Alderman Moreno claims that his luxury development policy generates affordable housing. The idea is that giving zoning changes to developers increases the supply of housing, which reduces prices, and that 10% of the new units will be affordable.
Unfortunately, his claim is based on myths about the impact of luxury development and the definition affordable housing. Moreno’s policies are in fact deeply destructive to affordable housing, though they are effective for fundraising.
Let’s take a closer look:
Increasing the supply of luxury units does not reduce rents overall. Although the supply-demand argument seems right in theory, real experiences with luxury development reveal a more complicated situation. Rents in the the new Milwaukee avenue luxury developments are between $1500-3200/month for studios & 2 bedrooms. Since these are so much higher than middle class rents, they actually become a separate market. In cities throughout the country, adding luxury units to the market hasn’t reduced surrounding rents. In fact-
Luxury development increases surrounding rents. Luxury units increase displacement by:
– Encouraging surrounding landlords to try to charge as much as the new luxury developments. (See pg. 22 of the linked article.)
The 10% ‘affordable’ units in new luxury developments are not actually affordable, and there are nowhere near enough of them. According to the Affordable Requirements Ordinance, a unit is considered affordable if intended for a family making 60% of the Area Median Income, or $46,000/year for a household of 4. However, the median Latino household income in Logan Square is $34,000/year, and nearly 18,000 families in our area make $25,000/year or less.
An ‘affordable’ studio is between $715-800/month, and 2 bedroom between $900-1000/month, depending on which utilities the tenant pays. While these prices might seem low to some, they’re out of the question for many of us. It was only a few years ago (2011-12) that these rents were closer to the average, and by then, thousands of people had already been displaced from Logan Square.
To stem the tide of displacement, and to create opportunities for people to return to the communities they built, we’re going to need a real affordable housing policy, driven by the community members most at risk of displacement, not the developers and politicians driving them out.
Note: Here’s an article from Harvard Law & Policy Review about why Airbnb is so bad for affordable housing.