Does new housing raise nearby rents? Researchers and community leaders have differing views

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Adding to the housing supply nudges nearby rents downward, according to research by Michael Manville, an urban planning professor at UCLA. But that’s not always easy to see, he says, because developers like to build in places where rents are already rising. Photo by Shutterstock.

Gentrification is one of the most polarizing words in housing. A new apartment building going up in Echo Park or West Adams might be the solution to the region’s housing supply crisis. Or it could be a scourge to lower-income residents culturally connected to their community.

But let’s get down to the basics. Does new development raise nearby rents?

“It's important to separate this big question of gentrification with the question of what happens to rent,” says Michael Manville, an urban planning professor at UCLA. “Obviously, putting in a big apartment building changes the neighborhood. … But when a new apartment building goes in, do rents nearby go up? The answer to that more and more seems to be no.”

According to his research, adding to the housing supply nudges nearby rents downward. But that’s not always easy to see, says Manville, because developers like to build in places where rents are already rising. 

He points to Avenue 34, a new apartment complex project in Lincoln Heights, as an example.

“People want to buy into these neighborhoods. Do you want newer residents moving in and displacing residents in the existing housing? Or do you want them to be in brand new housing where, while they will change the neighborhood by their presence, they don't put as much pressure on the existing housing stock where a lot of the current people live?”

The end result is often the same: Longtime residents, directly or indirectly, end up being priced out. That’s according to Damien Goodmon, founder of the Crenshaw Subway Coalition, a racial justice organization focused on land use issues with respect to transit and housing.

“It is a very cyclical process, whereby new housing, especially when it's for the higher income, leads to increased land values, which leads to increased housing cost,” says Goodmon.  

To solve the housing crisis in the region, building units that appeal to the upper-end of the demand market is not the solution, says Goodmon.

“Putting up luxury and market-rate housing does nothing to relieve the pressure in the speculation that is being disproportionately felt by Black people, by Brown people, and by working class people in this community.”

Credits

Guests:

  • Michael Manville - Professor, UCLA Department of Urban Planning
  • Damien Goodmon - Founder and executive director of the nonprofit Crenshaw Subway Coalition