Thread by @FurmanCenterNYU

Thread: Land use battles raging around NYC, most recently Innovation QNS, highlight local fears about displacement and questions about the impact of new development on rent.

There has long been a consensus among researchers that limiting the supply of new housing increases rents and home prices at a citywide level. nber.org/system/files/w…

Until recently, there was far less evidence about the impact of new construction on housing costs at the neighborhood level.

That has changed over the last five years. Several studies suggest that construction absorbs demand, relieves displacement pressures, and slows rent increases. lewis.ucla.edu/research/marke…

This study by a former doctoral student and co-authors looked at thousands of projects in 11 different cities and found that new buildings decrease nearby rents by 5 to 7 percent relative to locations slightly farther away or developed later. papers.ssrn.com/sol3/papers.cf…

Another of our doctoral students looked at this question in NYC and found that with every 10% increase in the housing stock, rents and sale prices decrease within 500ft.
fanniemae.com/research-and-i…

Housing opponents frequently note increasing rents and prices in neighborhoods where projects are proposed. That happens because, without new housing units to absorb demand, people who move into neighborhoods bid up the price of existing housing.

One important note: median and average rents in a given area will mechanically increase due to new construction. New market-rate housing commands a premium, so it will nearly always be more expensive than existing nearby buildings.

But the question this research seeks to answer is different: what happens to rent at existing units near new buildings vs. those that aren't near new buildings?

The answer appears that existing rents are lower near new market-rate buildings than those where new supply doesn’t come online.

So, to sum up: strong consensus that more housing lowers rents citywide, and there is emerging consensus that it also helps at the neighborhood level. Hopefully, these facts can assuage concerns that building housing will lead to displacement.