Encourage more and more building in cities – and get more and more luxury apartments

Efforts to encourage more housing in big American cities can often lead to more units for the wealthy:

Photo by Kozymeii Kong on Pexels.com

Academics, developers and people in their 20s and 30s—particularly those most active on social media—have reached an unusual level of consensus. Their solution, supported by a wealth of scholarly research, is simple and elegant: Loosen regulations, such as zoning, and build more homes of any kind—cheap, modest and palatial…

Inconveniently for the Yimbys, Austin, like other cities, is still way more expensive than it was years ago, even though it’s built so many apartments. As a result, a small group of academics is starting to question the free-market path. These critics note that the market leads developers to build luxury housing on scarce and sought-after property to maximize the return on their investment. “Yimbys say, ‘We have to let the market build,’ ” says Benjamin Teresa, an urban planning scholar at Virginia Commonwealth University. “But what kind of housing are you building, and for whom?”…

But the very popularity of these places with the affluent drives up housing costs, making it harder for companies to find workers and pushing firms to relocate elsewhere. The Austin metro area, one of the fastest-growing in the US, with a population exceeding 2 million, has benefited from corporations fleeing the high cost of housing elsewhere, particularly on the east and west coasts of the US. Home of the University of Texas’ flagship campus, it’s lured Elon Musk’s Tesla, along with Oracle, from Silicon Valley. JPMorgan Chase and Charles Schwab are expanding there, too...

Frustration over rising rents has led cities to consider government interventions that were once deemed discredited. Boston, Orlando and Kingston, New York, have taken fresh looks at rent control, which had been blamed for distorting the market and raising the cost of other apartments.

If a builder or developer gets the green light to build housing, why would they choose to build cheaper units if they can build more expensive units and make more money?

As the article notes, perhaps this requires cities to see housing as not just a market good or something subject to market fluctuations. If housing is just another commodity that requires a big return on investment, why not go big in asking for expensive rates? Rent control or publicly subsidized housing may require more intervention, but they could also be necessary to provide any housing within the reach of residents with fewer resources.

Which cities are able to successfully buck these trends will be interesting to see. If policies become more explicit about affordable housing units, will developers push back publicly? Will an important city then see a downturn in building and investment?

One thought on “Encourage more and more building in cities – and get more and more luxury apartments

  1. It seems always to need repeating. If you need housing, build housing. Suppose you don’t build “luxury” housing. Where do you think the people who would have bought those units will live? On the streets? No, they’ll take other housing, including housing that you might have wanted for your favored groups.

    Suppose you build a million luxury apartments in your city. What will happen to market rates, from top to bottom? Do I need to spell this out further?


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