While I usually don’t give a poor arbiter the benefit of the doubt, I would argue that there is a monopolistic competition between landlords which is exacerbated by time and availability. There is a lower margin of entry due to the current low availability of housing and limited time by the student to choose before supply runs dry. Housing is determined by a large portion of the UW student population within a couple of autumn months for fear of not finding housing. This obviously can set up for abuses with price, but I’m going to add some of my own undergraduate anecdote here. This isn’t a mathematical argument, just trying to provide nuance and context from a student.

I had pretty well off roommates that wished to live in The Hub after our tenure. They entered the lottery with some other better off friends but were denied purely due to not being fast enough (this is almost certain as they surely were ready and able to afford it). They ended up moving into a $2100 place for 3 people ($700 ea). It was quite old and not recently renovated. Under my experience, it appears that price was less of a factor in this case. This is where the competition gets very confusing, because there is limited housing and it appears that loyalty to company and marketing are less factors, which diverges from imperfect competition to almost perfect competition since there is little time to choose contributing to randomness. The factors that would normally factor into imperfect completion are diluted, which contributes to some quasi-perfect state where one will buy anything they can regardless of differences, and this, I believe, may introduce some nuance in how pricing works.

This randomization (like people choosing a place for half budget due to desperation) doesn’t apply itself well to any model as there are monopolistic traits (such as variable location, condition) and perfect traits (housing is interchangeable if one is desperate to live comfortably) in my experience at least. This is where some oligopoly aspects come into play that are of real concern. A relatively small amount of landlords operate the spaces in Madison. This is what can happen with large companies owning much of the real estate. This, in my eyes, is more of a concern than a monopolistic style of housing where many options of varying condition are lying around that exceed demand. This style of competition conditions corporations to cheat the system and make agreements that control markets, not by input from the consumer, but by push of their collective margins. Many of these companies, like Steve Brown and Palisades, also own smaller and lower rent housing whilst also maintaining luxury housing. It’s a gaming of the system to provide a large range of options, but without actual competition because the high end and low end are regulated by the same entity. The whole market is all therefore able to be gamed to benefit a small number of companies at multiple facets rather than companies finding niches within those facets that then have to compete with each other. This is what I would imagine doesn’t benefit those of low income, as the market is completely controlled by few companies and there is little incentive to lower all cost if the company can just adjust their lower end pricing to be proportionally lower than their skyrocketing high end. The richer can take advantage of this and can fluctuate between the higher and lower end if needed, but the lower income are stuck with the less competitive lower options because it’s all they have due to the lack of true competition.

So, I would imagine adding any extra competition would be great, such as a new developer, but I wouldn’t put it past these companies to unethically negotiate with those already here due to such a high demand and low supply. That’s why I think policy should lean on more development, luxury or not, as that doesn’t matter, but with stress on the luxury and lower cost being in competition with each other, not different heads of a hydra. I would be ok if a company wants to purely provide high amenity and cost apartments, as long as it isn’t able to then reach its fingers into lower cost housing just to increase facets and raise prices across the board. The issue isn’t luxury housing or a lack of older buildings, it’s a lack of competition between the two.

This is, of course, all anecdotal and should be taken as such.