Wednesday 22 May 2019

Yes in my back yard! Taking on Nimbys

BAY CITY HIGH ROLLERS: San Francisco is a town where you need to be wealthy, with
average rents of $2,500 a month for studio apartments. Photographer: David Paul Morris/Bloomberg
BAY CITY HIGH ROLLERS: San Francisco is a town where you need to be wealthy, with average rents of $2,500 a month for studio apartments. Photographer: David Paul Morris/Bloomberg

Roderick M Hills Jr

Housing prices are famously out of control in many US cities - the average studio apartment in San Francisco is nearly $2,500 (€2,120) a month, and over $2,900 in Manhattan. This trend has inspired a movement called "Yimby," for "Yes, in my backyard!"

Yimbys push for reductions on zoning restrictions to increase the supply of housing, reasoning that all new housing, market rate as well as subsidised, helps to keep housing prices under control.

"We should build more housing in every neighbourhood - especially high-income neighbourhoods," reads the mission statement of the Yimby Party, based in San Francisco. "Increasing supply will lower prices for all and expand the number of people who can live in the Bay Area."

The Yimby movement has become popular enough to win some bipartisan support: Secretary of Housing Ben Carson endorsed on Twitter a pro-Yimby column by Bloomberg's Noah Smith.

But Yimbys face enormous opposition from self-styled progressives who dismiss the idea that adding new market-rate housing to a city will improve housing affordability.

Sometimes these activists go even further, and argue that adding market-rate housing to cities hurts the poor (on the grounds that expensive apartments attract wealthier residents who push up rents). Such activists will even fiercely oppose even new market-rate buildings that include subsidised units.

They end up allying themselves with Not-in-my-Backyard (Nimby) homeowners who oppose all new construction in their areas. Working together, the two groups help choke off new construction that could ease housing prices.

Call this attitude "Left NimbyISM." Left Nimbyism not only flatly contradicts the logic of supply and demand but also flies in the face of empirical studies of what happens when cities see new construction.

In its stubborn rejection of empirical reality, the Left Nimbyist view of housing markets share characteristics of ideologically motivated refusals to accept evidence in other contexts, such as climate change or the safety of vaccines.

Four authors for the Coalition for Community Advancement flatly asserted in 2016 that market-rate housing had no role to play in the policy discussion over housing affordability. Under a headline that said "Supply is Not the Solution," they wrote: "The only increase in housing supply that will help to alleviate New York's affordable housing crisis is housing that is truly affordable to low-income and working-class people."

Bizarrely, the group was arguing against a plan to build 6,500 new apartments, of which fully half would go for below-market rents. The Los Angeles Chapter of the Democratic Socialists of America put that idea more bluntly: "New housing is built at the high end of the market not to bring working-class people of colour in, but to shut them out."

The logic underlying these sorts of statements is remarkably flimsy. Attributing rent increases to new market-rate housing is like attributing rainstorms to umbrellas. High demand for housing is driven by jobs that attract newcomers who bid up rents. If new market-rate housing is not built, then wealthier-than-average people will just place higher bids on existing units, thereby preventing "filtering".

Filtering is the process by which, as housing ages, it becomes less desirable to wealthier residents, thereby becoming affordable to the middle class and poor. A huge share of affordable housing is hand-me-down housing: One study, by the Hudson Institute's John C Weicher and Econometrica's Frederick J Eggers and Fouad Moumen, found that, between 1985 and 2013, 45.2pc of rental units that were affordable to very low-income renters in the US had filtered down from owner-occupied or higher-rent categories.

As Syracuse University's Stuart Rosenthal wrote in an 'American Economic Review' article in 2014, the "direct evidence that housing filters down, on average" is so indisputable that "there should no longer be debate on this point".

Why such intense hostility to the evidence about housing markets?

First, anti-market community organisers tend to think in hyper-local terms. The effects of adding new market-rate housing are geographically uneven.

New market-rate housing slows rent increases citywide. But a fancy apartment could simultaneously increase rents in a particular neighbourhood.

The rational response to such "amenity effects" is to fight against restrictive zoning in already-expensive neighbourhoods, where such effects are minimal.

Anti-market housing activists, however, don't rally for taller towers even in wealthy neighbourhoods: They fight such development.

Second, consider the role of political strategy. Activists need votes from local legislators on a host of labour, environmental and civil rights issues aside from zoning.

But local legislators tend to favour Nimby homeowners when their home values seem threatened by new construction.

Hills is the William T Comfort, III professor of law at New York University. The Washington Post

Irish Independent

Also in Business