Whats In My Backyard

From HousingWiki

Responses to "What’s In My Backyard?" by Karen Narefsky, in jacobinmag.com June 14, 2017


Article excerpts: 

[subhead:] "YIMBYs look to the free market to solve the housing crisis. But the profit motive is what caused the affordability crunch in the first place.

"Earlier this year, Massachusetts Democrats almost passed a party platform that included support for rent control, stronger tenant protections, inclusionary zoning policies, and land trusts. Local progressives, including delegates from Our Revolution MA, submitted a resolution that garnered wide backing and almost passed. But the pro-tenant measure ultimately failed. The sticking point? The resolution also called for removing existing language that advocated building market-rate housing.

I don't know any details of this, but why was it considered necessary for that resolution to remove existing platform language advocating market-rate housing? It seems like that statement must represent the views at least some portion of Massachusetts Democrats, such as the YIMBY advocates there for whom it would probably be core issue. 

"Delegates aligned with the national YIMBY (Yes In My Backyard) movement felt that it was more important for the platform to explicitly advocate for more housing than to incorporate additional tenant protections and programs focused solely on affordability. They joined with conservative anti-rent-control Democrats to block the resolution.

Why couldn't the compromise position have been to support both market-rate and subsidized affordable housing (what I think you mean by "programs focused solely on affordability")? Such a "Both-And" position both describes current de facto practice, and is widely accepted by housing advocates. [add citations: eg Shelterforce, Terner Center

YIMBYs...argue that the affordability crisis is a product of restricted development in growing urban centers.

YIMBYs argue that it is a factor. So does a wide variety of other organizations and experts: 
[see, White House memo, and report from council of economic advisors; Terner Center; Glaeser, Gyourko, etc]. Also, common sense: if a municipality imposes a large development fee or long permit approval process, it makes it more difficult to create housing, so it will be less available. 

When confronted by arguments that market-rate development drives up local housing costs and leads to displacement, they respond that any opposition to development (or developer profit) is NIMBYism that ultimately opposes the interests of low-income people and contributes to displacement.


YIMBYs' framework is fundamentally flawed in two crucial ways.

[1.] YIMBYs paint all critics of development as entitled, self-interested actors who have no concern for the greater good — ignoring the fact that it is quite possible to be skeptical of a development for reasons other than personal greed.

YIMBYs may observe that development opponents have a self-interest in opposing development, but that a) is widely and long observed by many parties, see e.g. Fischel "The Homevoter Hypothesis" and works cited; and b) this observations doesn't imply that self-interest is the only motivation.

Further, from a policy standpoint, arguably it does not matter so much what people's motivations are for actions/policies, as what the outcomes of those policies are. Would we rather have, for example, housing that fulfills needs, produced by for-profit developers, or unsatisfactory housing, produced by non-profit or government agency?  In any case, YIMBY leaders have often said [cf. quotes from Sonja Trauss, Laura Clark] that the goal is sufficient and affordable housing, however it can be done, which currently in the US is primarily by private developers.  YIMBY organizations have a record of supporting below-market-rate housing, community housing development orgs (housing non-profit developers, CHDOs), and other means such as Inclusionary zoning, and strong interest in forms of social/public housing as well. 

Developers play a huge role in shaping urban economies. Yet they’re accountable to their investors, not to the communities where they build.

They are accountable in that building is highly regulated and overseen by many bodies of government and extensive public process.  Development requires large investment and risk-taking, and in the system current operating in the US, there are not other large capital sources for financing most housing. 

We might also ask, to whom are, say, homeowners or neighborhood associations opposing new housing, accountable? Are they accountable to the communities affected by their actions, such as neighboring areas and excluded residents? 


It’s not unreasonable for tenants being driven out by rising rents to challenge projects that benefit from the value of the neighborhood they once called home. In many of these projects, “market-rate” rents are far out of reach for the surrounding neighbors.

