The Atlantic senior associate editor Gillian B. White digs into why the cost of housing is growing further out of reach for those at the bottom of the economic ladder.
She examines a recent analysis published on a New York Fed blog by the economists Jonathan McCarthy and Richard Peach.
They found that price of housing is increasing a whole lot more for those at the bottom of the economic ladder than for those at the top, even when controlling for the possibility that growing utilities bills are responsible for the increasingly heavy burden on renters.
That’s especially troubling because it means that even relatively affordable apartments are quickly becoming too expensive for low-income families, says White.
The reason for this gap is what construction projects developers are deciding to pursue these days. The Fed researchers took a look at housing supply and found that there’s a lot more construction happening at the top of the market, where developers and builders are quickly getting luxury apartments to market. The wide selection of swanky apartments actually helps to keep inflation at bay for pricier properties. Since there are so many options at the top of the market, landlords compete for new tenants, which helps keep the cost down for consumers.