Is Market Housing an Affordability Solution?

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Mast said his study has been in the works for a year and a half, starting with his graduate studies at Stanford University in the Bay Area.

“What I could afford was so pathetic, and what my friends with real jobs could afford is just unreasonably bad,” he said.

To conduct the study, Mast looked at what he described as 686 “large new multi-family buildings at market price” built since 2009 in a dozen cities – New York, Chicago, Dallas, Houston, Washington, DC, Philadelphia , Atlanta, Boston, San Francisco / Oakland, Denver, Seattle, and Minneapolis – and tracked 52,432 residents to their previous addresses using data from Infutor Data Solutions, based in Oakbrook Terrace, Ill..

What he found was that through what is called the ‘migration chain’, in which people of all income brackets end up moving into more expensive housing, 100 new housing units in Market prices ultimately open up to 70 units in more affordable neighborhoods with below-median income. leaflets and up to 39 leaflets in the bottom 20 percent of income, usually within five years of the completion of new units.

“Previous research has shown that new homes depreciate and ‘filter’ into affordable over decades, but little is known about shorter timeframes of, say, three to five years – a horizon that is all in. fact relevant to the acute housing crisis in the center of the current debate, ”writes Mast.

“Some households that would otherwise have occupied cheaper units move into new units, reducing demand and lowering the prices of the units they leave vacant. The process is repeated when a second round of households move into the units. that the first round left vacant. This ripple effect spreads However, if different parts of the housing market (such as new construction and lower-income neighborhoods) are strongly separated, with little cross-migration, the chain may never reach areas that need it most. ”

He notes that he does not estimate the effects on house prices and that the migration chain could be suddenly interrupted – for example in the event of withdrawal from a market or the purchase of a home as a second home. – before it reaches the wealthiest people. need.

In addition, it may not be able to save costs.

“Census tracts in the bottom quintile (20%) of median household income and the top quintile of rental load have an average vacancy rate of 12.8%, compared to 8.1 in the rest of my sample.” , writes Mast. “Given that rents are generally already low in these neighborhoods, this suggests that reducing demand through the migration chain mechanism is unlikely to lower costs, perhaps because rents have reached the minimum cost of housing. “


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