How Luxury Units Turn Into Affordable Housing

There’s a fierce argument about housing affordability and supply that’s raging in the urbanist community. The big question: Does building “luxury” (or market rate) housing in wealthy neighborhoods free up more housing for everyone? Advocates in the “Yes In My Backyard” (YIMBY) movement say it does; others are more skeptical.

The market-rate-skeptic’s view, as captured in Richard Florida’s write-up of a new paper by Andrés Rodríguez-Pose and Michael Storper, paints a picture like this: Allowing new market-rate housing citywide will only result in high-end units in already-expensive neighborhoods. At best, developers may win big as the wealthy enjoy new homes. At worst, it could exacerbate segregation in wealthy neighborhoods and displacement in low-income neighborhoods.