Can New Luxury Units Free Up Affordable Housing?

June 6, 2019
luxury pool
Photo: Unsplash/David Lezcano

A new working paper from the W.E. Upjohn Institute for Employment Research found that the addition of market-rate units can cause a migration chain that frees up affordable housing.

City Lab reports that the paper, authored by economist Evan Mast, “suggests that even expensive new units in wealthy areas help relieve pressure on rents across the market, including in less-affluent neighborhoods. And that process doesn’t need to take years to unfold.”

These findings suggest that housing markets aren’t nearly as segregated as some might fear, if you work your way down the migration chain far enough. His model suggests that for every 100 luxury units built in wealthier neighborhoods, as many as 48 households in moderate-income neighborhoods are able to move into housing that better suits their needs, vacating an existing unit in the process. Somewhere between 10 and 20 of these households are coming from among the city’s lowest-income neighborhoods, vacating units and reducing demand where housing is most likely to be affordable for working families.

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