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Do you have a single data point to back up your assertion? Because the places I’ve seen that have embraced upzoning seem to be counter your assertion https://ww

Do you have a single data point to back up your assertion? Because the places I’ve seen that have embraced upzoning seem to be counter your assertion https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability https://www.pewtrusts.org/en/research-and-analysis/articles/...

cyberax 3y ago
SF has not built anything, but rents decreased much more than in MN: https://www.sfchronicle.com/realestate/article/sf-rent-prices-18534829.php https://www.sfchronicle.com/realestate/article/sf-rent-price... Rents right now are an unreliable indicator because they are heavily affected by the downtown blights that are spreading in many cities. Sale prices are much more reliable, and Minneapolis prices (as expected) grew: https://www.redfin.com/city/10943/MN/Minneapolis/housing-market https://www.redfin.com/city/10943/MN/Minneapolis/housing-mar...
- theluketaylor 3y ago
  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.
  - cyberax 3y ago
    > 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.
    - BirdieNZ 3y ago
      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.
      - cyberax 3y ago
        Yes. That's why the action has to be concerted. It's exactly how we dealt with all other types of pollution, btw.
jjav 3y ago
> > Upzoning does NOT reduce per-unit prices > Do you have a single data point to back up your assertion? Is there any case of increased density causing a reduction in housing costs? Manhattan is the most dense area in the US. It is also the most expensive. If density reduced cost, one might think Manhattan should be the cheapest? Can you mention a city that massively increased density and the consequence was reduced cost? I'm very curious to know which ones?
- CalRobert 3y ago
  Well there's this https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3532027 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3532027 """ 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. """ Or this https://research.upjohn.org/up_workingpapers/307/ https://research.upjohn.org/up_workingpapers/307/ """ . 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
  - jjav 3y ago
    The second paper could be interesting but can only see the abstract (I don't know anything about Auckland real estate to know about the first one). The summary of the paper seems sound, can't disagree. But then, why have we never seen these effects at a macro level, citi-wide? How come there are no examples of an expensive city that became cheap as density increased?
    - BirdieNZ 3y ago
      (This is not contrary to you, I think): See https://www.fresheconomicthinking.com/p/the-auckland-myth-there-is-no-evidence https://www.fresheconomicthinking.com/p/the-auckland-myth-th... 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! ---- 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 :) ---- 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).

cyberax 3y ago

SF has not built anything, but rents decreased much more than in MN: https://www.sfchronicle.com/realestate/article/sf-rent-prices-18534829.php https://www.sfchronicle.com/realestate/article/sf-rent-price... Rents right now are an unreliable indicator because they are heavily affected by the downtown blights that are spreading in many cities. Sale prices are much more reliable, and Minneapolis prices (as expected) grew: https://www.redfin.com/city/10943/MN/Minneapolis/housing-market https://www.redfin.com/city/10943/MN/Minneapolis/housing-mar...

theluketaylor 3y ago
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.
- cyberax 3y ago
  > 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.
  - BirdieNZ 3y ago
    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.
    - cyberax 3y ago
      Yes. That's why the action has to be concerted. It's exactly how we dealt with all other types of pollution, btw.

jjav 3y ago

> > Upzoning does NOT reduce per-unit prices > Do you have a single data point to back up your assertion? Is there any case of increased density causing a reduction in housing costs? Manhattan is the most dense area in the US. It is also the most expensive. If density reduced cost, one might think Manhattan should be the cheapest? Can you mention a city that massively increased density and the consequence was reduced cost? I'm very curious to know which ones?

CalRobert 3y ago
Well there's this https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3532027 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3532027 """ 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. """ Or this https://research.upjohn.org/up_workingpapers/307/ https://research.upjohn.org/up_workingpapers/307/ """ . 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
- jjav 3y ago
  The second paper could be interesting but can only see the abstract (I don't know anything about Auckland real estate to know about the first one). The summary of the paper seems sound, can't disagree. But then, why have we never seen these effects at a macro level, citi-wide? How come there are no examples of an expensive city that became cheap as density increased?
  - BirdieNZ 3y ago
    (This is not contrary to you, I think): See https://www.fresheconomicthinking.com/p/the-auckland-myth-there-is-no-evidence https://www.fresheconomicthinking.com/p/the-auckland-myth-th... 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! ---- 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 :) ---- 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).