealthy/corrupt foreigners outbid (pay more) local buyers, so more locals are renting instead of buying

- lowered supply: if your main motivation is money-laundering and/or long-term stability (e.g. the rich Chinese/Saudi buying property in a democratic, stable, non-corrupt country like the UK), chances are they won't be renting it (the income is negligible), it might just sit empty

It's called monopoly, there is no infinite offer "people will spend whatever it takes to get a roof over their heads. Cities are not infinitely sprawlable, so it's possible to corner the market on places to live in them. Eventually, the parasites will devour the hosts and leave the cities empty shells (ahem, Venice), but by then the money-launderers have sold up and moved on."

Are you saying the old landlords were just being nice, changing less than they could, and the new oligarchs are suddenly charging market rate?

No, oligarchy provides market power similar to that of a monopoly. Also, if you’re renting 100 properties letting 20% sit idle might be with it. I’d your renting 1-2 properties then you don’t have the fine grained control.

See my response to child comment - this is a story about the landlords diversifying globally, not merging together.

Not nessisarily relevant if the same management companies are running these rentals for large numbers of investors.

“25 money laundry clients, all with about $3 million (after you & your washing cut) they need to invest. $75 mil? Let’s buy 6 dingbats and put them in an REIT. Which hires a management team” This means that specific team is managing property for a hypothetical group of 25 people.

The second part “If the REIT buys a building for an inflated price, and they’re getting clean money monthly? They can just sit on it until someone legit comes along, having convinced a bank to make them a very large mortgage on an inflated price.” In other words they don’t care that much about cash flows the way somone leveraged to the hilt would.

That said these numbers completely ignore leverage, that 75 million investment could easily own 200+ million in property.

> changing less than they could,

Possibly, with the event of modern high speed communications pricing is much more transparent. Also, the theory is there were far more landlords in the past and the market is condensing on a much smaller number of them.

I’m really skeptical of this - my mental model is that when a city is initially settled and developed, large tracts of land are owned by people who end up becoming the local “old money” families who may truly have been monopolists. Over time they sell off chunks to “foreign investors” (who might come from the next town over or across the globe) which diversifies ownership.

I think there's an implicit assumption that housing stock is sufficient to house the population, and that landlords compete with each other. So rents generally trend downward, and track the costs of owning and maintaining a residence.

When those costs balloon (because of a glut of buyers with cash to launder), so does the prevailing rent which legitimate purchasers of real estate need to charge to recoup costs and make a profit.

If on the other hand housing stock is insufficient, rent will simply track demand and this effect will be masked.

Clearly demand from investors would raise sale prices, but why would renters pay more to rent in buildings owned by shady oligarchs?

You don't have to specifically live in these buildings to be affected by the influx of all that cash in the local market.

How does that cash end up in somebody’s rent check? Presumably the people selling to the oligarchs are not renters?

If the cash was able to get to renters via some kind of trickle-down effect, we’d all be happy with the resulting economic prosperity and then the resulting rent increases would unfortunately capture some of those gains. Increases in rent caused by increases in income aren’t going to exceed the increases in income, that violates causality. It’s only a problem if rent goes up first and renter incomes don’t increase to make up for it.

There's no "trickle-down" effect. It's a trickle-up effect in terms of (1) rents necessarily raising in reaction to the dwindling supply and (2) the ensuing speculation bubble in "hot" neighborhoods.

Both of which royally screw over long-term tenants living on flat incomes -- i.e. "the middle class".

What do you mean by dwindling supply, we are talking about investors buying properties and renting them out. That doesn’t decrease supply in the rental market.

The thing is - quite often they aren't renting them out; but simply holding them as "assets". Or when they do rent them out - they tend to raise the rent. Which is why the supply of affordable apartments tends to "dwindle".

Yes. Really bad article, I don’t understand how people can handle the cognitive dissonance. If anything, the situation described would reduce rents for your average consumer because the increased building sale prices makes it more profitable to build more buildings, increasing the supply of apartments. Basically foreign oil money supporting jobs and subsidizing rents. And as the article actually states, it doesn’t make sense for them to buy single family homes, so they aren’t even inflating the market for people who want to own their own home instead of renting.

The only potential drawback is the situation where investors buy property as an investment only, not for income, and consider tenants will decrease the value of the property, so they keep it vacant. I hear this happens in China. But it is expressly not the case as described in the article.

This is a clear example of someone quoting theoretical economic arguments as if they were as rigorous as mathematical proofs (and believing the gospel that they are preaching just because the logic is, on the surface, sound).

It takes years for buildings to be built. There are a ton of regulations that exist around construction and refurbishment in most cities (for good reason). Demand increases in any part of a market will have knock on effects on other parts of that market if supply is static (if buyers are priced out of one area they move onto other areas, increasing the demand and therefore price level).

Basically, the way the world behaves cannot be quoted out of a textbook. This is economic thinking at its worst.

Where I live, London, the rental market has gone absolutely mad in the past 20 years. While there is no single reason for it, it is no coincidence that this has been happening in the money laundering capital of the world, a favourite destination for oligarchs as our governments have turned a blind eye to their dirty money in the pursuit of foreign investment.

