Escaping the Cycle of Inflated Housing Costs
William Fulton discusses the factors motivating today's frustrated NIMBYs and development advocates. Is there a way to keep housing prices reasonable in major cities? While some progressive voices call for more housing to ease prices, others argue that "the trend toward high housing cost must be countered with less housing construction. Or at least less market-rate housing construction." The question is whether (in the case of "luxury" housing) supply can create its own demand.
Of course, luxury housing and market-rate housing mean pretty much the same thing in many urban centers. As a result, "a new generation of people – not quite NIMBYs, but not quite not NIMBYs – are arguing that you shouldn't build more housing because housing is already really expensive."
In desirable, vibrant locales, the very-rich purchase existing large houses, leaving new development to cater to upwardly-mobile professionals. Any new construction just encourages more of the well-off to move in, doing little for those making under three figures. "To a local community activist, it feels like a no-win."
Fulton suggests a fix: true diversity in housing types, from penthouses to boarding houses. If a city can offer housing to match the diversity of those who want to live there, the luxury housing bubble might deflate.