No, Really. Building More Housing Can Combat Rising Rents
To many people, new home construction is synonymous with gentrification. But a new analysis reinforces how more supply drives down housing costs.
A study of new housing construction in Helsinki found that new homes rented by higher-income people set off a chain of moves that opened up housing to lower-income people.
Photographer: Ville Mannikko/Bloomberg
When it comes to housing, seeing is believing. To many, construction cranes are considered a grim harbinger of gentrification, not a sign that rents will soon go down. Urban and suburban residents alike, when asked in a 2022 survey about the expected effects of a sudden housing stock surge, overwhelmingly believed that rents and prices would go up or stay the same, not fall.
But a review of recent research into the link between new housing production and apartment affordability offers new evidence that the rules of supply and demand do apply to housing: Building more can slow rent growth in cities and free up more affordable vacant units in surrounding neighborhoods, without causing significant displacement.