The comparison to umbrellas and rain - two variables with obviously no causal dependency - feels like a big stretch no matter what side of this argument you fall on.
Per the article:
> The alternative to induced demand is called “filtering” — or as I like to call it, the “yuppie fishtank theory”.[1] Basically, this says that when you build a big glass tower full of nice new apartments, it draws high-earning people away from working-class neigborhoods. Yuppies would probably rather go live in a nice new tower with other yuppies than go around bidding up the price of 40-year-old apartments in working-class neighborhoods. So if you build those “luxury” apartments, they’ll draw the yuppies away and stop them from pricing out the working class.
The article [1] in question:
> In 2018, I wrote a post[2] about why building market-rate housing in gentrifying cities helps relieve rent pressure on long-time working-class residents. I dubbed this kind of housing “yuppie fishtanks”, and I tried to explain why they help without resorting to the theory of supply and demand. Later, someone made a TikTok video about the concept. Anyway, with people moving back to the big cities after Covid, and housing construction still lagging, I thought it would be a good time to re-up my original post.
* https://noahpinion.substack.com/p/yuppie-fishtanks-yimbyism-...
* [2] http://noahpinionblog.blogspot.com/2018/07/yimbyism-explaine...
Going back to this article, increasing housing stock in general is generally good:
> What you should notice here is that Gopal and Clark only briefly mention the “growing body of research” that supports the filtering effect, choosing only to specifically name the 2019 paper by Asquith et al. They do not mention Li (2019), who finds that “for every 10% increase in the housing stock, rents decrease 1% and sales prices also decrease within 500 feet.”
Especially around housing, there seems to be a thousand models that don't work to solve the housing crisis, while there's only one that's been proven again and again to work: build more.
There are far less total tenants now. Rooms are twice as big, in some cases apartments are twice as big, halving the number of units. These people probably would have stayed outside of the downtown if large units weren't created.
Except that it doesn't because of the nature of the financing agreements on these kinds of apartment complexes.
"Missing rent" can be tacked onto the end of the financial agreement. "Lower rent" requires you to recapitalize your financing--which is absolutely NEVER going to happen with the interest rates having gone up.
Therefore, apartments will sit empty for years rather than allow rent to go down. That benefits nobody.
Lots of various places would need to implement a "lack of occupancy tax" in order to force the rents to come down.