It's historically typical for new housing to be relatively expensive and become less so over time, for various reasons: 
1) development costs are amortized over a building's lifecycle, and are paid off for older buildings.
2) buildings generally age and lose amenities, and tend over time to decreasingly match residents' preferences in unit characteristics and sometimes location. 

Also, new housing units may be more expensive than existing ones around them, yet not raise the price/rents of existing ones. This may happen because new units absorb demand for housing in that area, which would otherwise bid up existing housing. See, e.g. San Francisco Controller's Office (/ city economist) study of the Mission District, finding such a dynamic there.  Conversely, it is often observed that areas with little or no new housing may increase greatly in price/rent: see e.g. recent WSJ discussion of Venice Beach, California; or many areas of Bay Area with little housing growth but large price increases (Pacific Heights, SF; Berkeley, 1975-2005; Oakland, 1975-2005). 


It is hardly an understatement to say that many of the luxury developments in formerly low-income neighborhoods fail to address any of the existing concerns of that community.

No doubt, some projects don't serve communities well. But should all market-rate developments therefore be opposed?  Also, YIMBY advocates want development to serve needs of existing communities, but believe new market-rate housing often can, e.g. by producing inclusionary housing and development-impact fees; by increasing density and thus related amenities like transit, pedestrian traffic, and local business support; by building local tax base; and by helping to create diverse, living neighborhoods with different types of residents and tenures. 

In a given situation, you'd have to consider the total effects of building or not building the project, and consider the positive economic impact (i.e. jobs) created by development, economic effect of new residents such as on sales tax and local business revenues, and tax revenues created by the new development.  Also, consider what effects may result from not building, such as excluded residents substituting other available housing in the area and displacing/excluding others of lower income; or moving into housing in other areas which may be of higher environmental impact because of being lower density, generating more vehicle trip miles, etc. 


many YIMBY groups are funded in part by developers and real estate interests.


Some, in part. But developers, real-estate interests, and other interest groups fund many other housing and community groups as well.  (cf. SFBARF resource linking to the backer lists for many SF organizations). 

Because an organization receives funding from some interest, it doesn't mean the org just advocates for that interest. It means there is some alignment. 

YIMBYs believe that many places have an urgent need to add more housing, and 'developers' are simply the people who, in our system, do that (including, generally, subsidized affordable housing such as inclusionary units or 100% BMR buildings). Therefore they are not inherently opposed to a community's interests, so it is not inherently suspect to receive funding from them. 

We might also say that existing local property owners and homeowners are, "real estate interests" in that they are directly and greatly concerned with the value of their property and any factors increasing or risking that; and this interest is not necessarily aligned with that of the larger community in, say, providing sufficient and affordable housing to all. 


The second, and more important, problem with YIMBYism is that it is based on an embrace of the speculative housing market. It assumes that the cause of the housing crisis is a dearth of supply, and that the market will address the crisis if restrictions are lifted. This may be true on a regional scale. But even then, the resulting drop in rents and home prices are not enough to bring housing within reach for most working people.


Fallacy pattern: if X doesn't solve the problem, it's wrong or shouldn't be done. Response: X may help the problem, or even be an indispensable part of helping it. 


In order for expanded supply to solve the crisis, land prices would have to be much lower than they are now, or the state would have to restrict the price of land. In the current market, land is extremely valuable in cities like Boston and San Francisco. That means the purchase price is high, and since construction costs are also high, rents must be through-the-roof if developers want to recoup their investment and make a profit.

YIMBY's don't generally claim that "expanded supply" in itself would solve the crisis, just that it is a necessary part of addressing it. 


The YIMBY narrative rests on an idea called filtering, which maintains that even luxury construction increases affordability: as new luxury units are built, wealthier residents move into the new housing stock instead of competing for existing lower-quality housing. ...this framework ignores the reality of today’s housing market. Existing housing is more likely to be turned into short-term rentals through Airbnb, flipped to a condo developer, or turned into a high-end rental than it is to be occupied by a low-income family.

