Landlords need to compete for tenants. High rents are only tenable in hot employment markets with bad policies imposing shortages. Everywhere else, high rents lead to more construction which leads to lower rents, and the landlord who refuses the going rate sees his units go empty.

Ok, show me the real world place in the US where this actually holds true. This hypothetical gets touted around, but I’ve never seen it play out this way anywhere I’ve lived.

For example, I currently live in a second-tier Midwestern city in the midst of a housing crisis. Wages aren’t great relative to their respective industries, but rents and home prices are still skyrocketing. There’s no influx of new construction outside of the luxury sector in a few neighborhoods, a lot of which sits empty. Meanwhile, existing landlords just collect ever larger checks from their properties without meaningful continued investment.

Are developers complaining about not getting permits to build more? That's the usual failure mode in cities.

Median rent in Toledo, OH is $550/mo. With a median household income of $33,687, renters clearly could pay more, but there's no shortage letting landlords demand more.