When NIMBYs win, everybody loses

Constricting housing supply drives up the price of housing further, and accelerates displacement, in rich neighborhoods and in poor ones.

Two recent cases from different sides of the country illustrate the perverse effects of NIMBY fights against the construction of new housing.  One from California, was a community effort to block 60 units of moderately priced senior housing in a high income suburb. The second, from New York, was a successful lawsuit to oppose building additional housing–including a number of “inclusionary” affordable units in a working class neighborhood.  .

While the motivations of the NIMBY opponents may have been radically different between the two communities—the California case pits wealthy homeowners against the senior housing complex developers), while the New York case turns on claims that the city failed to assess how building more housing might change the racial and ethnic makeup of the neighborhood—the results are the same in both cases:  fewer units of new housing will get built, housing prices will rise further, and low income households will find it increasingly difficult to find housing in these desirable neighborhoods.

Inwood, New York City

The centerpiece of New York’s affordable housing strategy has been inclusionary housing requirements, essentially requiring developers to build additional below-market units in areas that get upzoning. But even though the process will increase the stock of affordable units, local NIMBY opponents object to the added market-rate units (which in effect pay for the affordable housing).

In Inwood, in Northern Manhattan, local residents have banded together to fight the city’s proposed upzoning that would trigger the construction of inclusionary housing. Recently, according to CurbedNY, they prevailed in a court fight, arguing that the city was obligated to undertake racial impact analysis of the project.

The opponents allegation is that constructing new market rate units will change the racial and ethnic composition of the neighborhood, because market rate apartments won’t be as affordable to people of color, who tend to have lower incomes. A trial court has invalidated the city’s upzoning for lack of a racial/ethnic impact analysis and that decision is being appealed to a higher court.

Implicit in the “impact analysis” approach is an assumption that if the upzoning isn’t approved that the race, ethnicity (and for that matter, income levels) of the neighborhood somehow won’t change.  That implicit assumption is wrong because  if the housing stock in this neighborhood doesn’t increase, the growing demand for urban living will push up rents even further, likely hastening demographic change. That’s what we’ve called the “missing counterfactual” in this kind of analysis. Neighborhoods that don’t add housing don’t necessarily stay the same, and in the face of growing demand, don’t stay affordable (or even unchanged demographically).

The CurbedNY article, in fact, documents that this is already happening in Inwood. Rents have been going up due to the shortage of housing, and the people who are displaced as a result are those like the story’s Othanya Garcia, who can no longer afford the neighborhood. In fact, the increase in rents preceded, by years, the change in zoning in Inwood.  According to CurbedNY, Garcia moved out of her apartment due to higher rents in 2016, two years before the City rezoned the neighborhood in 2018. The point here is that it is the increase in demand for urban living, and not the rezoning or the construction of new apartments, that is the cause of higher rents, lower affordability and displacement. Ironically, blocking the construction of new apartments, both market rate and affordable, will accelerate the pace of rent increases and worsen the affordability and displacement problems facing this neighborhood.

One of the embedded conceits of NIMBYism is a kind of mystic nostalgia about housing markets, the idea that the existing housing stock was always there, and will always be as affordable as it once was. As our colleague Daniel Hertz pointed out in his essay, “The immaculate conception myth” the housing we now inhabit was the product of developers and market forces back in the day, and our failure to allow those same things to happen today is only worsening affordability now—and into the future.

Palo Alto, California

Meanwhile, on the West Coast, the outcome of another NIMBY-led anti-housing battle is becoming apparent.  In this wealthy Silicon Valley town, a local non-profit had proposed building 60 units of senior housing on a 2.5 acre parcel it owned. Opponents managed to subject the project’s approval to a city-wide referendum, where it lost. Now, the site is being developed for housing of a very different character, as the San Jose Mercury-News relates:

Now, the long-awaited aftermath of that referendum has emerged: the first batch of 16 new single-family homes are on sale, starting at around $5 million, each with about 4,000 square feet of space for home gyms, theaters, offices, pergola-covered patios and multi-car garages with electric vehicle charging ports. Even this upscale development, called Orchard Park, was cut in half after challenges and criticism from staff and residents.

While the contrast between $5 million mini-mansions and senior apartments couldn’t be more stark, the failure to build the senior housing means fewer units, but more limited opportunities for existing residents to downsize and age-in-place.  As a result, the downzoning of this project has both direct and in-direct negative effects on the housing market, by reducing the number of people who can live in the area, and probably also slowing the turnover of housing by older residents of Palo Alto, who have no choice but to stay in their homes rather than moving to a smaller apartment in their same neighborhood.

Tales of Two Cities

The media often tend to treat housing debates as a kind of morality play: it is easier to condemn the motivations of wealthy suburbanites blocking affordable housing in Palo Alto (especially when it results in $5 million mini-mansions) than it is to call out the negative effects of low income community activists fighting new housing. But ultimately, the effects are very much the same:  by blocking the construction of new housing, these successful NIMBY campaigns only aggravate the housing supply problem, and worsen affordability. The key difference may be that existing homeowners win (their home values rise due to supply constraints), while renters lose (supply constraints drive up rents). A world where we empower everyone to be NIMBYs seems only to reinforce all of the inequalities of the housing market.