Friday, May 17, 2024

#138 / The Downside Of Upzoning

The five-story building pictured above is located in Washington, D.C. I found the picture in The New Republic magazine, illustrating an article titled, "The Case Against YIMBYism." 

YIMBYs would, presumably, cheer the newer building pictured as helping to meet local housing needs. Others, quite likely, would think that the new building is an affront to the character of a beautiful little neighborhood, and might point out some practical problems, too, like parking demand, solar shading, and the like. 

Those who regularly read my blog postings may remember that I have writtten about "YIMBYism" before, and I didn't have much good to say about it in my earlier comments. While I absolutely believe that there are often very good reasons to urge new residential development projects, and increased density in urban areas, I strongly object to efforts by those who advocate pro-development policies, and who call themselves YIMBYs ("Yes In My Backyard"), to pretend that there is a comparable, organized, and anti-development group called NIMBY ("Not In My Backyard"). 

There is no such "NIMBY" group. No one has ever organized a group to oppose all development, period, and called it "NIMBY." Saying that someone is a "NIMBY" is plain-old name calling. Those who oppose specific developments are usually better called, "neighbors," and they often have very good reasons to oppose a proposed development project, when they do come out in opposition. Such project opponents are not - as the name "NIMBY" is meant to imply - selfish, greedy, uncaring and probably racist opponents to anyone who isn't already living in their neighborhood. 

The New Republic article, linked above, focuses on how the YIMBY movement operates. The main point of the article is revealed in its subtitle: "Why encouraging more private development won’t solve the housing crisis." I endorse the findings outlined by The New Republic, but want to add on an observation that is only very briefly mentioned in what that article says. 

YIMBY (the group) is of, by, and for the development industry. The actual aim of YIMBY, which tends to claim that its main purpose is to promote affordable housing, is to promote housing development, period. If there is any validity (or sincerity) to the YIMBY claim that building more housing will make housing more affordable, that claim rests upon the fallacious argument that there is a "law of supply and demand," and that if the supply of housing is increased, the price of housing will inexorably fall, thus making housing more affordable simply by building more of it. 

There are a number of fallacies involved in this claim - and The New Republic article gets at a number of them. What the article does not stress, though, is the following. In order to increase the "supply" of housing, YIMBY advocates routinely want to "upzone" land. "Upzoning" means changing local ordinances, and/or the local General Plan, to designate a particular piece of real property with a zoning designation that will allow more development than the former zoning designation would allow. 

Obviously, if the zoning designation on a piece of property would allow the construction of ten new units of housing on that property, and the zoning designation is changed, and "upzoned," to allow the construction of twenty new units, the "upzone" that made that change possible will permit the property owner/developer to produce more housing. Even if you believe that producing "more" housing will automatically mean that the "more" housing produced will be "more affordable" (which is not necessarily the case, as The New Republic article notes), there is a fallacy in the argument for "upzoning." 

The price of a new residential unit, where prices reflect the so-called "free market," will depend, of course, on how much it costs to produce that residential unit. When land is "upzoned," permitting more housing to be built, the price of the land will increase, to reflect this new reality. So, the benefit of "upzoning" will go to the property owner, not to the purchaser of the new units produced under the new zoning. 

That is one of the major "downsides" of upzoning. It's not the only one, of course, because community costs will also go up as land is "upzoned" for greater density. 

Who mainly benefits from upzoning? Not those seeking more affordable housing. Who benefits are the property owners, whose property just became more valuable, thanks to the upzoning approved by local officials. Lucky for the property owners, it just so happens that those folks have a bonafide nonprofit corporation to represent them, and to help them argue for those very profitable "upzonings." 

I know you have already guessed. That nonprofit corporation, of by and for the property owners and developers is called, "YIMBY," and The New Republic is right on target in presenting its case against YIMBYism.

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