Coffee shop planned for the Albion development on Sherman Avenue downtown.

Recent studies indicate construction of new luxury rental apartments has only a modest impact on rents for existing apartments in a neighborhood.

One study, from Xiaodi Li a doctoral fellow at the New York University Furman Center, says that in neighborhoods near new high-rises, a 10% increase in housing stock results in a 1% decrease in rents.

Li’s study and others were cited in a Friday report in the New York Times.

Housing costs continue to be a burden for many renters and are rising for middle-income renters in the Chicago region, according to the most recent data from the Harvard Joint Center for Housing Studies.

And newly-constructed units tend to rent for prices that are unaffordable to low and moderate income workers.

A study from Anthony Damiano and Chris Frenier at the University of Minnesota’s Center for Urban and Regional Affairs looked at new market-rate housing in Minneapolis using data from CoStar and found that new construction didn’t have a significant effect on nearby rents overall. But they found that while rents for fell for higher-priced apartments nearby, they rose for the lowest-priced units.

A third study, from Evan Mast of the Upjohn Institute, indicates that building 100 new market-rate units creates a ripple effect that’s equivalent to providing 70 new units in neighborhood where residents earn below the area’s median income.

The effect of new construction on housing affordability has long been contentious in Evanston and elsewhere, with economists assuming rents would fall with increasing supply while neighbors of new developments fear they would rise because the new high-income tenants would lead to gentrification of the neighborhood.

Bill Smith is the editor and publisher of Evanston Now.

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