New data keeps coming in that shows that increases in housing supply tend to be followed by declining Rental Rates, even in the cities facing the highest demand. After a boom year for apartment construction in 2016, rents are falling in New York City, San Francisco, and Washington, DC.

1. Median rents for one-bedrooms across New York City fell by 9.1% in the past year.
2. Even in San Francisco — the most productive city in the country — a burst of new supply in 2016 has led to falling rents. Estimates put rent year-over-year decline in prices at 1% to 9%.
3. Rising vacancy rates and quarter-over-quarter declines in Seattle’s rental rates are a sign that it’s leaving a period of double-digit annual increases.
4. A decade of increasing construction rates in DC has leveled off rent prices.
5. Los Angeles has not seen the apartment boom that has benefitted renters in other expensive cities, and its rental rates are the fastest rising in California.
6. Scott points out the striking correlation between housing construction and house prices in in-demand cities.

This trend of declining rents is some very preliminary evidence against Tyler Cowen’s claim that densification in expensive cities will result in economic growth, but not falling rents as more buildings draw in more business activity and talent. A New York developer echoes Tyler’s view: “There are so many units, but then they all get eaten up. That is the way New York works.”