The idea of employing upzoning to make urban areas more affordable is based on the principle of supply and demand — a fundamental tenet of economic theory. Incentivize developers to build more housing units thereby increasing the supply. As the additional supply begins to sate the demand for housing, the price of housing should eventually fall. Essentially, deregulate zoning laws, allow capitalism to do its work and everyone benefits. An idea so simple, how could it fail?
But where is there evidence to support this theory? Pick any city around the world and you will find that these densely populated urban areas remain far more expensive than their less densely populated surroundings. And there is no evidence that Cambridge is any different. Every new unit we build is more expensive than the last. Prices continue to go up.
So how is this possible? Is housing an exception to the rule of supply and demand? One explanation is that density directly affects demand. Increasing the density of a city makes it more attractive to businesses, developers, investors, and people in general. Thus making the deregulation of the housing market a big win for capitalism and a big loss for consumers.
Sam Christy / Elm Street, Cambridge
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Increasing housing supply won’t lower prices
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The idea of employing upzoning to make urban areas more affordable is based on the principle of supply and demand — a fundamental tenet of economic theory. Incentivize developers to build more housing units thereby increasing the supply. As the additional supply begins to sate the demand for housing, the price of housing should eventually fall. Essentially, deregulate zoning laws, allow capitalism to do its work and everyone benefits. An idea so simple, how could it fail?
But where is there evidence to support this theory? Pick any city around the world and you will find that these densely populated urban areas remain far more expensive than their less densely populated surroundings. And there is no evidence that Cambridge is any different. Every new unit we build is more expensive than the last. Prices continue to go up.
So how is this possible? Is housing an exception to the rule of supply and demand? One explanation is that density directly affects demand. Increasing the density of a city makes it more attractive to businesses, developers, investors, and people in general. Thus making the deregulation of the housing market a big win for capitalism and a big loss for consumers.
Sam Christy / Elm Street, Cambridge
Like this:
Related Stories
A stronger
Please consider making a financial contribution to maintain, expand and improve Cambridge Day.
We are now a 501(c)(3) nonprofit and all donations are tax deductible.
Please consider a recurring contribution.