Does Housing Construction Bring Rents Down?
It's supposed to. But I'm not sure it helps, especially for low-income families.
Robert Moses (1888-1981).
Did you know that landlords clear twice the profit, per apartment, on housing in poor neighborhoods than on housing in rich ones? The reason, according to a 2019 study by Matthew Desmond of Princeton and Nathan Wilmers of MIT, is that land values in poor neighborhoods are much lower, whereas rents in poor neighborhoods are only a little bit lower. That’s good news for slumlords and bad news for low-income renters.
In my latest New Republic piece, I explore this and other reasons why housing is unaffordable for so many Americans, especially at low incomes. The solution favored by liberal policymakers these days is build, baby, build! But over the past quarter-century, as Washington, D.C., increased housing units by one-third, median monthly rent didn’t go down; it more than doubled (after inflation). This raises the possibility that, at least in a city like Washington where housing demand is insatiable, building more apartment houses is analogous to building more highways: Rather than reduce scarcity, it merely reproduces it (or even increases it. Here is Robert Caro in The Power Broker on the opening, in 1936, of the Grand Central, Interborough and Laurelton Parkways:
The new parkways solved the problem for about three weeks. “It wasn’t more than three weeks after they opened that I decided to go out to Jones Beach on a Sunday,” Paul Windels [New York City corporation counsel under Mayor Fiorello LaGuardia] recalls. “I got on the Interborough and by God it was as jammed as the Southern State ever was.”
…
Some city planners noticed that the traffic pattern on Long Island had fallen into a set pattern: every time a new parkway was built, it quickly became jammed with traffic, but the load on the old parkways was not significantly relieved. If this had been the pattern for the first hundred miles of parkways, they wondered, might it not be the pattern for the next forty-five also? … But their voices were drowned out by the flood of praise for [master builder Robert] Moses’ idea.
You can read my piece here.
Please sit down and talk with somebody like professor Evan Mast. You're embarrassing yourself here. Yes, building more housing lowers the cost of housing. This is, as Senator Warren put it, plain old econ 101.
https://twitter.com/ewarren/status/1740469761543442685
Disappointing framing on this article. The evidence, both domestically and internationally, is unequivocal that building housing brings down rents. Matthew Desmond himself says that more supply is a necessary part of the solution. That is not mutually exclusive with tenant protections and welfare policies, and framing them in opposition with each other is deeply mistaken and counterproductive.