Rezoning Portland’s neighborhoods for higher density will result in higher housing prices. Developers will profit while ordinary Portlanders will suffer. Lower-income families will really suffer.
See this article from CityLab, describing research from MIT:
“One of the most influential ideas in urbanism today is that the key to addressing the housing crisis is reforming zoning and building codes to allow for taller buildings and higher population densities.
A growing chorus of market urbanists and YIMBYs make the case: Restrict supply, and demand and therefore prices go up. So, it follows, liberalizing codes to make it easier to build—and to permit taller, denser structures—will increase supply and cause prices to fall, which will then make housing (and expensive cities) more affordable.
But a new study published in the journal Urban Affairs Review throws a bit of a proverbial wrench into the works.“
Here is the article from CityLab: “Does Upzoning Boost the Housing Supply and Lower Prices? Maybe Not.”
“Its author, Yonah Freemark, a doctoral student in urban planning at MIT, has analyzed the effects of upzonings in Chicago neighborhoods. His study takes the form of a natural experiment (the “gold standard” of social-science research) by comparing an initial set of zoning reforms, undertaken in 2013 to encourage development around transit stops, with a more aggressive set of reforms from 2015, which expanded the upzoned areas and increased incentives for taller, denser development.“
Guess what happened when Chicago rezoned neighborhoods for taller, denser redevelopment?
“First, he finds no effect from zoning changes on housing supply—that is, on the construction of newly permitted units over five years.”
“Second, instead of falling prices, as the conventional wisdom predicts, the study finds the opposite. Housing prices rose on the parcels and in projects that were upzoned, notably those where building sizes increased.”
“ ‘As Freemark puts it bluntly: “[T]he short-term, local-level impacts of upzoning are higher property prices but no additional new housing construction.’ ”
The author of the CityLab article quoted and linked to here is John Florida, co-founder of CityLab and senior editor at the Atlantic magazine. Florida has in the past argued for “up zoning” as a route to more affordable housing. He’s now acknowledging the problems with that approach: developers use upzoning to build luxury housing, not housing for the lower or middle income.
“I argued that although it is important to combat unnecessarily restrictive zoning and building codes (whose advocates I dubbed “New Urban Luddites”), easing these codes would do little to address housing affordability and might actually serve to increase housing prices in the neighborhoods in question, for the simple reason that developers would use the land not for affordable units but for luxury construction.”
Florida also recognizes that the “trickle down” or “filtering” theory doesn’t work for housing.
“I noted that the markets—and neighborhoods—for luxury and affordable housing are very different, and it is unlikely that any increases in high-end supply would trickle down to less advantaged groups. Another economist who is more pro-market than I am, Tyler Cowen, has similarly argued that the result of liberalizing zoning codes to allow for taller buildings will likely be more luxury housingand more profits for landlords and developers.”
Despite this evidence, the City of Portland’s central planners, urged on by developers, real estate investors, and YIMBY groups (often funded by developers), is planning a sweeping rezoning of essentially all residential neighborhoods, hoping to replace thousands of single-family house with new three-story quadplex apartments.
That is the “Residential Infill Project” aka the infamous “RIP”. Middle and lower-income Portlanders beware. The RIP is not for you.
P.S. For another take on the MIT research, here’s an article from 48Hills.