Does building more housing lower rents or push them up? Studies suggest complicated verdict.

On 2/14/19, the New York Times published (online) A Luxury Apartment Rises in a Poor Neighborhood. What Happens Next?.

Writes Emily Badger:
It’s even plausible that both stories could be true at the same time — that new housing might help lower rents across a metro area even as it signals the popularity of a particular neighborhood and nudges up rents nearby.
...Taken together, [new studies'] findings suggest that new housing can ease rising rents in other buildings close by. But their verdict is mixed on whether lower-income renters directly benefit from new supply, too.

The studies confirm that new buildings drive more amenities, like restaurants, but new supply tamps down rent increases, at least in the higher-end categories.

Writes Badger:

“These results don’t deny the reality of gentrification,” said Ingrid Gould Ellen, a professor at N.Y.U. and an adviser to Ms. Li. “They don’t deny the reality of crushing rent burdens. They simply suggest that building more housing in a neighborhood isn’t going to exacerbate those high rent burdens and may even help to alleviate them.”
One caution comes from research by Anthony Damiano and Chris Frenier, doctoral candidates at the University of Minnesota who looked at new large-scale buildings built across Minneapolis. Like Mr. Mast and Ms. Li, they find that new supply helped ease rent pressure for higher-end units nearby. But at the bottom third of the market, they concluded that new buildings had the opposite effect, accelerating rents.

That, of course, depends on whether the more affordable nearby units are rent-regulated or otherwise non-market.

Any Atlantic Yards parallels?

The warning (and lesson) for/from Atlantic Yards was that the new production would keep some people in the neighborhood, but also contribute to the loss of somewhat affordable rental housing in the study area that wasn't protected by rent regulation, as in brownstone apartments.

No one's done a full analysis yet, of course. It should be noted, though, that the "affordable housing" in Atlantic Yards significantly helps middle-income households, not low-income ones. And that the slow buildout means that market forces have had more time to take effect.

Also note that, unlike some other neighborhoods with income-restricted housing (like the one highlighted in the Times article), this is a coveted neighborhood, with access to transportation, jobs, and amenities. Plus some construction noise.

What's being built

One commenter on the Times article wrote:

Of course the studies look at the neighborhood effect of high rent construction, because that is what is occurring. No one looks at the neighborhood effect of low rent construction - which of course is what is needed - because low rent construction is not occurring. These are studies looking to justify a reality that is part of the problem. What should be studied is the benefit of low rent construction, and how to make it happen.
If the goal is to keep housing prices lower, then developers should be taxed for unsold/unrented units. That would encourage them to price them fairly. A NY Times story from Sept. reported that "among the more than 16,200 condo units across 682 new buildings completed in New York City since 2013, one in four remain unsold." That's ludicrous. Vacant apartments help only those who seek to keep prices high.