Despite a lack of affordable housing, many American cities have seen a paradoxical proliferation of new luxury condos. The reason behind this comes down to scarcity. Because cities limit the amount of housing that can be built, developers focus on attracting the wealthiest occupants instead of catering to everyone.
Consider this metaphor: Imagine you are the manager of a brand new beachfront restaurant. You have bought the only permit for serving food on this popular beach. The permit restricts you to serving only 50 customers at a time and prohibits take-out orders. With hundreds of hungry beachgoers yearning for a meal, you realize that catering to everyone is impossible. Desperate to recoup your hefty investment in the permit, you devise a strategy that targets the wealthiest patrons. You serve lobster, filet mignon, and specialty cocktails.
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