How New Developments Affect Housing Availability

Here's a finding that some may find counterintuitive: when cities build expensive new apartments, rents actually fall most in older, cheaper buildings. The Pew Charitable Trusts researchers analyzed seven years of rent data from 1,654 ZIP codes to settle a debate in housing policy. Does building more housing - even luxury housing - help working families afford rent? 💸 First, they documented the problem: housing shortages hurt working families most. During 2017-2024, lower-income neighborhoods (under $43k annual median income ) experienced rent increases 10 percentage points higher than wealthy areas (above $70k). When there aren't enough homes, wealthy folks outbid everyone else, pushing working-class earners like teachers and service workers further down the affordability ladder. 🔄 Then they found places that solved the problem by building more housing To test whether more supply actually helps, researchers looked at 11 metros that increased housing stock by 10%+ from 2017-2023. The rent dynamics from 2023-2024 completely flipped: -Older, basic apartments saw the steepest rent declines -New luxury apartments barely dropped at all When there's more housing overall, competition eases most for working-class renters. ⛓️ Finally, they explained how building expensive housing helps cheap housing New apartments create "moving chains." Notre Dame economist Evan Mast tracked actual address changes: wealthy renters move into new luxury units → free up their previous apartments → middle-income renters move in → free up their places → working families get options. The data shows ~70 homes open up in below-median-income areas for every 100 market-rate units built in affluent neighborhoods. 📍 The bottom line: blocking new housing forces working-class earners like teachers, childcare workers, and service employees to fight over the same shrinking pool of housing that is more affordable. Check out the full research here: https://lnkd.in/gYEQUkPx

The U.S. multifamily housing market just hit a critical inflection point. Over the past 12 months, multifamily construction completions outpaced new starts by 223,000 units, signaling a major contraction in the development pipeline. In fact, the total number of units under construction is now at its lowest level since 2021, and industry experts say the trend will likely worsen before it improves. In May, apartment construction starts dropped 30% from April, according to U.S. Census Bureau data. Just 316,000 units in buildings with five or more units broke ground—a steep fall that wiped out the modest recovery seen in February, March, and April. It's a jarring reversal that underscores how volatile—and fragile—the multifamily market remains. While some blame recent tariffs for rising construction costs, the steep drop in starts began well before any trade policy changes took effect. Most economists point to elevated interest rates as the real culprit. Financing large-scale projects has become prohibitively expensive, forcing many developers to pause or cancel new builds. Still, there’s a glimmer of hope. Multifamily building permits actually rose 1.4% in May, and are up 13% year-over-year. The National Association of Home Builders (NAHB) says that may indicate May’s weak start numbers were more “noise than signal.” But with fewer projects breaking ground and the pipeline thinning, optimism remains cautious. REITs and major developers, despite pledging to restart their pipelines in 2025, have been clear that economic uncertainty and construction cost volatility are major headwinds. Tariffs may add some pressure, but financing constraints and return hurdles remain the bigger bottlenecks. Meanwhile, rental demand continues to grow. According to CoStar, the U.S. apartment vacancy rate peaked in late 2024 and is expected to trend downward through 2025. With completions forecasted to drop 45% this year, the supply-demand imbalance could drive tighter markets—and, potentially, higher rents. The bottom line? The multifamily sector is entering a constrained phase, marked by shrinking supply, suppressed starts, and surging demand. Unless financing conditions improve soon, developers may find themselves chasing a market they can’t build fast enough to meet.

New York City just did something the rest of the country should be watching closely. This week, the Mamdani administration released its SPEED report (Streamlining Procedures to Expedite Equitable Development), which is a sweeping overhaul aimed at one of the most stubborn problems in American housing: too much red tape. It takes too long, and costs too much, to build the homes people actually need. Here is what the report promises: • 8 months cut from the timeline of every affordable housing project • Up to 2 years saved on projects requiring a zoning change • Pre-certification compressed from ~2 years to 6 months • Move-in after construction: 210 days → under 100 days • Lottery application window: 60 days → 21 days • $22B committed to housing over five years; +$14M for staffing and tech Since 2022, NYC has failed to build more than 3,500 proposed apartments (including nearly 1,000 income-restricted units) due to the public review process alone. SPEED is a direct response to that. What this means for housing affordability in NYC: Time is money in development. Every month a project sits in review, financing costs accrue, construction prices drift higher, and those costs land in rents. Cutting 8–24 months out of the pipeline would address those obstacles, without spending any additional tax dollars. What it means for the surrounding region: When NYC under-builds, the spillover pushes people to move into Westchester, Long Island, Northern New Jersey, and the Hudson Valley, which drives up prices far outside of NYC. A faster pipeline inside the five boroughs eases that pressure on commuter markets that have absorbed a decade of displaced demand. What it means for the NYC economy: Housing construction is one of the highest-multiplier sectors a local economy has. Permitting reform translates almost immediately into construction jobs, materials orders, and downstream spending. Plus, more people living in NYC means more people consuming, producing, and contributing to the NYC economy What it means for the U.S. economy: The national housing shortage is estimated in the millions of units, and shelter inflation has been the single most persistent driver of core CPI. If NYC can successfully solve its housing supply challenges, more cities will follow suit, and the U.S. economy will grow.    Housing economists have been making the supply argument for years. It's encouraging to see a major city act on it with this much enthusiasm and specificity at this scale. Image credit: Wikimedia Commons (public domain, photo by Termin8er850)

