The Weird Thing About Housing ‘Markets’

They don’t really compete based on price.

Here’s what I mean by that. Consider D.C.’s Shaw/U Street neighborhood, a rapidly gentrifying neighborhood. There are still new buildings going up in Shaw, as well as available parcels for new buildings. These buildings could adopt one of several strategies:

  1. Charge more than the going rate, but make the housing really nice (e.g., amenities, larger than usual apartments, extensive sound-proofing, etc.).
  2. Charge the market rate, and offer comparable prices, amenities, etc.
  3. Charge less than the market rate, but offer less space and fewer or no amenities.

After all, this is how other sectors typically compete.

Given that Shaw is a pretty happening (and these days, safe) place, you don’t really need an amazing building, so one would think option #3 would be part of the mix. But, as best as I can tell (I read a lot of housing porn), that’s not on the table at all.

This seems relevant to the whole NIMBY/YIMBY debate.

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