New Report on the Benefits of Increasing Housing Supply

A new report titled “Supply Skepticism Revisited” by Vicki Been, Ingrid Gould Ellen, and Katherine O’Regan has been highlighted by the Furman Center in a recent email. The report is structured into four parts. The first part shows evidence that housing is unaffordable and that supply is not meeting demand in many parts of the country; the second part reviews arguments made by skeptics at the efficacy of increasing housing supply to increase affordability; the third part identifies new research that shows the benefits of increasing the housing supply; and the fourth part identifies areas where additional research is needed.

The report presents evidence for the following (see page 44 of the report):

• Additional housing slows the growth in or decreases rents in an area;
• In some instances, additional housing may also reduce rents or the rate of growth of rents in surrounding areas;
• New construction causes “chains of moves” where higher-income households move to new housing freeing up older units for use by other households in different income brackets;
• While increasing housing supply may increase gentrification, it does not necessarily displace lower income households; and
• Reducing restrictions in land use usually leads to an increase in the supply of housing, but increases may happen over a longer time horizon and those increases may not be equivalent to the theoretical capacity created as other constraints may hinder development.

The full report can be read here.