A careful study of evictions in San Francisco says “No.”
There’s a widespread belief among some neighborhood activists that building new housing triggers displacement. We-and most economists are highly skeptical of that argument at the metropolitan level, but its at least theoretically possible that there could be some neighborhood effects, for example, that building a nice new building triggers a change in the perception of a neighborhood and makes the existing housing nearby more attractive and more valuable. (There’s the further un-stated assumption that this spillover effect more than offsets the downward pressure on prices from additional supply.)
If there was any place where one would expect to find this localized displacement it would be in the San Francisco. The city is famous for its extraordinarily expensive housing and the great difficulty with which new housing is approved. There are also many neighborhoods on the cusp of gentrification.
A recent study from the University of California’s Kate Pennington takes a close look at data on eviction notices in San Francisco to see whether new development leads to an increase in displacement nearby. Her overall finding is that new construction has no discernable statistical effect on the rate of evictions. Describing her findings on the effects of new market rate housing on nearby eviction rates, Pennington reports:
Each of these point estimates is a precisely estimated zero, no larger than 0.05 percentage points and always statistically indistinguishable from zero. This means that the monthly probability of an eviction notice being issued does not change due to the completion of new housing nearby
Pennington’s study is remarkably detailed and meticulous. She gathers project-by-project and block-by-block data on new construction and inventories all of the eviction notices issued in San Francisco over the course of a decade. She looks at eviction rates before, during and after construction of new housing, and disaggregates her analysis separately for market rate and affordable housing. She event separately analyzes more than 1,000 different housing projects to see if particular ones were associated with upticks in eviction activity.
Not surprisingly, the study has generated considerable controversy. Some anti-gentrification activists dispute the studies findings, claiming that the data is incomplete, and runs counter to their experiences. Mission Local (a blog for the city’s Mission neighborhood) worries that:
. . . Pennington’s report could serve as a cudgel for the city’s YIMBY (Yes In My Back Yard) faction, which fervently advocates for a glut of new construction at all levels of affordability.
A key issue is whether legal eviction notices are a good proxy for displacement activity. Not all displacement is associated with eviction; some tenants are pressured or harassed by their landlords. But as Pennington argues, there’s little reason to believe that landlords prefer or are more likely to use these tactics rather than legal eviction procedures when new development occurs nearby.
If you were going to find a localized displacement effect as a result of new construction changing the character of a neighborhood and generating an upgrading spillover in adjacent properties, you would most likely find it in a city like San Francisco, where prices are high, supply is tightly constrained, and new development is occurring in dense urban neighborhoods. The fact that there’s almost no discernable impact of new construction on the rate of evictions is a strong signal that we ought to be focused much more on the price-ameliorating benefits of additional supply, and worrying a lot less about whether new construction causes displacement, even locally.
Kate Pennington, “The Impact of Housing Production on Legal Eviction in San Francisco,” June 8, 2018