More New Housing = Less Displacement: Some Proof

by Dan Ross

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The California Legislative Analyst’s Office has released some study results showing that, in the San Francisco Bay Area, the more market rate units that were built in neighbourhoods, the less displacement of the poor those neighbourhoods experienced.
Reported here in The Washington Post, the study findings will be intuitive to some and completely counter-intuitive to others. I’m not a ‘free-market-cures-all-things’ disciple, but in this case it seems the relationship really is a simple, though not easy, matter of supply and demand:

In tight markets, poor and middle-class households are forced to compete with each other for scarce homes. And so new market-rate housing eases that competition, even if the poor aren’t the ones living in it. Over time, new housing also filters down to the more affordable supply, because housing becomes less desirable as it ages. That means the luxury housing we’re building today will contribute to the middle-class supply 30 years from now; it means today’s middle-class housing was luxury housing 30 years ago.

So the more you build, the more there is to go around, and the less ridiculous the local housing and rental prices will be. Of course it’s all still relative and imperfect. Even in those areas with more new construction, things may still be pricey; and there is some displacement; just less.
It strikes me when I hear people complain about Vancouver housing prices and new construction in the same breath. There’s nothing wrong with opposing a housing proposal in order to improve it, but to oppose new apartments out of principle while shaking your fist at the high cloud of real estate is literally crazy. It’s what crazy people do.