With new luxury apartments always coming on line, the selection of affordable units continues to shrink. Beyond that fact, Joe Cortright says in this CityLab article, this situation affects rents for everyone: Housing demand that isn’t met by the construction of new high-end units doesn’t disappear; it spills over into more modest housing, driving up rents.
Building more high-end housing actually helps with affordability, because it keeps high-income renters or buyers from outbidding those with lower incomes. Over time, as new luxury units get built, today’s luxury homes will become tomorrow’s affordable ones. Cortright explains with an example:
To understand this, just look to Portland [Ore.]’s recent history. Housing blogger Iain MacKenzie, who tracks new housing and commercial developments at the definitive Next Portland website, shared with us a couple of fascinating historical clips from the city’s paper of record, The Oregonian. They show that today’s affordable housing often started life as self-described “luxury” housing when it was originally built. The first example dates back a half century, to the 1960s, when in the wake of urban renewal the city was building a wave of new apartments. The Oregonian on January 9, 1966, described the city’s booming market for new luxury accommodation:
Luxury apartments, which start at $135 for a one bedroom unit and rapidly climb out of sight, have been sprouting in Portland at a breathless rate, and more are planned … . The total investment in such properties is certainly above the $100 million mark here.
One of these complexes was the Timberlee in suburban Raleigh Hills, a close-in suburban neighborhood. According to The Oregonian, the Timberlee on SW 38th Place was one of the most prosperous of the 13 apartment complexes it examined in its story, with 97 percent of its 214 units rented.
The Timberlee Apartments are still around today. While none of its units is currently for rent, according to Apartments.com, rents in the area run from about $1,000 for studios and one-bedroom units to $1,300 and more for two-bedroom and larger apartments. By today’s standards, the Timberlee seems modest, and a bit dated, rather than luxurious.