In 2019, I argued that Kansas City’s debate over “luxury” apartments missed a basic point: housing markets are connected. When higher-income households move into new buildings, they leave something behind. Those vacancies matter. New research now makes that case with concrete evidence.
A recent piece in The Atlantic detailed the study. Researchers studied a 43-story condominium tower in Honolulu and tracked what economists call “vacancy chains”—who moved into the new units and who moved into the homes they left. The results were measurable and citywide.
The building’s 512 units generated at least 557 vacancies elsewhere. On average, residents moving into the tower left homes that were 38 percent cheaper per square foot. One step further down the chain, homes were 44 percent cheaper than the new condos. Each new market-rate unit created roughly 1.6 vacancies elsewhere in the city.
This research builds on earlier national work, which found that new market-rate construction prompts substantial movement out of below-median-income neighborhoods. As households move up, older units filter down. The process is gradual but observable.
Kansas City is not Honolulu. Our housing stock is less geographically constrained, and our prices are lower. But the economics of supply do not change by region. When we restrict new multifamily construction—through zoning caps, parking mandates, or prolonged approval processes—we constrain mobility.
Mobility allows households to adjust to new jobs, schools, and changing family needs. Nationally, residential mobility has fallen sharply over the past half-century. Culture plays a role, but so does housing availability. Fewer vacancies mean fewer options.
Kansas City faces a quieter risk: complacency. Because our prices have not reached coastal extremes, it is easy to assume supply is sufficient. Yet rents and home prices have risen faster than incomes in recent years. If we make it harder to build—luxury or otherwise—we should expect fewer vacancies and higher prices over time.
Certainly, luxury housing construction should not be subsidized. Much of the local controversy over “luxury” projects arises when developers seek public incentives. But housing construction at all levels is welcome. Today’s Class A building becomes tomorrow’s middle-income housing. Aging is built into the market.
The real question is not who benefits from the first occupant of a new building. It is who benefits over the next decade.
If Kansas City wants more affordable options tomorrow, it needs more housing—of all kinds—today.
