There are many consequences that come with this such as externalities and inequities and that complicates the market. When these high end apartments dominate college cities like this, the students face a huge financial burden, which then leads to taking on more debt or reducing spending in other areas like groceries, shopping, etc. Developers and the income students may benefit from this, the reality of it is the majority of students experience reduced consumer surplus due to higher rent and limited affordable housing. According to the Daily Cardinal, “A studio apartment at Chapter currently costs $1,859 per month, $691 more than the city’s average, according to Apartment Advisor. Comparable units in Atmosphere and Oliv are over $400 above average”. This quote illustrates how luxury student housing inflates rental prices, with these apartments costing $400-$691 more than the city’s average. In summary, the development of high end student housing in Madison has created a market that benefits high income students and developers while leaving many students struggling with there being such few affordable options. 

-If you look at the average rent price in Madison from January until December of 2024, it has gone from sixteen hundred dollars a month to seventeen hundred (Zillow).

-The issue of rents rising does not stop there, as buildings such as the Saxony Apartments are being proposed to the city, to be renovated into luxury apartments.

-Fortunately, Madison has recognized that there is a lack of affordable housing.

-In November, the city council announced they would be funding 9.85 million dollars for four new development projects (Rios).

-Students and the labor force are still going to be unrepresented

-"The Housing Strategy Committee recently released a report showing that more than half the jobs in Madison right now don't pay enough for folks to comfortably afford the median rent in Madison, and that's a big problem" (Rios).

-Considering the funding from the last project came from the affordable housing fund, we are proposing that the city not only continue to invest in their affordable housing but to put a price ceiling on what certain types of buildings can charge for rent.

-Buildings considered to be in this class of buildings should be given tax credits to help incentivize developers. 

Many factors distort the standard supply and demand. Large property management companies take charge of the rental market, showing their power that can result in higher-than-competitive rents. Some solutions like rent control try to cap prices but can reduce the landlord's incentives to their properties like building new units which potentially is losing the idea of building new properties and creating a housing shortage in the long term. 

A couple of ways for the city of Madison to address these issues the right way, they need some policies that have both affordability and market efficiency. Motivating developers to build affordable student housing near campus through tax breaks or subsidies could end up increasing the supply and maintaining the quality of the apartments. If Madison were to focus on these strategies they can create a more fair and affordable housing market for students who are renting from them. They can avoid supply shortages and reduced housing quality.