Left-NIMBYism and COVID-19 — Blogs

When I think of Not In My Back Yard (NIMBY) oppo­si­tion to new hous­ing, I used to think of con­ser­v­a­tive sub­ur­ban home­own­ers, who believed that new hous­ing would low­er their prop­er­ty val­ues. But in New York and oth­er left-lean­ing cities, NIM­BY­ism has mutat­ed: rather than claim­ing that new hous­ing low­ers prop­er­ty val­ues, some pro­gres­sives argue that the laws of sup­ply and demand become invert­ed in cities. The law of sup­ply and demand sug­gests that a sig­nif­i­cant increase in hous­ing sup­ply low­ers rents—but left-NIM­BYs claim that new pri­vate hous­ing actu­al­ly makes hous­ing more expen­sive, by mak­ing urban neigh­bor­hoods more appeal­ing or by increas­ing land prices. Instead of sup­port­ing both pub­lic and pri­vate devel­op­ment, these pro­gres­sives argue that only gov­ern­ment-sub­si­dized “afford­able” hous­ing should be encour­aged, and that mar­ket-rate hous­ing should be made more dif­fi­cult to build.

I have already crit­i­cized some of these argu­ments in oth­er arti­cles.* The pur­pose of this post is to ask: does COVID-19 change any­thing? 

In par­tic­u­lar, it seems to me that demand for hous­ing in parts of New York City seems to have decreased sig­nif­i­cant­ly. Last spring, about 5 per­cent of New York­ers left the city at least temporarily—mostly res­i­dents of the city’s rich­est neigh­bor­hoods. By a strange coin­ci­dence, this was fol­lowed by a sig­nif­i­cant decline in rents in parts of the city—especially well-off areas near the city’s major dis­tricts (down­town and mid­town Man­hat­tan). For exam­ple, last spring I agreed to pay $3550 for a one-bed­room apart­ment in Mid­town; today, one-bed­room apart­ments in my build­ing rent for as lit­tle as $2800. My build­ing is not unique; in Man­hat­tan gen­er­al­ly, medi­an ask­ing rents have decreased by over 20 per­cent ( $3500 in Decem­ber 2019 to under $2800 in Decem­ber 2020). 

A log­i­cal expla­na­tion of this change is that because of the fear of COVID-19 infec­tion, many work­ers have (like me) began to work from home. Peo­ple who work from home have no rea­son to live near the office when could pay low­er rents some­where else. And because a dis­pro­por­tion­ate share of office jobs are in Man­hat­tan, demand for Man­hat­tan apart­ments has decreased the most, caus­ing rents to go down.

Thus, the law of sup­ply and demand works as most econ­o­mists might expect, and the core claim of left-NIM­BY­ism (sup­ply-and-demand denial­ism) has been debunked. Con­verse­ly, rents have not fall­en so rapid­ly in areas far from busi­ness dis­tricts: in Stat­en Island, rents actu­al­ly increased in 2020.

Oppo­si­tion to new hous­ing is not dri­ven just by an abstract fear of high­er rents, but a more spe­cif­ic fear of gen­tri­fi­ca­tion: some fear that new hous­ing will lead to an influx of afflu­ent renters, which in turn will lead to dis­place­ment of less afflu­ent city res­i­dents. As I have writ­ten some years ago, the extent of gen­tri­fi­ca­tion may have been exag­ger­at­ed by the press: even expen­sive cities like New York are far more pover­ty-rid­den than their sub­urbs. But even if I was wrong then, rent trends sug­gest that over the past year, middle—and upper-class peo­ple have been leav­ing expen­sive cities rather than gen­tri­fy­ing them—so con­cerns about gen­tri­fi­ca­tion and dis­place­ment are no longer real­is­tic, at least for the time being. (On the oth­er hand, it is unclear how sig­nif­i­cant or long-last­ing this trend is.)

Anoth­er pil­lar of left-NIM­BY­ism is that there is no need for mar­kets to pro­vide new hous­ing, because gov­ern­ment should and will step in. Because even a mas­sive reduc­tion in mar­ket rents will not help the poor­est New York­ers, I think more pub­lic hous­ing would be a fine idea. How­ev­er, I am less opti­mistic about this than I was a year ago, for the rea­son that state and local gov­ern­ments have far less mon­ey to throw around; for exam­ple, New York has a $15 bil­lion short­fall. Because of COVID-19, unem­ploy­ment has increased, caus­ing a decrease in tax rev­enues of most (if not all types). And if there real­ly is an upper-class exo­dus from cities like New York, tax bases will con­tin­ue to dwin­dle even more. The fed­er­al gov­ern­ment has been sym­pa­thet­ic this year—but aid to state and local gov­ern­ments is far less pop­u­lar than oth­er social pro­grams. For exam­ple, Sen­ate Repub­li­cans have been eager to sup­port direct aid to , but have been far less inter­est­ed in sup­port­ing state and local gov­ern­ments. Thus, it seems unlike­ly that the fed­er­al gov­ern­ment can be count­ed on for long-term aid.

In sum, the three pil­lars of pro­gres­sive NIM­BY­ism are 1) the law of sup­ply and demand does not apply to urban hous­ing; 2) because gen­tri­fi­ca­tion is run­ning wild; and 3) a mas­sive invest­ment in pub­lic hous­ing is a polit­i­cal­ly prac­ti­cal alter­na­tive to mar­ket-rate hous­ing. All of these pil­lars even less con­nect­ed to now than they did before COVID-19. 

*See for exam­ple, this arti­cle, this arti­cle and this arti­cle, as well as blog here and here. In addi­tion, quite a bit of eco­nom­ics schol­ar­ship sup­ports the idea that new hous­ing low­ers rents—such as this and this paper.

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