New Housing Slows Gentrification

By. Neil Williamson, President many times have we heard the “G” word in public hearings as a reason to deny an application for increased density?

What if gentrification was actually stymied by new housing?

Since the Free Enterprise Forum’s founding, we have advocated that more housing, at all price points, improves housing affordability.

A recently released Upjohn Institute research paper “Supply Shock versus Demand Shock concludes that an increase in housing stock actually slows rent increases.

The paper, written by economists Brian Asquith and Evan Mast from the Upjohn Institute and Davin Reed from the Federal Reserve Bank of Philadelphia, examined cities where the affordability crisis is at its worst and new large (50+) units were constructed in low-income, central city neighborhoods.

The paper found new market-rate buildings lower nearby rents 5 to 7 percent and cause more people from lower-income neighborhoods to move in.

We find that new market-rate apartment buildings in low-income areas do not accelerate gentrification. Instead, they slow rent increases in nearby apartments and increase the number of people who move into the area from other low-income neighborhoods. Thus, the effect of new supply appears to outweigh any amenity or reputation improvements. The latter may be small because new housing, even in currently low-income areas, goes into areas that are already gentrifying. This implies that new developments serve mainly to absorb existing demand for an area rather than to generate new demand. In turn, this reduces pressures on nearby rents because many high-income households move to the new building rather than outbidding lower-income households for nearby apartments. (Emphasis added-nw)

Back in 2018, Roger Valdez wrote a piece in Forbes entitled “We Don’t Need More Affordable Housing, We Need More Housing So It Will Be Affordable”.  In his column Valdez identifies the many economic, sociological and ecological benefits of an urban environment. Valdez however warns of looking for small solutions under the banner of “Affordable Housing”:

So be wary when you hear advocates ranging from so called YIMBYs and Urbanists to single-family neighbors and socialists and politicians saying, “We need more affordable housing;” that is another way of saying more money for non-profit housing developers to build a few expensive units years from now. What we all should be saying is, “We need more housing so that it will be affordable.” Rising housing prices mean we need more housing and fewer rules.

While both Valdez and the Upjohn paper focus on denser cities than Charlottesville and the surrounding counties, local policymakers would be wise to understand the supply demand economic reality and consider how affordability of their specific housing market could be improved with two words: “More Housing”.

Respectfully Submitted,

Neil Williamson


Neil Williamson is the President of The Free Enterprise Forum, a privately funded non partisan public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa and  Nelson County.  For more information visit the website

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