Quote of the day: "New apartments are generally more expensive than older ones"
Apartment rent hikes magnify high cost of a UW education: A rush of new apartments is causing an uptick in rents in the University District, and University of Washington students fear they’re getting priced out of the market." in the Seattle Times. From the article:
Even now, about a thousand new apartment units are under construction in the neighborhood, designated an “urban center” by the city and planned for denser growth. New apartments are generally more expensive than older ones. ...Nothing particularly scintillating about these quotes.
Fiona Stefanik, a fifth-year student, also found better options outside the University District — she’ll be sharing a two-bedroom apartment with two roommates in Lake City this fall.
“Even though they’re building a lot more housing, it’s still just really expensive, because there is such a high demand,” she said.
Just that it reiterates that a lot of the discussion about the higher cost of housing (e.g., "Why it's so hard to find a cheap apartment in Washington, DC," Post) ascribing the problem of rising housing costs in DC being due to historic preservation is a misreading of economics.
The issue is more that comparatively speaking, historically, DC has a lot more single family housing than apartments. And the single family houses are small.
The issue is low inventory.
Higher demand in the face of low inventory leads to higher prices.
It truly is the most basic concept in economics.
Adding to inventory today won't provide lower cost housing, unless it is subsized, because the cost of new construction is priced into rental rates for new housing at today's market pricing (it's an illustration of LIFO vs. FIFO in accounting practices for the pricing of products--which is most often seen in how gasoline re-prices in the face of rising prices).
However, over long periods of time, adding housing today will result in lower prices, comparatively speaking, in the distant future.