Joe Cortright spreads the good news that “For Rent” signs are proliferating across Portland, signaling an easing of the affordable housing crisis. And he points out a critical thing that many activists miss. That luxury housing that affordability advocates decry does improve affordability for everyone.
The … myth is that you can’t make housing affordable by building more of it, particularly if new units are more expensive than existing ones. The surge in vacancies in existing apartments is an indication of the interconnectedness of apartment supply, and an illustration of how construction of new high end, market-rate units lessens the price pressure on the existing housing stock. When you don’t build lots of new apartments, the people who would otherwise rent them bid up the price of existing apartments. The reverse is also true: every household that moves into a new apartment is one fewer household competing for the stock of existing apartments. This is why, as we’ve argued, building more “luxury” apartments helps with affordability. As our colleagues at the Sightline Institute recently observed, you can build your way to affordable housing. In fact, building more supply is the only effective way to reduce the pressure that is driving up rents. (Emphasis added.)
Why mention this on a transit blog? Because the mistake activists make here is the same one that many transit advocates make, which is to think of wealth as a set of boxes, called classes, that never intermix or affect each other. It’s the same mistake that underlies the false dichotomy of “choice” and “dependent” riders in transit planning, the notion that you need separate services for each type of rider because they are absolutely different kinds of people who will never mix.
In fact, wealth is a spectrum. People are everywhere along it. Admittedly, this is less true that it once was, but it’s still true. So although people certainly differ in wealth and thus in the options they have, they are still part of the same diverse market — for housing, as for transit. When advocating for a fairer and more equal economic world, don’t lose track of this. Don’t become so focused on us-them differences that you miss the solution that improves things for everyone, including you.
Oddly, here in Calgary, the one thing I don’t seem to have trouble convincing people (politicians) of is that people live on a spectrum of choice and will pick the thing that is most useful to them, not the thing that “fits their class”.
High-end units built and priced and marketed to appeal as investments or part-time homes for the wealthy (as compared to local average incomes) may contribute to the supply for the spectrum, but not enough when too many of them sit empty much of the time. Policy is inching awkwardly along to try to address this.
Since many of those new builds are large McMansions built as car-dependent estates, or single-bedroom condos, even if they become part of the overall supply there is still a shortage of affordable and suitable family housing. And new buildings either contribute to urban sprawl, or replace older more affordable rental, because of barriers to building denser housing in single detached neighborhoods. Policy and economics make other types of building projects challenging.
IMO the concept of induced demand as for transportation (e.g. build more roads, attracting more drivers, crowding out space and investments for alternate transportation modes) could also apply to housing, and that is enough of a factor that we are as likely to be digging ourselves into a hole as building our way out of one.
(from Metro Vancouver… but for how much longer that can last I don’t know)
The same happens in my city. For each 3-or-more bedroom apartment there are two 2-bedroom apartment and 15 single bedroom or studios. That way the city have grown from 85 km2 to 210 km2 in the last 25 years and families with 2 or more kids (aprox. 70% of the families) needs to travel 10-15 km each trip to go downtown
My understanding was this was referring more to the construction of higher-end condo buildings, which is something Calgary is seeing a lot of.
Don’t those one-bedroom apartments attract many students and young professionals that would otherwise take roommates and share a 3+ bedroom unit? It certainly seems that in many expensive cities, multi-bedroom units are more often shared by several young working professionals that can easily outbid a family with only two earners and a need for childcare.
Well, it depends on where those high-end houses are built. If they are built instead of previous working-class housing(like it was done in Paris in the 1850s-1860s), it won’t solve any problem. It’s just sending back the working poor far from any active area.
OTOH, when it’s done in new areas(as currently in the South-East of Montpellier), where several buildings of dozens of flats replace a handful of countryside houses, yes, it can work. Even if the new flats are really costly(I know, I just moved to one of them).
“When you don’t build lots of new apartments, the people who would otherwise rent them bid up the price of existing apartments. ”
Not exactly. If the housing stock is all low quality it low cost, it can remain that way in perpetuity. Look at Camden, NJ. There is 24/7 subway service in Philadelphia, 10 minutes away, but you still have abandoned properties next to vacant lots next to crack dens.
When you build a luxury apartment, you are signalling that the developer/investor knows something. Why would they put this here if this wasn’t a hot market? So people buy out the nearby buildings, jack up rents, and aim for a future in which another rich developer will buy them out.
So you create a cycle of speculation. As prices go up, you can actually create demand. You woudlnt rent a $300 a month apartment 10 minutes from center city because surely it is a shithole. But $1,200? Why would they be charging that much if it wasn’t a good deal? You assume the market is correct in pricing it based on how desirable it is, vs the reality which could be speculation.
“In fact, wealth is a spectrum. People are everywhere along it. ”
I also disagree with this point.
Surely you’re familiar with this image from Sao Paulo:
This kind of extreme wealth difference exists in the US, but it is harder to photograph.
Again in NJ, you can drive 5 minutes (or ride one bus line) and go from an area with a median household income of $15,000 to one of $150,000.
Do you think the people living in the $150,000 area are going to board the bus which takes them through the 15k area to the train station?
You see this leaving Newark, Camden, and Paterson in NJ.
No, those richer folks driving to the train station and pay to park. Doesn’t matter how frequent and direct you make your bus line, because that frequency isn’t going to stop the crazy homeless person from getting on, yelling at everybody, and then getting off a block later.