Upzoning increases land prices. It only results in a decrease in per-unit average house prices if it is accompanied with development (more housing units per square metre of land).
Upzoning doesn't guarantee increased development as developers only build when it makes financial sense to do so, and flooding the market with more units would decrease the potential profit they can make.
Existing residents who don't develop their land usually end up with a big windfall of higher land prices, because their large lot sizes could have many more housing units built on it with new upzoning laws.
Now, they still might revolt for other reasons, like not wanting undesirables like people poorer than themselves to move in next door, or not wanting to see as many houses in their morning walk, but from a financial sense, upzoning is a big positive for existing landowners.
> Now, they still might revolt for other reasons, like not wanting undesirables like people poorer than themselves to move in next door, or not wanting to see as many houses in their morning walk, but from a financial sense, upzoning is a big positive for existing landowners.
This is a very uncharitable take. People choose a place to live based on criteria they like. If you want to live in a super dense city you might gravitate to Manhattan. If you want to live in a quiet suburb you end up in such a place.
If suddenly that reality is torn down and substituted for something you didn't want, it's going to hurt. If you wanted a quiet suburb and you found it, you won't be happy if suddenly all your neighbor houses are torn down and replaced with apartment buildings. It has nothing to do with "not wanting undesirables". It is because the conditions they wanted and bought into are no longer there.
> from a financial sense, upzoning is a big positive for existing landowners
Except for house flippers, people don't care about the financial sense. A house is a home, in a place they like. Telling someone that the neighborhood they cared about it no longer a reality but it's ok because they made money, will not satisfy anyone. It's not about money.
You should go to a city council meeting and see how NIMBY homeowners behave. It is impossible to be worse than they are and it's impossible to describe them uncharitably.
You can say "they just like their neighborhoods" all you like but they hate poor people, young people, richer people, anyone who might park a car in front of their house, anyone who might use all the parking spots at the grocery store, any men (they'll molest their daughters, you know), and anyone who might approve a cell phone tower (it'll give them 5G cancer).
The above will be communicated half in claims they've lived there longer than you and you're a developer shill / corporate plant and half in death threats.
You paint with a very broad brush. I have no doubt that for each aspect you list, you can indeed find an example of some extremist who hates it.
But the average regular person doesn't particularly hate any of these, they just want to live in their home in an area they like.
> You can say "they just like their neighborhoods"
I assume you have selected place(s) to live? Did you have any criteria for selecting the area?
Most people have a list of things they absolutely want, and deal breakers they won't put up with. So you find a home that meets these. This is what I mean by they like the neighborhood they selected when making that decision.
Is it at all surprising that after they selected a suitable neighborhood, they don't particularly want it to transform into something completely different that no longer meets any of their criteria?
No I don't, this is realistic. You can easily experience it anytime you like. They're also on Nextdoor if you can't go to any planning meetings.
> I have no doubt that for each aspect you list, you can indeed find an example of some extremist who hates it.
The problem is the political system is set up to only listen to these people, because urban planners are embarrassed about when they did urban renewal, and now they make up for it for every new project by delaying it until someone like this tells them to cancel it and then cancelling it.
> I assume you have selected place(s) to live? Did you have any criteria for selecting the area?
Walkable to a grocery store. Obviously it can close, but I can't stop that from happening.
And we're not supposed to care what these people want; they have influence over their property. They don't have influence over the "neighborhood" because they're not paying for it.
> > I assume you have selected place(s) to live? Did you have any criteria for selecting the area?
> Walkable to a grocery store. Obviously it can close, but I can't stop that from happening.
But I bet you'd be unhappy if you chose this place specifically for the walkable grocery store and suddenly it's gone and now you need to drive. Maybe you don't even have a car, or even parking, because you built your life plans around the choice to walk to the grocery. Surely you'd be quite sad and probably annoyed by all that, suddenly having rearrange your life in a big way (either move, or get a car and parking).
(Also, people do protest and lobby for stores to remain open all the time. Sometimes they succeed sometimes they don't.)
> And we're not supposed to care what these people want; they have influence over their property. They don't have influence over the "neighborhood" because they're not paying for it.
That is a very dystopian world to live in. The whole point of society is that there are common norms in an area. If you're not allowed to have a voice about anything except what you financially own, that's a bleak future.
> Surely you'd be quite sad and probably annoyed by all that, suddenly having rearrange your life in a big way (either move, or get a car and parking).
