The Penny Drops: Evidence for Upzoning Benefits is Full of Holes

By Peter Dorfman

Ever since the beginning of the upzoning controversy in Bloomington, ideologues in the community and on the City Council have touted published research that purports to show eliminating single family zoning brings down housing costs. So-called “Supply Advocates” argue that allowing developers to densify core neighborhoods will eventually create enough new apartments to bring down Bloomington rents to workforce or affordable levels, through the magic of supply and demand. This is the basic logic of the YIMBY movement that began in California and has asserted itself in other areas of the country, including Bloomington.

Opponents of upzoning have expressed doubts about these claims, and dismissed the theory behind them as warmed over Reaganomics. Some of this is reflexive, a reaction to the well-documented and well-remembered vacuousness of the Republican supply side snakeoil of the 1980s. 

Bloomington’s YIMBYs have presented lengthy bibliographies to assure residents that the preponderance of objective science supports the supply side strategy — or at least gives the Mayor, his planners, the Plan Commission and the Council enough academic cover to claim legitimacy for their political project of tax revenue growth through densification.

But some upzoning critics have actually looked at the evidence and come away convinced there is at least as much peer-reviewed literature debunking supply side housing theory as there is supporting it, from academics at least as credible as those that Supply Advocates claim as their own.

Just last week, a post appeared on the online blog of the Brookings Institution — widely considered the nation’s leading progressive think tank — that provides insight into the strength of the Supply Advocates’ claims of data-supported credibility and the ideological fervor of their true believers. 

Columbia University Ph.D. student Jenna Davis, the author of “The double-edged sword of upzoning,” is just that — a true believer. She begins her post enumerating the various YIMBY articles of faith — that: 

  • Rising housing costs make “the need for zoning reform…more pressing than ever”; 
  • “Exclusionary zoning places artificial constraints on supply, exacerbates residential racial segregation, and contributes to rising housing costs”; 
  • “Exclusionary zoning practices are rooted in a deeply racist history”; 

and so on.

She is more than halfway through the post before she actually gets to the “double-edge sword.” That is, while YIMBY advocates push supply as a nostrum for housing affordability, opponents whom Davis identifies as “tenant advocates” argue that upzoning leads to “real estate speculation and gentrification, as landlords of upzoned buildings will be incentivized to sell their properties at inflated prices reflecting their added development potential.”

(Indeed, some of the loudest critics of the YIMBY movement nationwide have been tenants’ advocates, such as the LA Tenants Union — which makes it curious that upzoning advocates typically present themselves as defending the interests of renters.)

The tenant advocates’ critique should sound familiar to people who followed the upzoning debate in Bloomington, although critics here rarely referenced “gentrification” as the problem. Davis uses the term as a synonym for racial turnover — “using growth in the non-Hispanic white population as a proxy for gentrification.” 

Like many of Bloomington’s most strident upzoning advocates, Davis sees the impact of zoning rules, and the ostensible benefits of relaxing those rules, mainly in terms of expanding access to neighborhoods for people of color. The context for this formulation, and the reason for posting on the Brookings blog in the first place, is to introduce the findings of Davis’s own newly-published study in the journal ScienceDirect: “How do upzonings impact neighborhood demographic change? Examining the link between land use policy and gentrification in New York City” (April 2021).

Davis looked at several upzonings in New York City in the early 2000s to see what effect they had on the racial compositions of the affected neighborhoods. Remember, the whole point of upzoning is supposed to be to bring down rents by juicing the supply of housing, and therefore (because lower-income renters are assumed to be disproportionately people of color), the neighborhoods should see an influx of racially diverse tenants.

The actual result, as reported by Davis: “I find that upzoning activity is positively and significantly associated with the odds of a census tract becoming whiter, suggesting that upzonings might accelerate, rather than temper, gentrification pressures in the short-term.”

What is a YIMBY true believer to make of such an outcome? For Davis, the implication is obvious: “The answer is that scholars must conduct additional research on upzonings in order to better understand their effects.” In other words, go back to your labs and keep trying until your research produces the findings that support our theory.

