Strange article from Strong Towns on "filtering".
Fundamentally, they do not believe in indirect spillover effects, where adding high-end supply can reduce low-end rents. Instead, we have to intentionally and directly target the low-end.
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But the evidence is clear: high-end demand can raise low-end rents, and high-end supply can lower them.
If you care about low-end affordability, your strategy must include high-end supply to create vacancy chains and prevent demand cascades.
buildingabundance.ca/p/housing-ladd
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Marohn also conflates housing ladder spillovers with filtering.
Vacancy chains can free up housing in poor neighborhoods within one year. In contrast, it takes decades for a new home to depreciate and become cheap.
buildingabundance.ca/p/filtering
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This is a strawman. Of course we should build attainable homes. The point of housing ladder spillovers is that *even* high-end supply helps improve affordability.
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This is the crux. Yes, actually, when new apartments absorb demand from young professionals, that does help poor people stay in their homes and it does create more housing options.
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I think you are missing the point of Chuck Marohn’s argument - the system of housing is broken (like NASA was broken until Elon fixed the problem via Space-X) - we need to understand and resolve the whole system and filtering is in part a cope and not a fix
The entire concept of *building* affordable housing makes NO sense.
It makes as much sense as “building” used cars!
The price is set by what people will pay for it! Being new is a huge value add! People want new! But the way you get poor people into newER housing is just build!
His argument is to build starter homes. But for some reason, he thinks this is a disputed point.
Both are true for some markets. I tend to agree with you more, and your stance makes more sense in the long run. In markets with desperate need for starter homes though, I think ST’s stance is valid in that we need to get starter homes built for more immediate relief.
No one is saying "don't build starter homes".
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Michael Wiebe
@michael_wiebe
Replying to @michael_wiebe
This is a strawman. Of course we should build attainable homes. The point of housing ladder spillovers is that *even* high-end supply helps improve affordability.
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I think people have alot of fundamental problems with only building upper class housing and then letting the poor just filter into the housing that gets left behind. Much of the left wants to build housing for the poor directly.
Yes, everyone agrees on that. And we should build high-end housing too!
The strongest version of an academic analysis of filtering really didn't show a strong effect. It's more of a hopeful thought than a widespread reality even though conditions are already slightly favorable to show the effect filtering.
This one?
Quote
Michael Wiebe
@michael_wiebe
Replying to @michael_wiebe
But the evidence is clear: high-end demand can raise low-end rents, and high-end supply can lower them.
If you care about low-end affordability, your strategy must include high-end supply to create vacancy chains and prevent demand cascades.
buildingabundance.ca/p/housing-ladd
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Yeah, that’s strange.
In reality, it’s a both / and.
We can build Toyota Corolla’s that are relatively affordable.
AND ALSO
When Acuras are 10 years old, they are also relatively affordable.
One of my favorite charts. Of the three housing classes, low-end rents are most reduced by high-end supply 🥳
this is someone distorting logic to arrive at a conclusion they always intended to arrive at. If we had a house for every time this happens in the housing debate, we wouldn't have a housing debate any longer.
The mental gymnastics people will go through to explain and justify their NIMBYness is just depressing to see from people who you know are smart enough to know better, but cannot get past their own ego and selfishness.
It's not either or! And with current building codes, building penny loafers is frequently not possible.
In places with very high demand and very low supply (especially geographically constrained like Manhattan or San Francisco) even penny loafers will command a high premium.
The issue I had with this article is that Chuck Marohn does not say how we should cut down the price of brand new private construction projects.
Strong Towns rejecting an empirical finding about housing? Color me shocked
The way I framed Strong Towns when I introduced it to my book club was as having a useful framing of problems, questionable or absent solutions, and a very poor understanding of economics.
You'll notice arguments like this about how all we build is "luxury" housing never mention what "luxuries" they think should be cut to make them more affordable
Because of course the vast majority of new luxury housing already is essentially bare minimum entry level housing
Aren’t we not grappling with the real claim here which is that the financing system is broken? I don’t disagree with anything he says in the article except the claim that small projects are hard to finance. That has not been my experience but these issues are very regional.
Even the gucci-slipper metaphor doesn’t really work, because anyone who cares about quality clothes will tell you that you get the best stuff by buying secondhand quality brands.
A particular concern for me is the lack of resiliency in these “high-end” rental units, which are all stick-framed and cheaply built. They’re more likely to burn down or fall apart than they are to move downmarket.
He must think the rich guys live under a bridge until the luxury penthouse is ready...