New Market-Rate Housing Lowers Rents for Everyone, According to New Research

A study published by a German researcher adds ammunition to the cause of improving housing affordability by legalizing and building new supply.

2 minute read

December 15, 2020, 6:00 AM PST

By James Brasuell @CasualBrasuell


Building Trades

Dmitrii Iarusov / Shutterstock

Joe Cortright shares news of new research that ties the amount of new rental housing to the cost of rent—the "tortured" supply and demand debate that defines housing policy in expensive areas of the United States.

"In our view, its [sic] been a growing demand for cities and urban living, running headlong into a relatively fixed, or at best slowly growing supply of urban housing that’s been the principle reason for affordability problems in many cities," writes Cortright. "But many housing advocates refuse to believe that increasing housing supply will have any beneficial effect on rents."

Andreas Mense, an economist at the University of Erlangen-Nuremberg, recently published a paper that agrees with Cortright's opinion on the matter. The paper finds that new supply has an effect throughout the market—not just at the top. According to Cortright, the findings of this paper add to a growing body of research showing that "new market rate construction triggers a chain-reaction of moves and price adjustments that rapidly propagate through an entire housing market and ultimately benefit low income households."

Notably, the paper also gives quantitative estimates of how much additional housing a city might need to build to stave off rent increases. In Munich, that number is a 20 percent increase over development totals from the last seven years, but the article cites a graph that charts the supply needed in a large number of German cities as well.

Monday, December 14, 2020 in City Observatory

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 9, 2025 - Diana Ionescu

Map of Haussmann's redesign of Paris in the 1850s through 1870s under Napoleon III.

In Urban Planning, AI Prompting Could be the New Design Thinking

Creativity has long been key to great urban design. What if we see AI as our new creative partner?

June 30, 2025 - Tom Sanchez

View of dense apartment buildings on Seattle waterfront with high-rise buildings in background.

King County Supportive Housing Program Offers Hope for Unhoused Residents

The county is taking a ‘Housing First’ approach that prioritizes getting people into housing, then offering wraparound supportive services.

July 11 - Real Change

Aerial view of suburban housing near Las Vegas, Nevada.

Researchers Use AI to Get Clearer Picture of US Housing

Analysts are using artificial intelligence to supercharge their research by allowing them to comb through data faster. Though these AI tools can be error prone, they save time and housing researchers are optimistic about the future.

July 11 - Shelterforce Magazine

Green bike share bikes parked in a row on a commercial street with outdoor dining and greenery.

Making Shared Micromobility More Inclusive

Cities and shared mobility system operators can do more to include people with disabilities in planning and operations, per a new report.

July 11 - Cities Today