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High End Luxury Apartments and the Rental Market

According to a recent study by the California Legislative Analyst’s Office (LAO) on market rate housing and the effect on affordable housing, California should encourage more private housing development to make housing more affordable. Many low-income households receive no assistance, and expanding assistance programs would be very expensive and complicated.

LAO explains that a lack of housing supply increases prices and rents. While new market-rate housing is “typically targeted at higher-income households,” it actually increases the supply of housing available for lower-income households. The study shows that areas with higher increases in housing stock have slower rent growth for poor households.

When new homes are built, people who can afford them vacate older homes. New construction creates more housing availability while reducing the price of older units. Thus, more market-rate home building, in addition to affordable housing units, can help to bring rent affordability to more people.

Written by Brett Poirier, a Research Assistant at RSG