I would say the point of housing abundance is to make moving easy. This is both the best way to increase customer power vs landlords and the best way to let people reduce their commutes as their life circumstances change (like where their job is and where their children go to school).
> The whole point of society is that there are common norms in an area. If you're not allowed to have a voice about anything except what you financially own, that's a bleak future.
There's room for it, but overly local democracy is usually bad because it's more corrupt and people pursue things that are against the interests of every other local area. In particular because of Prop 13 in CA, everyone wants the job sites but not the employee housing.
> I would say the point of housing abundance is to make moving easy.
That's an interesting take, although I can't agree these are related.
It's not scarcity of housing that keep people from moving, it is that moving is mostly undesirable once you settle somewhere. If both spouses have a job and kids in school, you have three sites anchoring you there. And you like your neighbors and friends in the area and you like the neighborhood. Why would I move, even if there is an infinite supply of housing?
I'm basing the reasons for why people don't want development in their neighbourhood off real-world observations; I didn't intend to be uncharitable, just realistic. To be honest, I toned back the reasoning quite a bit from some of what I've heard before.
Maybe the underlying truth is merely "I don't like change", but the actual literal reasons given by many people when blocking development in their neighbourhoods in my city are not saying they don't want change, it's far more targeted at the kinds of people who will move in. I tend to operate on the assumption that the true reasons they have for not wanting development are worse than what they will voice in public, and at least certainly not better.
> Except for house flippers, people don't care about the financial sense.
I agree that typically this isn't the issue; the person I responded to did seem to think it might be though.
Unfortunately such a tax would be limited by prop 13 in California.
While the proposals here can be implemented on a local level, any change to prop 13 would be a state level ballot proposition.
(For the record, I'd love to see reform of prop 13. While I love the idea of smoothing out over a number of years the impact of sudden inflation or increases in local housing prices on existing residents, it should be a smoothing rather than an entitlement for long term owners of multi-million dollar homes to avoid property taxes.)
> Upzoning doesn't guarantee increased development as developers only build when it makes financial sense to do so, and flooding the market with more units would decrease the potential profit they can make.
This doesn't really matter; developers aren't a cartel and they don't care if the margin on new projects goes down. They only have to care that the smaller margin goes to them and not someone else.
(To the extent they are a cartel, it's because they got one enforced by downzoning, because only legal force can keep people in the cartel.)
For one example of how upzoning alone doesn't result in developers exceeding the market saturation rate.
To be clear, I support upzoning but I think it should be accompanied with an increase in the holding cost of land, so landowners are incentivised to develop now rather than later.
Zoning alone can only affect prices when there is an arbitrage opportunity to build something in location A that isn't possible in nearby location B. When entire cities upzone across the board like Minneapolis there is no arbitrage opportunity, so prices are not going up specifically because the zoning was changed. Prices are increasing because there is a chronic shortage of places to lives near economic opportunity and high demand to live somewhere you can make a living.
> Prices are increasing because there is a chronic shortage of places to lives near economic opportunity and high demand to live somewhere you can make a living.
Yes. And the solution is not to drive people into dense slums, but to make sure that jobs are available outside of city cores.
It will require concerted action, probably something like cap-and-trade for dense office space.
Agglomeration effects mean that any city that tries to split up offices away from the city cores would end up "losing" compared to cities which allow offices and industries to cluster together freely.
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Notably, intensively-developed properties decrease in value relative to similar dwellings that were not upzoned, showing that the large-scale upzoning had an immediate depreciative effect on pre-existing intensive housing.
"""
"""
. Next, I combine the address histories with a simulation model to estimate that building 100 new market-rate units leads 45-70 and 17-39 people to move out of below-median and bottom-quintile income tracts, respectively, with almost all of the effect occurring within five years. This suggests that new construction reduces demand and loosens the housing market in low- and middle-income areas, even in the short run.
"""
To give some random examples
Let's start by defining "cheaper" as "cheaper rent" specifically. Rent will only decrease or stabilise when supply outstrips the absorption rate of the market. In New Zealand, for example, at least one analyst sees the equilibrium absorption rate of rentals to be 2.5% vacancies to total rentals. This means that to make rents go down (or stop going up at the same rate as household income), the available rentals must be greater than 2.5% of the total rentals.
