3 ms·

> lots of lower rent units will bring down the rents in the luxury segment I'm not sure I agree that that will help anything, and it might even be a bad thing.

> lots of lower rent units will bring down the rents in the luxury segment I'm not sure I agree that that will help anything, and it might even be a bad thing. Assuming an area has a housing shortage because of an influx of people drawn to the area by good jobs, the newcomers' biggest problem is not a shortage of money to spend. It's a shortage of housing to spend it on. That is, if you have 100,000 people who make $150K/year, luxury units go for $3000/month, and there are only enough luxury units to house 75,000 of those people, lowering the price on luxury units to $2500/month won't pull the remaining 25,000 people out of non-luxury units. And the reason why it might be a bad thing is that it costs money to build new housing. The higher rent the developers can charge for brand spanking new housing, the more investors and developers it attracts and the more housing can be built. Once the new luxury housing can be built, the well-paid 25,000 who were forced into non-luxury housing can upgrade and stop being forced to take lower rent housing (that they don't even want to live in) away from people who don't want them to have it.

frgtpsswrdlame 9y ago
Well you're only considering the problems of the wealthy newcomers and not the problems of the impoverished who already exist there.
- adrianmonk 9y ago
  No, I am considering the problems of the impoverished. One major cause of their problems is that wealthy newcomers are forced by lack of supply to compete with the impoverished for housing. This screws over everyone. The poor don't want to compete with the rich for housing. The rich don't want to live in housing that is below their quality standards. Also, how do you think new housing stock gets built? It takes capital to build housing. You attract that by luring investors with the promise of returns on their investment. Who can pay for that? Wealthy newcomers who can afford to pay high rents. The way to get housing built is to tap into the gigantic piles of cash available.

frgtpsswrdlame 9y ago

Well you're only considering the problems of the wealthy newcomers and not the problems of the impoverished who already exist there.

adrianmonk 9y ago
No, I am considering the problems of the impoverished. One major cause of their problems is that wealthy newcomers are forced by lack of supply to compete with the impoverished for housing. This screws over everyone. The poor don't want to compete with the rich for housing. The rich don't want to live in housing that is below their quality standards. Also, how do you think new housing stock gets built? It takes capital to build housing. You attract that by luring investors with the promise of returns on their investment. Who can pay for that? Wealthy newcomers who can afford to pay high rents. The way to get housing built is to tap into the gigantic piles of cash available.