Housing prices are famously out of control in many cities — the average studio apartment in San Francisco goes for nearly $2,500 a month, more than $2,900 in Manhattan. This trend has inspired a movement called “YIMBY,” for “Yes in My Back Yard.”
“We should build more housing in every neighborhood — especially high-income neighborhoods,” reads the mission statement of the YIMBY Party, based in San Francisco. “… Increasing supply will lower prices for all and expand the number of people who can live in the Bay Area.”
The YIMBY movement has become popular enough to win some bipartisan support: Housing and Urban Development Secretary Ben Carson endorsed on Twitter a pro-YIMBY column by Bloomberg’s Noah Smith.
To some people, the YIMBY platform will sound painfully obvious. But YIMBYs face enormous opposition from self-styled progressives who flatly dismiss the idea that adding new market-rate housing to a city will improve housing affordability. Sometimes these activists go even further and argue that adding market-rate housing to cities actively hurts the poor (on the grounds that expensive apartments attract wealthier residents who bid up rents). Such activists will fiercely oppose even new market-rate buildings that include subsidized units.
They end up allying themselves with NIMBY (“Not in My Back Yard”) homeowners who oppose all new construction in their neighborhoods. Working together, the two groups help choke off new construction that could ease housing prices.
Call this attitude “Left NIMBYism.” Left NIMBYism not only flatly contradicts the logic of supply and demand but also flies in the face of empirical studies of what happens when cities see new construction. In its stubborn rejection of empirical reality, the Left NIMBYist view of housing markets shares characteristics of ideologically motivated refusals to accept evidence in other contexts, such as climate change or the safety of vaccines.
Four authors for the Coalition for Community Advancement flatly asserted in 2016 that market-rate housing had no role to play in the policy discussion over housing affordability. Under a headline that said “Supply is not the Solution,” they wrote: “The only increase in housing supply that will help to alleviate New York’s affordable housing crisis is housing that is truly affordable to low-income and working-class people.” Bizarrely, the group was arguing against a plan to build 6,500 new apartments, of which fully half would go for below-market rents. The Los Angeles chapter of the Democratic Socialists of America put that idea more bluntly: “New housing is built at the high end of the market not to bring working-class people of color in, but to shut them out.”
The logic underlying those sorts of statements is remarkably flimsy. Attributing rent increases to new market-rate housing is like attributing rainstorms to umbrellas. High demand for housing is driven by jobs that attract newcomers who bid up rents. New construction follows along. If new market-rate housing is not built, then wealthier-than-average people will just place higher bids on existing units, thereby preventing “filtering.”
Filtering is the process by which, as housing ages, it becomes less desirable to wealthier residents, thereby becoming affordable to the middle class and poor. A huge share of affordable housing is hand-me-down housing: One study, by the Hudson Institute’s John C. Weicher and Econometrica Inc.’s Frederick J. Eggers and Fouad Moumen, found that between 1985 and 2013, 45.2 percent of the rental units that were affordable to very low-income renters in the United States — that is, those making less than 50 percent of the area median income — had filtered down from owner-occupied or higher-rent categories.
As Syracuse University’s Stuart Rosenthal wrote in an American Economic Review article in 2014, the “direct evidence that housing filters down, on average,” is so indisputable that “there should no longer be debate on this point.” According to Rosenthal, market-rate housing filters down at a rate of almost 2 percent per year — fast enough to make a big difference. Housing filters fastest in the middle of the country, but it filters down on the expensive coasts, too, he found.
In short, excluding new market-rate housing by means of stringent zoning regulation keeps wealthy households in existing units that might otherwise open up to lower-income households.
What do anti-market housing activists say against this body of evidence? They pretty much just plug their ears, asserting that housing markets defy economic laws that govern other commodities.
“Let’s talk about California, and specifically our region,” Zelda Bronstein, a former Berkeley planning commissioner, wrote in 2016. “Here the textbook theory of supply-and-demand — prices fall as supply increases — doesn’t apply.”
The Council of Community Housing Organizations, which calls itself the “voice of San Francisco’s affordable housing movement,” echoed Bronstein’s assertion, producing infographics and other documents arguing that filtering is a “fallacy.” That’s because, it says — echoing Bronstein — rents continue to rise even when more market-rate units are built.
That’s a stunning non sequitur. Of course rents rise when demand outstrips supply, even when new units are being built — so market-rate housing cannot be the only solution to the affordability crisis in our most expensive cities. But the data shows that rents rise even faster when market-rate housing is not built. New market-rate housing complements policies such as housing subsidies and units reserved for moderate-income households, restraining prices so that subsidies go further.
Why such intense hostility to the evidence about housing markets? Two motivations seem to me to drive the Left NIMBY agenda: parochial attitudes and political expediency.
First, anti-market community organizers tend to think in hyperlocal terms. The effects of adding new market-rate housing are geographically uneven. New market-rate housing slows rent increases citywide. But a fancy apartment could simultaneously increase rents in a particular neighborhood by making it seem safer, prettier or otherwise more desirable to wealthy migrants. The rational response to such “amenity effects” is to fight against restrictive zoning in already-expensive neighborhoods, where such effects are minimal. (There is no plausible reason to believe that new housing occupied by wealthy people will raise rents in areas where the existing housing is already occupied by the wealthy.)
Anti-market housing activists, however, don’t rally for taller towers even in wealthy neighborhoods — they fight such development. Few if any housing activists spoke out against wealthy homeowners’ push to zone out new residential housing in Sutton Place, on the East Side of New York City, for instance.
Second, consider the role of political strategy. Activists need votes from local legislators on a host of labor, environmental and civil rights issues aside from zoning. But local legislators tend to favor NIMBY homeowners whose members turn out with reliable ferocity when their home values seem threatened by new construction. Opposing homeowners’ NIMBYism is politically hazardous. Opposing market-rate construction, by contrast, is a great way to build rapport with city council members who support restrictive zoning.
Despite the widespread self-delusion on this point, however, there are signs of hope in the housing debate. In recent years, a substantial number of left-leaning writers, including Ezra Klein and Matt Yglesias at Vox and, as mentioned, Smith at Bloomberg, have championed market-rate housing as part of the solution to affordability. Some YIMBYs are even running for office, such as Sonja Trauss, a YIMBY Party member and candidate for supervisor in San Francisco.
As with resistance to evidence of global warming, resistance to evidence about housing markets yields slowly to data and logic, but it does seem to yield. In the meantime, it is wise to keep in mind a chastening moral: No side, left or right, has a monopoly on the capacity to ignore evidence staring it balefully in the face when the data is inconsistent with its ideology and pocketbooks.