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Comment by rm_-rf_slash | Hacker News Reader

My favorite misconception!

Here in Ithaca NY, Collegetown used to be a sleepy neighborhood of large divided houses rented to Cornell students.

About 20 years ago they began densifying like crazy. 2-3 story houses for 8 people became 8-floor apartments and studios. And you know what? Rent is higher than ever! Everywhere!

Once you build up you can charge higher rents, which means the landlord next door can charge slightly higher rents, and so on.

Building housing almost never lowers rents for the non-rich, unless there is a massive recession (Florida), or an equivalent rise in wages. People build dense housing because they expect people to keep coming...

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This is wrong. Both the students at Cornell and Ithaca university got wealthier, and more people moved to the area/stayed as a result of the schools expanding over the last 20 years. There was a natural increase in demand, which resulted in new construction, and which ALSO resulted in higher rents. If housing in Ithaca had kept up with demand prices would not have exceeded inflation and quality of the unit.

> Both the students at Cornell and Ithaca university got wealthier, and more people moved to the area/stayed as a result of the schools expanding over the last 20 years.

Evidence? In the last ten years the typical apartment in Ithaca has gone from $550/mo to $1500/mo, which seems far in excess of the extra 1,500 people or so spread across the city, especially given they've been building new apartments like crazy the entire time.

So you're saying supply went up and they just started charging more and got it?

Well that's what I was trying to figure out, but as far as I can see (based on a quick look at their population growth figures) that's basically what happened.

>About 20 years ago they began densifying like crazy. 2-3 story houses for 8 people became 8-floor apartments and studios. And you know what? Rent is higher than ever! Everywhere!

So developers started building houses, which caused more people want to move there and rising rent prices? You sure you have the right cause and effect there? It sounds like 20 years ago demand for housing prices started to rise and the supply never kept up.

You seem to be assuming that new housing caused a rise in rents, while ignoring that the reason substantial new housing is built in a short period somewhere is because people want to move there.

If a lot of people want to move somewhere, rents will rise with or without new housing!

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