It might seem that opening a swanky new apartment building with luxury amenities, such as a pool, gym, roof deck, and a trendy new grocery store, would benefit only people who can afford to live there—not lower-income families struggling to find affordable rental space in more modest buildings. But it turns out that adding more housing—of any kind—brings down rents across the board for the whole community, helping everyone.
It may be counterintuitive, but the recent research is thorough and sound.
It works like this: When lots of homes are available for sale, it’s a buyer’s market. Buyers have choices, often leading sellers to bring down their asking price. But when homes are scarce, that’s a seller’s market. With fewer homes available, houses get multiple bids, so prices increase and affordability worsens.
Now we know that the same process applies to rents. When home occupancy rates are high, landlords raise rents quickly—because there are more prospective tenants than there are available rentals. But when home occupancy rates are lower, landlords keep rents down, because tenants can move somewhere that costs less.
So how does increasing the supply for upper-income rental units help those at the other end of the scale?
This is an excerpt from a commentary that ran in The Dallas Morning News on January 29, 2025.
Joseph Dingman is the co-founder of Dallas’ Catholic Housing Initiative. Alex Horowitz is the director of The Pew Charitable Trusts’ housing policy initiative.