Here's the crazy thing about downtown/midtown rents spiking $200-$400/month, as reported in the Sunday Free Press. That amount seems to correlate to the housing subsidy offered by Live Midtown and Live Downtown.
Live Midtown/Live Downtown: New renters receive a $2,500 allowance of funding toward the cost of their apartment in the first year followed by additional funding of $1,000 for the second year.
It's almost as though landlords know potential renters associated with the DMC, Henry Ford, Wayne State, Blue Cross, Compuware, DTE, Marketing Associates, Quicken Loans, or Strategic Staffing Solutions have about $200/month in free money to throw towards their rent and have adjusted their prices accordingly. Landlords tend to be smart like that.
Even beyond just padding rents to absorb the subsidy, the Live programs have created a seller's market for downtown and midtown landlords by simply increasing demand for a product with a relatively static supply, instead of actually making living downtown/midtown more affordable.
I'll let the Global Subsidies Initiative at the International Institute for Sustainable Development explain it.
Economists call the ratio between what ends up in the pockets of the target group and what the government [ED: or non-governmental actors like Live Downtown/Live Midtown] spends the transfer efficiency of the subsidy. Subsidies for the purchase of inputs, by lowering the producer's costs, can have a fairly high transfer efficiency, but only if the supply is not limited. If the seller of the subsidized good is a monopoly, or there is a finite supply of the input, the subsidy will mainly enrich the input provider.
Granted, the full Live Midtown/Live Downtown subsidy only lasts one year, but if the last decade's mortgage bubble taught us anything it's that consumers aren't always rational when it comes to acquiring their dream home. And even if renters move after the subsidy expires, there is always a fresh pool of prospective renters eligible for the subsidy waiting to replace them.
All of which is fine if the intended goal of Live Midtown and Live Downtown was to increase rents. However, if the goal was to make living in downtown or midtown more affordable to employees of major local institutions, well, the realities of economics appear to have caught up with the best intentions of local boosters.
