Document Type


Publication Date

January 2021


Some new condominiums in urban neighborhoods are too expensive for anyone but the very wealthy. Buyers of these high-cost units include not only wealthy city residents, but also nonresidents who wish to use housing as an investment rather than a residence. Some commentators use this apparent fact as an argument against new market-rate housing generally; they claim that new housing will be purchased by out-of-town investors rather than used by local residents and that those investors will leave housing units empty, rather than renting them out. A related argument is that, even if market-rate condos are purchased by local residents, any market-rate housing will increase housing costs by increasing the cost of land, regardless of its effects upon housing supply. This Article suggests that these fears are overstated. In particular, the article points out that such ultra-luxury housing units are a small part of the supply of new housing. More importantly, even the most expensive units may increase housing supply for local residents and thus reduce housing costs, because (1) at least some of these condos are purchased or rented by local residents; and (2) even if this was not the case, these condos might lower housing costs by shifting demand away from older housing units that might otherwise be purchased by out-of-town investors. The Article further demonstrates that even if out-of-town investment has increased housing demand, a vacancy tax would limit this demand more effectively than restrictive zoning.

Source Publication

New Mexico Law Review