This claim keeps popping up. I’ve yet to see it include a citation. Maybe today will be different.
Most underrated comment in the world.
This coupled with for-profit journalism and the atrophy of critical thinking is giving rise to nonsense like anti-vax, chemtrails, and flat Earth.
In America, the public has been led so astray by both the media and the government about things like basic macronutrients that a recent report found 1/3 of Americans, 100 million people, are diabetic are prediabetic (will have type II diabetes in 5 years).
https://www.cdc.gov/diabetes/data/statistics/statistics-repo...
Virtually all new construction in Manhattan is luxury.
What other outcome could happen?
Not saying that’s what happens, but a simple supply/demand analysis (ceteris paribus) may not suffice.
Induced demand is definitely a thing for roads, but that demand is from fixed supply of people. In the roads case, it is counter-intuitive specifically because it causes the same number of people to drive more, on average.
That dynamic simply doesn't hold for luxury goods in general or luxury housing in particular. There are effectively no replicable instances of more luxury good = more buyers unless price falls or supply was previously constrained.
Cleveland isn't a prestigious world-class city attractive to the wealthy, but if new luxury condos in a tier-1 city come online, it may induce demand from wealthy/speculators who would not otherwise have considered that city, or were picking between alternatives. (Investment, signaling/status-seeking, etc.)
Treated as an investment vehicle, increasing supply (e.g., having an IPO where no shares existed before) can unlock latent demand (people divert income into that investment and drive up the price). Perhaps housing needs to be modeled as a mix of investment, local demand for shelter, status symbol, tax haven, political baton (keeping existing homeowners above water), etc.
Again, not sure how housing actually behaves but it seems complex enough to defy my econ 101 understanding.
It seems like you're conflating cause and effect here - If Cleveland isn't good enough, then it must be the tier-1 city that is the cause of the demand. Not the housing itself. Further, unless the new luxury units are sitting empty (a problem Vancouver, BC dealt with for awhile), then the market for rents functions regardless of whether speculation is occurring. I invite you to find an example of vacancies increasing in the same place that housing/rents climb - it won't exist in any of the real estate hot-beds in America.
The main thrust of this article and the research surrounding it by folks like City Observatory, Sightline Institute, etc. is that we now do know the dynamic of housing prices in booming economies. I don't feel like you've provided any evidence that contradicts the conclusions presented in the research, so I'm having trouble pinpointing your skepticism. Let me know if I've missed your point!
Nothing in economics says it's obvious without observation or experiment that adding expensive housing in SF helps affordability for lower income brackets.