📄 Tariffs are adding $17,500 to the cost of building a new home. This figure, calculated by the Center for American Progress, comes as key building materials have surged under a sweeping new tariff regime. The rising costs stand to worsen an already severe affordability crisis and choke the construction pipeline. What's driving the increase? The most impactful tariffs on housing inputs include: - 🔩 50% on steel, aluminum, and copper  - 🪵 45% effective rate on Canadian softwood lumber  - 🪨 25% on gypsum (primary ingredient in drywall), cabinets, and wood products - 🌎 25% on products from Canada and Mexico Since these tariffs took effect, aluminum prices are up 23%; steel, 24%; and copper, 49% https://www.bls.gov/ppi/. Compounding the cost increases is the uncertainty. Housing development runs on long timelines, tight margins, and often fixed-price contracts. Volatility in input costs makes planning difficult and riskier, which in turn slows projects or stops them altogether. We’re already seeing the impact. Residential permits and single-family construction are at their lowest since the early pandemic, and builder confidence has fallen to its lowest since 2012 📉 https://lnkd.in/emWPCHHJ. In total, the 2025 tariffs are projected to add $30 billion to residential construction costs, potentially resulting in 450,000 fewer homes built through 2030, according to Brookings https://lnkd.in/eStYYADc. This lands on a market already short 3.7 to 4.9 million units. In the short run: this means higher costs for buyers and renters with fewer homes coming online. In the long run: developers may shift toward high-margin luxury projects, deepening the affordable housing shortage. Follow for more analysis of the latest trends affecting real estate markets: Forty5Park #realestate #construction #tariffs #affordability #dataviz

The New York Times just published a piece on housing that leads with our team's research — and I'm grateful they're centering the question that should be at the heart of every housing conversation: building for whom? For years, the narrative has been simple: just build more housing and prices will come down. But our analysis of six high-growth metros shows it's not that straightforward. Take Phoenix. The city built aggressively. New units had a vacancy rate over 9%. Yet rents for extremely low-income households jumped 26.7% while rents for high-income households actually fell by 5.3%. Or Seattle, where our team found lower-income households saw rents rise faster than wealthier ones despite new construction coming online. The pattern was consistent across Atlanta, Dallas, Houston, and Washington D.C. too: new supply didn't translate to affordability for the people who need it most. As I told the Times: "You can't just build, build, build and think it's going to work out for everybody in the end. You need to think about what you're building and who you're building it for." The housing crisis is solvable. But the solution isn't just "more supply." It's the right supply, built intentionally for the people who need it most. Proud of our team for this essential research. Read the full NYT coverage: https://lnkd.in/eFXRiBEQ Read our complete report: https://lnkd.in/edxpjA_f

The latest State of the Nation’s Housing report from Harvard Joint Center for Housing Studies is a sobering reminder that simply building more homes isn’t enough. Yes, increasing supply matters, but unless we deliver the right supply in the right areas, the affordability crisis only deepens. The US experience shows that even with record levels of new construction, most of it has been concentrated at the higher end of the market. Rising land, construction, and infrastructure costs, combined with developer return expectations, are pushing rents and sale prices ever higher. At the same time, the stock of genuinely affordable rental homes has collapsed, homeownership rates for younger and lower-income households have fallen, and homelessness has surged to record levels. The clear takeaway for New Zealand? Market-led housing delivery alone cannot solve our affordability challenges. Without targeted Government, CHP, iwi, church, and philanthropic intervention, the market will continue to underserve those on lower incomes, locking more whānau out of secure, affordable homes. Perpetuating our long and continued social and economic decline. We need bold, coordinated action to deliver a better mix of supply: * Affordable rentals in the right locations * Smaller, more attainable homes for first-home buyers * Supported pathways into homeownership for those excluded by deposit and mortgage hurdles * Investment in social and community housing for those most in need The US housing system reminds us: the market will chase profit (as it is meant to do). But a just, inclusive housing system takes leadership, intentionality, and public investment. There are signs of progress in New Zealand — the Government’s new Flexible Fund, the rise of philanthropic and impact investment in housing, the growth of papakāinga and iwi-led developments, and Councils across the country beginning to allocate land and resources for more affordable homes. But let’s be clear: it’s not nearly enough. If we want to change the trajectory, we need more than good intentions. It’s time to get serious about building more of the right type of homes, and building equity for all. Doing so is good for us all.