Creating enough affordable housing is one of the hardest political and economic challenges in the world. (If you think you know an easy answer, you’re wrong!) Here is a new piece of data that could “add to our understanding,” and make everyone mad.

The Washington Post today picks up a nonpartisan California government study that looks specifically at what happens to low income people when you build more housing for high income people in their neighborhood. It is natural to imagine after a moment’s thought that this sort of gentrification—which can be seen all over Brooklyn, for example, where new luxury condos sprout on blocks that were considered poor just a few years ago—would hurt the neighborhood’s low income residents. In fact, the report finds, the opposite is true.


In places facing affordable housing crises—like NYC, and like parts of California, which the report focuses on—one unavoidable fact is that there is simply not enough housing. Housing that was once affordable becomes unaffordable due to the lack of new supply to keep up with increasing demand. For this reason, the study found that one very simple way to help ease the affordable housing crisis is to allow more private construction—even if that construction is not of affordable housing. In other words, even those shitty new condos for wealthy assholes could be unintentionally helping less wealthy people continue to live in their gentrifying neighborhoods.

For one, the report notes, the new luxury housing of today turns into the middle class housing of the future, as the rich chase ever newer housing stock. By building continuously we ensure a future supply. “One study of housing costs in the U.S. found that rental housing generally depreciated by about 2.5 percent per year between 1985 and 2011,” the report notes, “but that this rate was considerably lower (1.8 percent per year) in regions with relatively limited housing supply.”


Furthermore, adding new units (even if they’re not affordable) tends to cause rent to grow more slowly. Check out this chart!!!!!!!

The study also found that—perhaps because of this effect of keeping rents in check—low-income areas with the most market-rate construction actually had lower displacement of citizens than low-income areas with less new construction. Which is to say that poorer people are actually less likely to be forced to move out of neighborhoods where developers are building lots of new buildings for gentrifiers than neighborhoods that are just plain poor, with little new building at all. And none of this is related to policies that require new buildings to set aside a certain (small) percentage of units for affordable housing: “market–rate housing construction appears to be associated with less displacement regardless of a community’s inclusionary housing policies.”

Of course, all of this must be understood in the context of a place like the Bay Area where housing supply period is too low to meet demand. This does not mean that building luxury housing is the optimal solution to our affordable housing issue, or that we start handing out good citizenship awards to developers. But it does seem (according to this study at least) that rage at new construction in gentrifying neighborhoods is misplaced in the context of this particular problem.

It’s better to rage at the people moving into new places in gentrifying neighborhoods. Ugh, hipsters!!!! Mayonnaise stores!

[None of this should be read as a pardon for liberal guilt, which is an essential force for good in our democracy. Full study here. Photo: Mark Hogan/ Flickr]