New construction sometimes doesn’t even help, when developers knocks down an old affordable 12 unit apartment building and build a luxury 36 unit building, you’ve created -12 units of affordable housing.
The argument I hear against this is that the 36 people who move into the luxury apartments moved from somewhere, and so 36 other apartments become available. The reduced demand for the vacated apartments then drives their prices down.
Of course, housing as a market is super distorted for a bunch of reasons so this effect is muddled. But I think it would be a net negative to fully disregard supply and demand in a market-based economy and preserve 12 affordable units in favor of 36 luxury ones.
I get that argument and I think there’s some merit to it since like you said this whole thing is muddled. But the counter point is often those vacated units are in another town or city. So in the way overly simplified scenario, if 36 “programmers” move to the city, the vacated units through out the country don’t help the “bus drivers” who are tied to the area.
Again we largely agree, I just wanted to illustrate even the simple assumptions like building more is good isn’t always that straight forward in this fucked up system.
The obvious and immediate flaw with the 36 people moving into luxury apartments is, that’s not usually how luxury apartments work. Particularly in certain markets, it’s more and more common for luxury housing to be temporary homes, vacation homes that are turned into investments the rest of the year, e.g. air BNB. So a lot of the time, you get 36 regular homes destroyed, for 12 luxury apartments that get bought up by either people or companies that either then rent them out or keep them empty most of the year, with no increase in available housing.
The argument I hear against this is that the 36 people who move into the luxury apartments moved from somewhere, and so 36 other apartments become available. The reduced demand for the vacated apartments then drives their prices down.
Of course, housing as a market is super distorted for a bunch of reasons so this effect is muddled. But I think it would be a net negative to fully disregard supply and demand in a market-based economy and preserve 12 affordable units in favor of 36 luxury ones.
Largely agree with all your other points though.
I get that argument and I think there’s some merit to it since like you said this whole thing is muddled. But the counter point is often those vacated units are in another town or city. So in the way overly simplified scenario, if 36 “programmers” move to the city, the vacated units through out the country don’t help the “bus drivers” who are tied to the area.
Again we largely agree, I just wanted to illustrate even the simple assumptions like building more is good isn’t always that straight forward in this fucked up system.
The obvious and immediate flaw with the 36 people moving into luxury apartments is, that’s not usually how luxury apartments work. Particularly in certain markets, it’s more and more common for luxury housing to be temporary homes, vacation homes that are turned into investments the rest of the year, e.g. air BNB. So a lot of the time, you get 36 regular homes destroyed, for 12 luxury apartments that get bought up by either people or companies that either then rent them out or keep them empty most of the year, with no increase in available housing.
Rich people don’t really move into these luxury apartment. They buy it as an investment, use it as a holiday home, etc.