Feb222017

Are renters also to blame for nimby resistance to more housing?

The conventional wisdom holds that renters favor new construction and homeowners oppose it because renters want more abundant and less expensive housing and homeowners want more valuable housing and less traffic. But is it really that simple? A new study says no.

Nimbys oppose all development because they believe their neighborhood was perfect when they moved in, but new development removes beautiful natural features, clogs the roads with more traffic, and changes the character of the community they moved into.

True Nimbys don’t evaluate the pluses and minuses of new development and form an opinion based on facts. True Nimbys oppose everything, and in doing so, they fail to see the hypocrisy in their attitude and actions. After all, they wouldn’t be a resident in their own neighborhood if previous Nimbys had successfully defeated the project where they live.

nimby-hypocrisy

The cartoon above is one of my favorites because it points to a simple truth that Nimbys conveniently ignore: The neighborhood they live in was better before their house was built and they moved in. The passage of time between when their house was built and a new house in their neighborhood doesn’t matter.

True Nimbys who argue against all new development fail to recognize that the house they live in or the stores they shop in represented the diminution of the quality of life to the true Nimbys that came before them. I wonder how many of them would go back in time and oppose the development where they live? And how many of them are willing to demolish their homes and allow the lot go feral?

When Do Renters Behave Like Homeowners? High Rent, Price Anxiety, and NIMBYism

by Michael Hankinson, Tuesday, February 7, 2017

In theory, renters and homeowners disagree about proposals to build new housing in their communities, particularly if that housing is close to where they live. However, in practice, this is not always the case.

… in high-cost markets renters are still more likely than homeowners to support citywide increases in the supply of housing. Since changes in city governments over the past several decades have generally strengthened the power of neighborhood-level opponents to proposed projects, my findings help explain why it is so hard to build new housing in expensive cities even when there is citywide support for that housing.

I assumed that nimbys would ultimately lose the battle because nimbyism inevitably leads to a lower homeownership rate, leading to a tipping point where renters who want more housing take power from nimbys who oppose all housing. According to this research, my faith in the demise in nimby resistance is misplaced.

NIMBYism and the Rising Cost of Housing

Since 1970, housing prices in the nation’s most expensive metropolitan areas have dramatically increased. Real prices have doubled in New York City and Los Angeles and nearly tripled in San Francisco. Driving this appreciation is an inability of new housing supply to keep up with demand. Even accounting for the cost of materials and natural geographic constraints on supply, the dominant factor behind this decoupling of supply and demand is political regulation, such as limits on the density of new housing developments and caps on the number of permits issued by a localities’ government.

Some people refuse to accept that nimby resistance is the root of the problem.

These limits are a classic example of the NIMBY (Not in My BackYard) phenomenon. Even if residents support a citywide increase in the supply of housing, they may still oppose specific projects in their neighborhood. This seeming disconnect between views on citywide and local development policies creates a classic collective action problem for those policymakers who must find ways to reconcile the conflicting views. …

When Renters Behave Like Homeowners

As noted, renters and homeowners are expected to disagree on support for new housing, with NIMBY homeowners opposing citywide and neighborhood development and renters likely supporting the new supply. In line with existing theory, homeowners in my national survey largely opposed the proposed 10 percent increase in their city’s housing supply (28 percent approval), while a majority of renters supported the new supply (59 percent approval). Likewise, when asked in the experiment which of two randomly generated buildings they would prefer for their city, homeowners exhibited consistent NIMBYism, preferring buildings that were farther away from their home. In contrast, renters on average did not pick buildings based on distance from their home. If anything, renters preferred affordable housing that was closer to their home, displaying a YIMBY or ‘Yes in My BackYard’ attitude. In short, homeowners and renters tend to have very different attitudes towards both NIMBYism and the citywide housing supply.

Those results are what the conventional wisdom would expect.

However, in high-rent cities, renters look far more like homeowners. Instead of paying little attention to the location of proposed new housing, renters in expensive cities are just as NIMBY towards market-rate housing as homeowners. Moreover, this renter opposition to nearby development does not mean they support less new development overall. In fact, renters in expensive cities show just as much support for a 10 percent increase in their city’s housing supply as renters in more affordable cities. The main difference between these groups of renters is their NIMBYism.

Results from the San Francisco exit poll show a similar combination of supporting supply citywide, but opposing it locally. When asked about a 10 percent increase in the San Francisco housing supply, both renters and homeowners expressed high levels of support, at 84 percent and 73 percent approval, respectively. But, somewhat surprisingly, when asked if they would support a ban on market-rate development in their neighborhood, renters showed far more NIMBYism than homeowners, with 62 percent of renters supporting the NIMBY ban compared to 40 percent of homeowners.

This could be a San Francisco specific result. The key phrase above is “a ban on market-rate development.” Liberals in San Francisco oppose market-rate development in favor of affordable housing projects, so it may not be that they are more nimby than homeowners, they may simply oppose the market-rate development in favor of affordable housing. In other words, they still want development, just not the kind described in the survey.

NIMBYism and How We Permit Housing

Renters in high-rent cities generally both want new housing citywide but behave like homeowners when it comes to their own neighborhood. These scale-dependent preferences present a policy challenge for keeping cities affordable. Over the past 40 years, city governments have increasingly empowered neighborhoods to weigh-in on housing proposals through formal planning institutions. In doing so, these decisions have amplified NIMBYism and the ability to reject new housing, without maintaining a counterweight for the broader interest for new supply citywide. In other words, while most residents may support new housing for the city as a whole, both homeowners and renters are willing and increasingly able to block that supply in their own neighborhood, effectively constraining the housing supply citywide. This is housing’s collective action problem.

As I pointed out in A possible solution to California’s housing crisis, this is a “tragedy of the commons” problem.

Each individual in California wants to be the last new resident in their neighborhood. The nimbys lobby their local politicians to block new development because they believe it will improve their quality of life. And since local governments directly control development approvals in California, politicians pander to nimbys or face defeat at the polls; thus almost no new residential developments obtain approval in California, creating a shortage of housing that adversely impacts everyone.just_say_no

Most economists believe the only solutions to “tragedy of the commons” type problems is for a government entity to step in and force cooperation for the greater good because individuals acting in their best interest fail to produce a desirable result. So how could the nimby problem be addressed in California?

The State established the California Coastal Commission to address a similar problem. The actions of individual developers along the coast was ruining a valuable resource used by everyone. The Commission regulates all land use within the coastal zone and serves as another layer of regulatory approval. We need something similar in housing.

California Housing Commission

A California Housing Commission would have a simple mandate, “To ensure sufficient housing is provided to meet the needs of a growing population and economic growth.” This agency would oversee County and City general plans to ensure a balance between residential and commercial development. Further, the Commission would exercise discretionary approval power over projects of a certain size to confirm the residential and commercial balance is maintained throughout the cities, counties, and regions in California.

Do we really need another agency to approve plans? Unfortunately, yes we do. Without this agency, each local governing body will continue to act in its own best interest and exacerbate the housing shortage.