Here’s a neat chart from a Canadian urbanism blog called Spacing Toronto, about the relationship between density and affordability for housing in different US cities.
Here’s the chart:
In the detailed blog post, Dylan Reid explains how there’s a “paradox” in the results, where the cities with the highest density are also the cities that are the most expensive. (You might think the opposite would be true, given basic supply and demand dynamics.) Stealing from transportation planning, it becomes what Reid terms an “induced demand” situation.
Here’s his punch line:
I wonder if there is a kind of “induced demand” effect for housing that helps explain this pattern. Induced demand (sometimes called “latent demand”) is a phrase normally used to explain why, when new highway capacity is built in urban areas, it soon becomes full and the level of congestion does not get reduced. It’s possible something comparable is happening in cities — the greater the supply of housing within a city, the larger the number of people who want to live there.
The underlying mechanisms would be different for housing than for highways. Induced demand on highways is generally explained in part by the fact they are usually a free good, so there’s no monetary price mechanism to balance supply and demand (instead, demand is regulated by time costs resulting from congestion). That’s obviously not the case for housing, where a price mechanism exists but doesn’t seem to be having the expected effect.
You can read the rest here.
PS. It’s worth noting that Minneapolis is the closest city to “average” on this chart! Does that make us special?
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