What Is the Relationship Between Urban vs. Suburban Development and Affordability?

In examining ways to best address the housing affordability crisis, the Joint Center for Housing Studies of Harvard University recently released a working paper looking at patterns of development in dense urban centers and low-density suburban neighborhoods and how residential mobility connects different housing submarkets and influences housing affordability.

The research found that, over the past 30 years, while housing costs have grown more rapidly in urban centers than in the suburbs, growth in new housing stock has been much greater on the urban periphery, with more than 80% of the increase in housing supply taking place in low-density suburbs between 1990 and 2018. The paper aims to answer the question: Can continued suburban expansion alleviate rising housing costs in the urban center, or will cities have to grow denser to become more affordable?

We show that new suburban single-family housing construction leads to few moves by households in low-income urban neighborhoods. We then conduct a simulation exercise that shows that the effect of new housing construction on housing costs in other submarkets is strongly related to the number of moves in the submarket created by that new construction. Together, these results imply that building new suburban housing does little to lower housing costs for the urban households most vulnerable to rising urban housing costs.

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