High-End Construction Really Does Help Everyone

One well-worn refrain of progressive urban politics is that new, “luxury” housing will not help solve the housing shortage. A 2024 study of U.S. voters found that 30 to 40 percent believed more housing would, instead, increase prices, and another 30 percent believed it would have no effect.

But research generally points in the other direction: More housing supply of all kinds leads to lower prices in general terms. A new study lays out exactly how a brand-new building can open up more housing in other, lower-income areas, creating the conditions that enable prices to fall.

In the paper, three researchers looked in extraordinary detail at the effects of a new 43-story condo project in Honolulu. The building, called the Central, sits right behind the giant Ala Moana shopping center, halfway between downtown and the beachfront hotels of Waikiki. It comprises both subsidized and market-rate units, priced at around $780,000 for the former, and $1.25 million for the latter. What the researchers found was that the new housing freed up older, cheaper apartments, which, in turn, became occupied by people leaving behind still-cheaper homes elsewhere in the city, and so on. A new rung higher up the housing ladder permitted people lower down to climb. The paper estimates the tower’s 512 units created at least 557 vacancies across the city—with some units opening up no empty apart