Andrew Yang is advocating for universal basic income. His proposal is $1,000 a month. A common criticism raised is that UBI would cause inflation. The counter argument usually goes along the lines of market wide collusion to raise prices being infeasible, unilaterally raising prices would lead to a loss in sales, demand is elastic and consumers are price sensitive, etc. This seems to hold true for most consumer goods, so we should expect only modest price raises.
However, I'm not so sure that this holds true for housing. UBI would increase housing demand as many people who couldn't afford a home previously would now be willing to look for one. Demand for housing is less elastic than normal (people may not want to leave a neighborhood due to social connections, commuting to work, etc), so consumers may be less price sensitive than for other goods. Furthermore, housing supply also seems to be constrained (largely due to extant laws). I'm not really sure that landlords can't decide to raise rent by say $250 and get away with it.
My first question: would a $1000/mo UBI lead to significant rises in housing price and why?
A proposal that I've seen to mitigate housing inflation is rent control. However, when I spoke to my economically literate friends they all said it's a bad idea and has the standard faults of price controls such as: shortages, search costs, reduction in quality, and deadweight losses. I'm inclined to trust them, but as they were private conversations it's not really something I can link to, so I decided to ask a question here.
My second question: Is rent control a bad idea and why?
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