SerialStateLineXer t1_j4ohx65 wrote
Reply to comment by [deleted] in New apartment buildings in low-income areas lead to lower rents in nearby housing units. This runs contrary to popular claims that new market-rate housing causes an uptick in rents and leads to the displacement of low-income people. by smurfyjenkins
>if they built those apartments & charged higher rent then I dont think you would see rent drop & would probably see it go up
If they could charge higher rent and still get tenants, they would. They're charging as much as the market will bear, and it still lowers prices on surrounding housing.
If they charged rent so high that nobody was willing to rent the apartments, then it would have no real effect on the price of surrounding housing, but doing that would be a tremendous waste of money.
[deleted] t1_j4piylk wrote
so how does the more expensive apartment building by me lower housing prices? it's more expensive than houses, what is the incentive for housing prices to drop? why would someone choose a tiny expensive apartment over a large less expensive house? wouldn't it create demand for people who want houses & therefore increase house prices?
cantdressherself t1_j50xbv4 wrote
Apartments are substitute goods to houses. Raising rents due to new building can happen but only in specific areas.
Building luxury apartments next to affordable houses has no affect on the demand for affordable houses, unless it pulls a few tenants that really wanted luxury in that location but couldn't get it before.
It can raise property valuations and drive up taxes and attract higher paying renters, (gentrification) but that assumes the supply of renters is endless, which is not the case in most areas.
[deleted] t1_j50xnak wrote
yes so simply saying "more housing = lower rent" is obviously not the entire equation
cantdressherself t1_j61sjwn wrote
I mean, it will lower the rents somewhere. Maybe not right next door, but someone somewhere lost a buyer or a renter.
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