Filtering is only one way that new housing may support affordability. New housing can also help by a) substitutability (aka fungibility), meaning that the occupants of a new unit would if that unit weren't built often substitute some existing local unit for the need, and rent/buy it instead, contributing to price increase and displacement;  b) adaptation - new housing often over times is adapted for different and lower-income use, e.g. by being subdivided or use for congregate / roommate shared housing. 


There is also strong evidence that rents in existing housing near new luxury housing rise more than rents in apartments that are not close to new luxury housing. As the Lincoln Institute of Land Policy outlines in a recent report: It might stand to reason that development of housing — any kind of housing—would lead to lower housing prices. In most urban areas, however, the opposite occurs. Construction of new residential real estate impacts the price or rent of existing homes in two different ways simultaneously. As the basic notion of supply and demand suggests, the addition of new units in a given market will inevitably put some downward pressure on the cost of existing units. But the larger effect tends to be upward pressure on housing costs because new homes are primarily built for higher-income residents . . . Modest price increases in a region can translate into very acute increases in specific neighborhoods. New development often comes with marketing campaigns that promote not just one building but the surrounding neighborhood, which can send rents soaring. As developers and real estate brokers attract the high-income residents who can afford the new development, those residents also demand higher-end retail, restaurants, and neighborhood services. The incoming retail can also pay higher rents, pushing out existing neighborhood businesses and lower-income residents.



The idea of filtering, as well as the premise that new construction will bring down rents, means little when housing can be, and often is, used as an investment. Boosting the number of housing units doesn’t necessarily mean people who need homes will get them. Increasingly, what we see in so-called “global cities” is a proliferation of housing as a global commodity, not a basic necessity.

Review evidence of impact on foreign investment, and units unoccupied. E.g. SPUR study on San Francisco; Vancouver, London. How significant a factor does it seem to be? 

Can we effectively stop or limit this investment pattern? (e.g. in Vancouver, within year after instituting foreign buyer tax, prices dropped but then surpassed previous highs. 

If outside investment helps create more housing units, this could be good if the units are occupied, i.e. rented out. To what extend does, or could, that happen?  E.g. most large multi-family developments has large 'outside' investors, outside the develop itself at least, which may be regional, national, international. 

To what extent may speculative investor interest in housing be a result of systematic housing undersupply, which has created long-term high valuation increase? 

Finally, YIMBYs commonly share an interest in counteracting speculative ownership / commodification of housing, and in measures such as land value or transfer tax, reforming mortgage-interest deduction and property cap-gains exemption. YIMBY's support available, affordable housing for all. 


As the Bay Area publication 48 Hills recently wrote: Developers build not to meet the market demand but to meet the demands of their investors. In San Francisco in the 1980s and 1990s, it was high-rise office space, not housing, that brought the highest returns to investors . . . Today, investment capital gets higher returns with luxury condos. So that’s what is getting built. It’s not NIMBYs, or Mayor Lee, or zoning policy that is driving the gold rush of housing for the very rich: its international speculative capital.



Mortgage lenders realized they could make more money selling subprime loans and defrauding home buyers than they could by ensuring homeowners long-term stability. As a result, many former homeowners have joined the renter nation, competing for an increasingly unaffordable rental-housing supply.



YIMBYs argue that zoning and other restrictions on development prevent the market from meeting people’s housing needs. But the housing market has never met the needs of the poor — in fact, while the latest housing crisis was caused by the mortgage market’s collapse, working people have been overpaying for substandard housing since at least the mid-nineteenth century, well before New York City pioneered zoning restrictions in 1916.



By advancing a narrative that privileges development (and developer profits) over non-market strategies and tenant power, YIMBYs provide cover and political support for politicians who want to be seen as progressive but don’t want to confront developers. 



At the end of the day, YIMBY/NIMBY is a false choice. We need to ask: what is being built in my backyard? Who benefits from that development? And who loses?

We also need to ask, compared to what other possible approaches? and, what is the effect of not building a given building? 



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