In fact, Davis undertook her study to begin with because, despite Supply Advocates’ assurances that the relevant science overwhelmingly bolsters their position, she recognized that “minimal empirical work has examined the effects of upzonings on gentrification.” In her words, she did the research “to address this gap in the literature.”

This is hardly a surprise to those of us who have taken local densification advocates up on their repeated challenge to examine the literature for ourselves, and discovered that there is less there than meets the eye. 

Scroll back up to the first paragraph of Jenna Davis’s Brookings post, and you’ll find a link to a scholarly article that she says documents “how exclusionary zoning places artificial constraints on supply, exacerbates residential racial segregation, and contributes to rising housing costs.”

That article, it turns out, is not a report of original research, but a literature review, written by three professors from New York University’s Furman Center at the NYU School of Law. It takes a position: “We ultimately conclude, from both theory and empirical evidence, that adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families,” the authors write.

But the title — “Supply Skepticism: Housing Supply and Affordability” — is a dead giveaway of the article’s real intention.

Rather than add to the empirical knowledge that would bolster the reader’s understanding of how more housing equals greater affordability, the review is designed to arm upzoning advocates to rebut “Supply Skeptics,” a priority because “left unanswered, supply skepticism is likely to continue to feed local opposition to housing construction, and further increase the prevalence and intensity of land use regulations that limit construction.”

The authors devote 12 ½ pages to this objective before letting the penny drop: For all its seeming elegance and internal consistency, the Supply Advocates’ argument suffers from a lack of empirical data on a wide range of crucial facets, including how housing markets respond to changes in supply and how well various policy initiatives actually work in real life.

“Most fundamentally,” the authors allow, “the lack of good data on rents makes it difficult to assess how changes in housing supply affect rents (as opposed to home prices). It is critical that we find better ways to track rents so that researchers can rigorously analyze the effects that adding supply has on both the local neighborhood and on the jurisdiction and region.”

They also admit there is insufficient data on how “filtering” works — i.e., how market rate housing trickles down to become workforce or affordable housing as it gets older. “Skeptics rightly are wary because of the time the filtering process takes, and because high-end housing rarely filters down to become affordable to those with very low incomes,” the authors write.

They also note that data are scarce on whether upzoning drives gentrification or attracts out-of-town developers who are interested principally in building luxury housing, noting that published research on both of these concerns commonly raised by upzoning opponents is sketchy at best.

The paper ends by admitting that adding supply will never be sufficient to drive affordability by itself, stipulating that “policymakers should be frank that adding supply is unlikely ever to meet the housing needs of the very lowest income households in our communities, and will have to be paired with subsidies or other incentives or inclusionary zoning requirements.”

This last bit is especially relevant to the upzoning controversy in Bloomington, because while local advocates have sometimes admitted upzoning would be insufficient by itself, it has been the only initiative on offer. There has been no ongoing discussion in any city government context about housing subsidies. And additional remedies that Supply Advocates regularly admit are required for upzoning to have any real impact are unavailable to Bloomington’s planners and policy makers, because Bloomington is in Indiana, where state law prohibits cities from imposing restrictions like rent control or inclusionary zoning.  

Does any of this matter now? The upzoning controversy is effectively over; the City Council already has approved the UDO change allowing duplexes in formerly single family zoned neighborhoods. The ship has sailed, right?

Not entirely. Bloomington’s YIMBY advocates did not get everything they wanted and are likely to be back looking for still looser restrictions on development. They already have begun a campaign in the City Council to eliminate the three unrelated adult limit on occupancy of rentals. 

And in 2023, several who hold elected offices will be up for re-election. They will be trying once again to convince Democratic primary voters that the upzoning they brought about here is supported by the overwhelming preponderance of scientific evidence, and that primary opponents who criticize densification are pandering to anti-expert populism and “fear of change.”

The election is still a year and a half away, and there is still time to set the Mayor and Council straight about the credibility of their claims to monolithic scientific support for supply side housing policy. It’s an illusion. Or a con.

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