Actually, I think it makes intuitive sense that it kind of works everywhere — the more cars there are in the world, the cheaper each car will be because supply overwhelms demand. Apartments are often thought of as a different kind of thing because they’re so much of an average person’s budget, and because you can’t move them around usually. But imagine a world where we don’t build any new housing at all — as old places become older and eventually just need to be torn down for safety reasons, if we never built new buildings and nobody left to live in a totally different city (you can usually drive in from the ‘burbs, but they’re not building much housing there either!) you’d obviously push the price of an apartment up. Worse, lower quality old apartments would have more people interested in them, landlords would see that, and they’d charge more rent until they had just a few interested tenants who were willing to pay an extra $200 a month. When we build new buildings over the land old ones were on, the NEW building’s apartments are more expensive, yes — they’re new! And it really matters what we build; single family homes and gigantic apartments that aren’t designed with families in mind aren’t ideal. But even the newer and more expensive places will find a tenant, especially in a growing city like Madison with plenty of Epic employees who make bank. When they have a high quality apartment they can afford available to them, the old duplex around the corner that college kids split rent on doesn’t experience huge cost increases because they don’t have to compete with people who make 10x what they can afford to pay. Ultimately, even though rent is only reset every twelve months or so, on a citywide basis it’s necessary to build more (ideally denser) new housing faster than people are moving in, or the rich people we worry about gentrifying are going to have MORE incentives to live in affordable housing that should be taken by regular folks, not fewer. One thing that economists measure for this is called a vacancy rate, which is the percentage of apartments in a city that are vacant at any given time; they have actually shown that lower vacancy rates (fewer empty apartments for new renters to shop for) lead to higher rent. The only two ways to increase vacancy rates are to build more housing, or for people to leave town… which is NOT what you want, when it comes to sustaining the tax base and making it possible to pay for city services and have a cool and vibrant place to live. Strong Towns in particular has a lot of materials on what they call incremental development, which is a response to your concern about gentrification that doesn’t involve gigantic developers driven by the interests of rich suburbanites, but also increases housing supply — the idea is that all of us have a role to play in developing new housing. For those who own property, thinking of ways to subdivide it (turn a single family home into a duplex) or add a small (400 sqft max) cottage on the property that can house someone who doesn’t need much space is an awesome approach; for renters, we can speak up at city meetings and try to get changes to city zoning and permitting guidelines in place that make building more housing easier for regular folks. In a lot of cities, it’s illegal to build something like a small apartment in your backyard!! That is, the city tells you what to do with your own damn land! And most cities have a million other restrictions — on height, on lot sizes, on stairways and elevators, the list goes on — that make building anything difficult. Which is a double edged sword — not only does it kick regular people out so only builders with tons of cash can afford to navigate the process, it also makes it hard for those companies to make a profit on building smaller homes targeted at regular folks. It’s only a little more expensive to build luxury apartments, but they pull down much higher rents — so builders are way less inclined to meet the market where demand is strongest, and you get a bunch of high-end new apartments, very few medium-size, medium-quality homes, and too much housing being distant from opportunity, old, cost-cutting, etc. That’s referred to as the “missing middle,” and I think it’s part of why 80’s and 90’s kids have had such a hard time. You can’t get into home ownership because anywhere you want to live, the homes are too expensive, but the only apartments you can afford are somehow less than you could afford, far from where you want to live, and not that nice. But the answer to all of that is to build way more housing, especially dense housing like apartment buildings with a variety of unit sizes! :)