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The author actually spends a long time arguing the opposite: > I think it is clear from this that we can’t expect new luxury development to have the same impac
by ufo 8y ago
The author actually spends a long time arguing the opposite:
> I think it is clear from this that we can’t expect new luxury development to have the same impact on rents at the bottom of the market as it does at the top. But how much less impact is not clear. In technical terms, there is no good recent data on the cross-price elasticity of demand between luxury housing and lower-cost housing. A large group of urbanists have taken to talking about the housing market as if these elasticities were close to 1 (increases in luxury supply have a big impact on the low-end rent). But it’s just as likely that the elasticity is closer to 0 (the rent at the bottom of the market is very insensitive to the level of supply at the top of the market).
- ineedasername 8y agoYou're (mostly) correct. I misread parts of his argument. But he doesn't conclude that opposite, only that luxury housing doesn't have the impact some argue for, and also that it might have very little impact at all on the opposite end of the market. However he does spend some time demonstrating that it does have some effect on the next tier down, then a little less on the next below that. And, as I argued, that some of the luxury inventory is purchased as buy-and-hold, not buy-and-move.