Please explain how the data provided by the article relates to higher rents. Just because rents are high and oligarchs are buying properties in order to collect rent, it does not follow that rents are high because of that foreign investment. It only makes sense that they are related if they are not renting them out. Which may be the actual case, but was not what was described in the article.

Easy, it is a two-fold problem.

First, if housing prices growing at a faster rate than wages then less people can afford buying and must keep renting. This means that the amount of people seeking rentals keeps getting larger, which increases the demand for rentals (and therefore the price).

Second, and this point is speculative and I have no evidence to prove this, these properties are much more likely to stay empty (or at least take longer to get to market as the goal of the money laundering operation is not the bottom line but the purchase itself). This is completely anecdotal, but the owner of a dog that my dog likes to play with represents a wealthy foreign individual, and this individual owns a really expensive property on Lancaster Gate that just sits empty that would otherwise pull in over 10 grand a month easy. If you live in these cities you see this kind of thing first hand.

Your first answer is in regard to: https://en.wikipedia.org/wiki/Law_of_rent

The second answer was verifiable from multiple markets on my end, in high rent areas like Southern California to Seattle where it was common knowledge that luxury items and land was bought up and left empty...unsurprisingly until China decided to start heavily double taxing foreign assets.

I've heard this a lot. Vancouver passed some laws to try to discourage the practice.

That said, I live in Seattle, and have for 25 years. I've lived in some of the nicest neighborhoods (Kirkland, Capitol Hill) and I have not seen or heard of a single actual example of nice places being bought and sitting vacant.

I'm not saying it's never happened, but I've seen zero evidence that it's happening on any scale that effects the market.

My point is not about foreign investment driving rents up or down, it is that this is a poorly written article. I generally agree with what you are saying, though your logic is somewhat flawed in your first point. Every property that gets turned into a rental on average changes one home owner to a renter but also adds a new rental to the market so in principle it’s a wash. However as I’ve stated now for the third time, I acknowledge that properties bought as investments without renting them out will increase rents.

What I have been saying is that the actual article doesn’t make that point, and therefore doesn’t make sense. Even if foreign investment drives up rents, a reasonable person without their own experience would not be able to conclude that from the information in this article.

Furthermore, I believe it is HN policy to assume the strongest argument of the person you are debating if you choose to disagree. Instead you are continuing to mischaracterize what I am saying.

Please don’t explain to me how it works in real life again, I am aware. I do agree that over the short and medium term some types of real estate investment will raise rents.

I agree with you that it is not a particularly polished article. However, you were basically saying that rents would decrease as a result of market forces, which is not really true as property markets can't react fast enough to match changing demand year on year.

You do have a point with your criticism of my arguments. I don't think I did a good job making the arguments as the issue that arises with renters not moving onto the properly ladder is closely linked with empty properties. Yes, a sold home becomes a rental in principle. But if it is slow to come onto the rental market or is kept empty then the supply for rentals decreases and the demand for rentals doesn't decrease accordingly, exacerbating the problem. So you are completely right that by itself it shouldn't matter much. You are correct that the problem arises when landlords are not too bothered by renting, which is a common feature in real estate money laundering.

> the situation described would reduce rents for your average consumer because the increased building sale prices makes it more profitable to build more buildings, increasing the supply of apartments

Ok, so why don't we see that happen in the real world? What you're saying is empirically wrong. So please supply an explanation of what's happening in reality.

Well for one people who paid for expensive real estate or had it appreciate in value won't be keen on any sort of devaluation whether from newer shinier buildings, an affordable housing project, or crime rates.

That is in addition to price per square foot rise from building larger scale - while more efficient in infastructure and land usage it may start requiring things like seriously deep foundations and pilings as opposed to a stack of bricks and mortar as a foundation. However while a high density area may wind up more expensive than prefabs at the outskirts not building isn't going to make things cheaper until demand collapses. Essentially it is complicated - part raw goods-and-labor economics and part selfishness tragedy of the enclosures essentially.

Why would you criticize a remark for being unfounded, by making another unfounded remark?

But here is some recent proof that the actual current rental market in the US is an example of what I was saying: https://www.bloomberg.com/news/articles/2018-09-07/boom-to-b...

I do agree that there are inefficiencies in the market that mean high building prices don’t always lead to more buildings being built. But the cause is certainly not because there is too much indiscriminate foreign capital available. That’s like telling me candy bar makers stopped making candy bars because they were selling for too high of a price. Local building restrictions, permitting, high labor and material prices have huge impacts on whether a growing city will be able to build enough housing to keep rents low. All it takes for rents to keep growing is one more family moving to the city than new units have been built. In cities with increasing rents, has the population recently been growing or shrinking?

I live in London UK, and here the idea that "high rents leads inevitably to a noticeably increased supply of more affordable apartments" is generally taken by the evidence of your eyes and wallet as so trivially false that it is not something that needs any additional evidence; it can an should be be dismissed with an unfounded statement. It is obviously not what happens.

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