One way to achieve that is to build a whole lot of housing and rent it out, far in excess of population growth in a city. To enable building a whole lot of housing, you can upzone a city. However, increasing potential housing does not actually increase the amount of housing.
To do that, you need to actually build houses. Now, anyone who wants to build a house will usually only do so if it makes financial sense to do so; essentially, when the risk-adjusted return on investment is high enough. Upzoning doesn't really change the risk-adjusted return on investment for developing a house.
Now, lowering rents WILL change the risk-adjusted RoI for building a house; it will LOWER the RoI! So builders will stop building when rents start decreasing, because the financials stop making sense. This is a natural hand-brake on (private) house-building rates, regardless of upzoning. Build enough housing to lower rents, and house builders will stop building houses!
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The kind of counter-factual we are looking for is not really expensive cities that become cheap as density increases, because density brings about more jobs, income, competition, and so on that mixes in with housing data as confounding variables.
Instead, we want: cities where rent as a proportion of disposable income goes down, while increasing population and density. Most likely, any city in that situation is going to be increasing housing units faster than population growth.
The next part of the analysis would be to figure out how they managed to do that despite absorption rates being a handbrake on the market :)
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A side-note; Auckland, which did upzone in ~2016 and again more recently, has not had a notable reduction in rent as a proportion of household income, despite increased density. Population growth meant that it hasn't really beaten the absorption rate of the market, except during Covid (lots of house-building going on at the same time as population decrease).
Agreed, thanks, you expressed it better than I could.
This is why I tend to question the YIMBY war cry of build build build until rent is affordable, as unrealistic. As you say, the build rate has to be consistently above the absorption rate. But that seems quite unlikely since builders are not chasing diminishing profits.
That's why don't see real world examples of cities that become denser and denser while becoming more affortable (relative to income, as you point out).
I live on a street in Berkeley that was not red-lined, so it has single family homes and fourplexes. It’s great, we love it. You can choose to be miserable but it’s got nothing to do with whether your neighbors can afford a home.
You're reading the demand/supply situation backwards. Even with all the construction in Brooklyn, supply is failing to meet demand, therefore prices are going up. We've failed to meet supply in urban spaces for several generations now and have a massive deficit to pay off before adding any supply can actually drive prices down; we're barely adding enough units to affect the rate of increase of prices.
> You're reading the demand/supply situation backwards.
No. I'm reading it exactly right. Density _causes_ higher prices. It makes it easier to create jobs near dense locations, which in turn makes it more attractive for people to move in. This in turn increases housing costs.
That's all only a problem when supply of housing is constricted, which it has been for generations in all urban spaces. Otherwise it's just wealth generation. It's also a problem when economic activity is limited to a handful of key urban spaces, but that isn't true. There are plenty of places to go make a good living. There just isn't anywhere to live.
There should be plenty of different levels of density for people to choose to live in as everyone has different preferences. What's not sustainable in any way is exclusive single family zoning. If, as so many backers of exclusionary zoning claim, people only want to live in SFH, why would we need a law to force that to be the only built form? Surely every single unit built of any other type would fail to find a resident.
This had the effect of driving all the developers into fewer land parcels, hiking up prices. New York has not substantially deviated from this zoning model since then.
That knowledge is severely out of date, then. You don't need bedrock to build skyscrapers, and indeed the tallest skyscraper in the world, the Burj Khalifa, is built on top of sand with no connection to bedrock whatsoever. You just need to pour immense amounts of concrete to serve as a foundation.
Which is cost prohibitive and doesn't make sense for any other entity other than "let's light money on fire + enslave people to flex so the cool kids like us" UAE.
it's not a good look. hope my comment doesn't flag me in unforeseen ways 20 years from now.
To be clear, I'm saying effectively yep need bedrock otherwise it makes zero actual sense. (I do take you point, and lesson learned on my part)
It's not cost prohibitive, it's a technique that is widely used in US cities too. The cost of building the foundation is still small relative to the cost of acquiring the land and building the rest of the building.
Upzoning doesn't guarantee increased development as developers only build when it makes financial sense to do so, and flooding the market with more units would decrease the potential profit they can make.
Existing residents who don't develop their land usually end up with a big windfall of higher land prices, because their large lot sizes could have many more housing units built on it with new upzoning laws.
Now, they still might revolt for other reasons, like not wanting undesirables like people poorer than themselves to move in next door, or not wanting to see as many houses in their morning walk, but from a financial sense, upzoning is a big positive for existing landowners.