But as long as demand at the high end is unmet the people with money will outbid everyone else and drive up the price of "affordable" housing if that's the only thing they can find. Nobody wants to pay $2,000 for a shitty apartment. But the price of shifty apartments will well rise north of $2,000 if that's the only thing you can find walking distance to Amazon.
I think there is so much pent up demand for housing close to work that you can double housing stock and still not make a dent in prices, so it's easy to conclude that simply building more does not lower costs. I think we need to build a LOT more if we are ever going to have truly affordable housing near city centers.
The affordable housing rules you mention are an example of an attempt to legislate our way out of the problem, and obviously they haven't worked. I'd say the reason they haven't worked is because they don't address the real issue: to have cheaper housing we need to reduce the barriers to building more housing.
At least that's my personal view. I'm not an economist or a city planner or any kind of expert, just a rando on the Internet. :)
What do you do when land prices and the obstacles to construction posed by high density (such as not being able to store large quantities of raw materials or keep a bunch of trucks on site) make development costs prohibitive for affordable housing? What do you do about the NIMBYs who are afraid the new skyscraper will block their view?
And why would a developer choose to build in a cheap area for lower rents when they can get higher ROI on everything but the land costs if they build luxury housing in an expensive area?
I'm not convinced that the biggest obstacles to affordable housing in the city are about zoning or safety regulations. (Some of which, btw, ARE necessary for the sake of, yanno, people not dying.)
I would argue this is a false choice: very few developers have the capital to build luxury housing in expensive areas.
For example, I know a guy who builds lower-end housing in Philadelphia (among other places). He would never consider building anything in Manhattan, simply because he can't afford to tie up the capital it would take to build even a townhouse-scale project. Lower-end is his game, period - only a small handful of mega-developers get to make the kind of choice you propose.
By the way, he lives in New York, and logically/logistically it would make more sense for him to build in New York than Philadelphia, but the economics of lower-end development in New York are prohibitive. Once in a while a good opportunity will come along here, but to pay the bills and not be idle he has to look elsewhere.
> I'm not convinced that the biggest obstacles to affordable housing in the city are about zoning or safety regulations. (Some of which, btw, ARE necessary for the sake of, yanno, people not dying.)
Yes, I totally agree on safety regulations (I don't think I cited them as an issue, did I?). I don't think they are a primary driver of the cost of building in New York vs. other cities. Logistics of operating in the nation's densest city, yes; safety regulations unique to New York, probably no.
Zoning, on the other hand... I think it's a bigger restriction than most people realize. My favorite illustration of the zoning issue is this article: http://www.nytimes.com/interactive/2016/05/19/upshot/forty-p...
Net result is that a developer can profit quite a bit more from luxury housing than affordable housing. If you are a developer (which presumably means a for-profit business) and have a choice between the two, you naturally decide to go after the higher profit option. Can't say I'd blame them either.
This is where incentives need to be provided to balance the profit equation. If they could make the same amount of profit, or gain other business benefits, I imagine the problem would start solving itself.
That may be true if the limiting factor is the number of developers - they will only develop the highest-value properties. But in a city like New York the limiting factor is not developer capacity, at least not that I have ever heard. Developers are effectively constrained by the number of profitable building sites, not their capacity to put up new buildings. And, in turn, the number of profitable building sites is dependent on not just the cost of labor and materials, but the cost of navigating city planning, obtaining permits, etc.
Don't forget that land is cheaper to acquire in less desirable neighborhoods, and it is also generally cheaper to build there due to lower existing density (which eases logistics by making it easier to get equipment in and out, allows more on-site storage, etc.). The development that maximizes returns is not always the development that maximizes revenue - cost and time also matter. And there are more developers who can handle building a 10-story building in the Bronx than can tackle an 80-story mega-project in Manhattan. Plus, a "cheap" neighborhood in NYC is often as expensive as an "expensive" neighborhood in most US cities, so if developers are willing to build in Milwaukee or Cleveland, they should be willing to build in the Bronx.
But in a world where the administrative cost of starting a relatively small project is overwhelming vs. the potential returns, then those smaller projects in lower-price neighborhoods simply won't get built.
What I do see is a lot of what amounts to saying that "those people" should just go somewhere else. As long as that somewhere else isn't one where I have to notice their homelessness.
But yes. We have to build upwards. In cities where building vertically benefits the well-off (as in NY), and where it's profitable to do so, it happens. But note that it only generates high-end and expensive housing stock (excluding rules that require including "affordable" housing, which based on the examples I've seen seems to mean "affordable to a family making $120k/yr instead of the $500k you need to afford the market rate units in this development".)
Will adding more housing stock at the top decrease prices at the bottom via market effects? Yes and no. If the availability does trickle down, it takes a very long time.
Here in downtown Brooklyn there's a temporary glut of high-end housing added in the last 5 years. But compared to the number of people added to what was already a tight rental (and sales) market in the city 10-15 years ago, the number of units added is laughable. We're talking almost a million more people living in the city but something like 20-30,000 units (enough to house 50-100k people) having been added.
So what happens? This oversupply will likely last about 5 years. The only real effect will be 1-2 year 10-15% concessions on rent in the new rental buildings until they can fill them up. People looking for high-end rentals will be able to take 24 hours instead of 3 minutes to commit to a specific apartment after viewing it, and might be able to get it if they wait an hour or two to apply instead of contacting the management company within 5 minutes of the listing going live. In a couple years, the high end rental market will go back to its normal cut-throat self.
Maybe the gentrification of Crown Heights will be delayed by a couple years, but I doubt it. This trickle of new housing at $2500-4000 per person per month isn't nearly enough to keep up with the constantly expanding demand for units under $1200 per person per month.
The for-sale units in the crazy high-end buildings will sit vacant until enough new Chinese billionaires are minted who want to park their money outside the country, and then they'll continue to sit vacant indefinitely anyway because they're investments rather than homes. The ones in only normally high end buildings will also sit vacant for a year or so and then generate a tiny bit less profit than the developers were hoping for. But sales don't really factor into the affordable housing market here anyway. If you're having trouble affording rent, buying is unimaginable.