Every year, millions of renters get the same bad news: the rent is going up, again. Most people assume they know why—inflation pushed costs up, there isn't enough supply, or the landlord is just greedy. Those assumptions aren't entirely wrong. But they are incomplete. The reason the rent is too damn high is because Wall Street is counting on it.

From the stock market to the labor market, much of our economy is based on expectations.

Your rent is more than a monthly bill. It is a financial projection. Rental housing in the United States is increasingly organized as a financial asset class. Apartment buildings are bought, sold, and borrowed against on the expectation that rents will keep rising. Apartment loans can then be bundled into commercial mortgage-backed securities and sold on the open market. The people who live in these buildings become assumptions in financial models designed to hit yield targets for distant investors.

The dominant story about the U.S. housing affordability crisis has a seductive simplicity: we don't build enough, so prices rise. Cut regulations, accelerate permitting, let supply meet demand, and affordability will follow. This frame has united mayors, governors, and even Congress in a deregulatory agenda that often treats tenant protections as obstacles. This narrative is not wrong about scarcity. We do need more homes. But it leaves out a crucial part of the problem: the housing crisis is not only a supply problem. It is also a financial regulation problem.

When an apartment building goes up for sale, buyers compete for it. To bid, they go to banks with projections of how much income the building will generate in the future. The lender then determines the size of the loan based on that projection. Typically, the buyer with the most aggressive rent-growth assumptions can borrow more........

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