New homes enter near the top
They must cover current construction and financing costs.
A normal product cycle
New homes are usually expensive. That is not an argument against building them.
New construction carries today's land, labor, material, financing, and regulatory costs. Older homes become relatively less expensive as they age.
NewCurrent costs
Middle-agedMore competition
OlderBroader price range
We do not expect a newly built car to be the cheapest car. Housing is similar, except that restrictive policy also makes the land beneath every home scarcer and forces new projects to carry avoidable costs.
Buildings age and compete
Most existing affordable rentals were once newer and more expensive.
Older homes face less bidding pressure
New choices reduce the number of households competing for each existing vacancy.
A simple example
What scarcity changes
With little new housing, even old homes command scarcity prices.
With sustained building, households can choose among ages, sizes, and price points.
The alternative to an expensive new home is usually not a cheap new home. It is no new home—and more competition for old ones.
See the evidence
Strong evidenceMore homes give renters more leverage.Read the studies →Strong evidenceOne new home can open many doors.Read the studies →