When Natalie Anderson looked at a one-bedroom apartment in one of the new residential towers in Hudson Yards, on Manhattan’s West Side, she recognized it immediately.

It had the kind of features—”open kitchen, barstools under a counter, inoffensive wood”—that developers use to attract young, mobile high-earners like Anderson to their buildings. She calls it “the formula.”

“It works for me—it works for a lot of people,” Anderson, 24, said. “If you move a lot for work or change locations, knowing you’ll find something like that anywhere you go is nice.”

Since the housing crash, developers have been chasing high-income tenants like Anderson by the thousands, investing across the country in huge multi-family residential projects like Hudson Yards. The soaring towers of steel and glass taking up more skyline in American cities are also taking up a historically large share of the country’s new housing construction.

But as the sector’s express ride to the top nears its end, cities taking stock of their housing find they have built too much luxury and not enough affordability. Developers driven to build tall and upscale by high construction costs and higher returns have overbuilt in luxury while exacerbating the affordable housing shortage.

“The multi-family sector did very well for most of the expansion but it has probably gone as high as it can expect to go,” said Michael Moran, chief economist at Daiwa Capital Markets.

The boom began with the housing crash. As many households were unable to buy and banks were unwilling to lend, people who would have been buying starter homes were renting longer.

Developers built big projects to accommodate the surge in rental demand.

“For the last decade, there’s been a multi-family development boom,” said Jonathan Miller, president of appraisal firm Miller Samuel Inc. “Even after the financial crisis, we’ve seen the homeownership rate declining and filling the void has been the development of rental property in large scale.”

The multi-family sector ballooned to absorb the demand that the single-family sector couldn’t.

“There has been a shift in what we’re building,” said Aaron Terrazas, a senior economist with Zillow. Both builders and households are moving “away from the classic single-family homes that we’ve built in America in basically every time period to high-rises.”

To wit, multi-family construction has recently dominated not only traditional tower towns, but cities like Atlanta, Charlotte and Denver. Dallas has been a big boom town, building more new multi-family units than any city but New York.

Though the boom started in the recession, it picked up in the recovery as low interest rates nudged investors towards real estate. Money followed money, particularly into the luxury sector.

“In a low-interest-rate world, where in this world is the promise of a higher return more apparent than luxury real estate?” said Miller. “The problem was everyone had blinders on. In 2016, a lot of the hedge funds seemed to open the windows and say, ‘Oh my god, there are 7 buildings across the street that I didn’t see before.’”

As rising construction costs pushed builders towards the luxury market, the top of the market has been oversaturated while cities struggled to entice development for other income brackets.

“Tariffs and rising costs make it all the harder to build affordable at a price point where we know there’s a lot of demand” said Zillow’s Terrazas.

For high-income tenants like Anderson, the glut of high-end apartments means they get their pick of the litter.

After looking at over a dozen apartments in a weekend, she and her partner ended up choosing a true one-bedroom in an older high rise in Midtown instead of the development at Hudson Yards. They pay $3,300 a month and received a free month’s rent, one of many such deal-sweeteners developers are offering to fill their buildings.

According to a recent report by StreetEasy, developers in New York are offering free amenities and reduced rents at record rates as they look to fill the glut of vacant higher-end apartments.

Meanwhile, many cities lack affordable housing options.

In New York, lotteries for lower-rent units in new buildings attract around 700 applicants for each individual unit.

A spokesperson for the City’s Department of Housing Preservation and Development was quick to note that that number was actually down from around 1,000 applicants per unit at its peak, as HPD-financed construction brought more affordable units to the market in 2017 than any year on record.

Some cities are trying to use their abundance of luxury units to alleviate their lack of affordable options. In Denver, which has added over 10,000 apartments in each of the past two years, city officials announced a program in January to provide rent subsidies for working- and middle-class tenants to live in the city’s rising supply of vacant luxury units.

In the past, cities built vertically to house more residents on less land. But this multi-family boom hasn’t helped.

“Cities don’t have the resources to supplement or fund on the scale that would be required but it’s not to their advantage to not be able to provide affordable housing to their workforce,” said Miller.

“We’re lousy with luxury and not a lot has been created for mere mortals.”

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