How Market-Rate Housing Makes Cities More Affordable
How Market-Rate Housing Supports Affordability and Drives Housing Mobility in the Grand Rapids area.
For communities across the country, the need for housing of all types remains a top priority – and Grand Rapids is no different. A healthy housing market requires investment in affordable, middle-income, market-rate, and luxury housing alike. However, the creation of market-rate housing plays an especially vital role in addressing housing affordability.
The housing market does not function in a vacuum. Simply put, market-rate housing works in tandem with affordable housing initiatives.
Critics of market-rate housing often cite a phenomenon known as “induced demand,” which claims that this type of housing only caters to wealthy residents, drives up property values, and displaces low-income residents. However, housing research and data modeling shows that new housing (market-rate or otherwise) compliments affordable housing in three critical ways:
Easing Market Pressure: New market-rate units reduce demand on existing housing and make existing housing stock more affordable, helping to stabilize prices across the board.
Supporting Long-Term Affordability: A balanced housing market with diverse options prevents bottlenecks and keeps the market accessible for all income levels.
Encouraging Movement: As residents move into newer units, older ones become available at more affordable rates – known as the housing migration chain.
What is the Housing Migration Chain?
Housing is a dynamic ecosystem. When new market-rate units are built, they set off what is known as the housing migration chain – a ripple effect of movement that creates housing opportunities at all price points. Housing studies on this effect have been conducted in Minneapolis, Houston, Portland, Boston, and other metropolitan areas that prove the relationship between housing supply, market-rate developments, and affordability. The housing migration chain is a series of events that includes:
New Market-Rate Units Are Created: A market-rate housing project is completed, providing a new option to residents.
A Resident Living in a Middle-Income Unit Moves Up: Someone moves into a newly built market-rate apartment or home, moving out of their middle-income unit.
Their Previous Unit Becomes Available: Their middle-income home or apartment becomes available for another individual or family.
The Chain Continues: Someone from an affordable housing unit moves into the middle-income home or apartment, creating an open affordable housing option.
This entire process helps free up existing housing and makes room for residents across the income spectrum. For example, the proposed Fulton & Market project is expected to include nearly 700 market-rate units, but the impact of these new units goes beyond just those who live there – it will create a chain effect that provides housing opportunities for even more Grand Rapids residents across the housing ecosystem.
Building a Future Where Everyone Can Thrive
It’s clear that Grand Rapids needs more housing options, and market-rate housing is part of the solution. By easing market pressures, supporting long-term affordability, and fueling the housing migration chain, market-rate housing compliments efforts to create a more inclusive, balanced housing ecosystem.
Discover how market-rate housing is shaping a more affordable and inclusive future for Grand Rapids with our interview with Housing Next. Stay tuned to learn more about how projects along the Grand River are shaping housing and helping us all move toward a brighter future—one step at a time.
