More housing supply denialism–debunked

It appears that we have been a bit premature in calling the housing supply debate over. Last week’s urbanist Internet was all a flutter with the latest claim of an academic study purporting to show that allowing more density in cities wouldn’t do anything to ameliorate the housing affordability problem. The latest installment is a new paper from  new paper from Andrés Rodríguez-Pose and Michael Storper claiming that upzoning will worsen, rather than ameliorate inequality and gentrification. The paper got wide attention thanks to a Richard Florida’s CityLab, article entitled, “Building More Housing is No Match for Rising Inequality.” Florida summarizes the study as follows:

“A new analysis finds that liberalizing zoning rules and building more won’t solve the urban affordability crisis, and could exacerbate it.”

There was little surprise that the Rodríguez-Pose/Storper paper, and Florida’s endorsement would be seized upon by NIMBY groups.  In San Francisco, 48Hills, a generally anti-development neighborhood publication, wasted no time citing the study yet another piece of evidence that “challenges the notion that allowing the private market to build more housing will bring down prices.”

Making higher density housing easier reduces rent inflation and displacement.

Florida quotes Rodríguez-Pose as saying: “Upzoning is far from the progressive policy tool it has been sold to be. It mainly leads to building high-end housing in desirable locations.”

The evidence for that in the paper seems to come from citations of two recent sources. An article on in the Washington Post examining Zillow data on changes in home prices by various price tiers (page 30), and a  a study of the effects of upzoning on land prices in Chicago by Yonah Freemark (page 31).

As City Observatory readers will recall, we took a close look at the Washington Post article when it came out, and challenged all of its principal claims. We found that the Post’s analysis, which purported to address the effects of new apartment construction, relied on a Zillow rental price series that didn’t include multi-family buildings. We also found that increases in supply were actually highly correlated with declines in in rental price inflation.  While building more housing in the highest price tiers produces declines in inflation in the highest tier first, these declines are rapidly echoed throughout the market.

Alex Baca and Hannah Lebovitz have also pointed out the limits of Yonah Freemark’s study.  Almost everywhere, but particularly in Chicago, there are many discretionary and contingent elements in the land use planning process that mean that changes in zoning are a necessary, but by themselves not sufficient condition for realizing greater density:

 No one who is intimately engaged with the complexities of affordable housing in America would suggest that zoning is the sole knob to twiddle to increase affordability—and Freemark doesn’t, either. Zoning is targeted because its origins are inherently racist, bigoted, and exclusionary. But, again, it is not the sole input to making housing more affordable. It’s just the one that, by changing it, allows for many other things that make housing more affordable. . . . But, for now, these findings are inconclusive and in many ways detached from the day-to-day reality of how local-level zoning and planning work. We hope they are not used to validate a continuation of exclusionary practices, or misguided power moves by elected officials in American cities and their suburbs.

Rodríguez-Pose and Storper also cite Rick Jacobus (page 32) as their source that housing markets are deeply segmented–i.e. that adding supply in one part of the market has little or no effect on prices in other parts of the market.  But Jacobus doesn’t offer data for that assertion, and as the recent Upjohn Institute study by Evan Mast shows, the succession of household moves set off by the construction of new higher income housing quickly reverberates through all tiers of a city’s housing market, with the effect that 60 percent of the increase in vacancies is felt in lower income neighborhoods.

As Bloomberg’s Noah Smith has suggested, the easiest way to poke a hole in the argument that more housing, even at the high end of the market, won’t help address housing supply is to consider the counter-factual of somehow demolishing 10,000 or 50,000 high income housing units.  Does anyone suppose that if there were that much less high end housing in say, San Francisco, that housing prices would be lower, or the plight of the poor would be lessened? Exclusionary suburbs, like Marin County, have tightly constricted the housing supply:  would Rodriguez and Pose consider them policy models of how to build a more equitable community?

From a policy standpoint, the more useful question is:  Will the poor in a city be better or worse off if it is easier to build new multi-family housing, especially, as California Senator Scott Wiener’s SB 50 would allow, in areas well served by transit?  In an important sense, Rodríguez-Pose and Storper simply decline to engage seriously in policy discussions.  The closest they come to is to seem to imply that YIMBY advocates are calling for more widespread building on environmentally sensitive greenspaces.  This ignores that there are many ways to accomodate greater density in built up areas in ways that are likely to advantage those with modest means, say by allowing the construction of apartments near transit.

The paper is remarkably silent as to how our land use planning regime contributes to exclusion and segregation, or how this might constructively be altered.  Aside from a gratuitous swipe at “the supposed social justice aspects of reducing housing regulation, assuming it would help the less skilled and reverse a long association of zoning with racial exclusion” there’s no acknowledgement that the balkanized suburban regimes of US metro areas have deployed zoning as a tool to exclude the poor and provide opportunity and access to amenities only to those wealthy enough to afford large single family homes. Among the words you will not find in their article are “exclusionary zoning” “single family housing,” “apartments,” or “parking.” It’s well-documented that our current system of deeply decentralized land-use decision-making, coupled with the strong incentives of “homevoters” to minimize tax burdens and shift costs and congestions to other jurisdictions, produces the expensive, sprawling and segregated land use patterns in US cities.

Rodríguez-Pose and Storper sidestep these nuts and bolts issues of how to fix zoning so that it isn’t exclusionary, in favor of a knocking down a straw man claim that upzoning is somehow a cure for  inequality, (an argument that no one seems to be making).  In the process, they (and by extension, Florida) lend credence to the NIMBY-denialism about  the central need to build more housing in our nation’s cities if we’re to do anything to meaningfully address affordability.