Wow, you wrote a whole lot of words just to ignore the obvious. It's ENTIRELY possible for both to be true - it just depends on what the nature of the neighborhood is pre-new-project(s), and what the nature of the new project is. To cite just one example, in a good-sized neighborhood with both single-family and apartment building housing types, a project that replaces single family housing - especially one that puts apartment buildings on blocks that previously didn't have any - and even more especially on blocks that did not previously have any for several blocks around - WILL depress the future value of the single family homes. Period. Not even debatable. AND, if there is a sufficient amount of such development to fundamentally change the nature of the neighborhood into a more desirable place for apartment dwellers - "gentrification" - it will ALSO raise the rents for the existing apartments. Sorry, but this is just how real estate works in the real world that us real people have to inhabit.
If this is really hard for you to understand - i.e., you're not just posturing here, but really believe what you're writing - then, think of it this way: The two people in the quotes at the top of the article can BOTH be right because, more often than not, they are talking about different SEGMENTS of the housing market in that neighborhood. They may well break down into the categories you cite - after all, homeowners of well established single family homes in a nice-enough neighborhood (lets say an outer urban or inner-ring suburban 'hood originally built in the early 50's), and renters in older rental property in the same neighborhood, are likely to be members of different demographics on more axes than one. But that doesn't mean their arguments cannot be right - either individually or both at the the same time. Very, very often, at least one of them is right, and I am personally aware of quite a few cases where both are correct simultaneously.
Development, and even more so, redevelopment can be hyperlocal issues with real winners and real losers - and the losers frequently end up being losers through nothing they DID (unless you count NOT getting out of a changing neighborhood, "in time", that once suited them, but no longer does). These issues deserved open-eyed public discussion. Shouting "NIMBY!" and "YIMBY!" at each other, fingers pointed, is rarely helpful, and that's pretty much what your article promotes...
1.) I agree with this "The two people in the quotes at the top of the article can BOTH be right because, more often than not, they are talking about different SEGMENTS of the housing market in that neighborhood."
I explain in the essay that expanding the supply of housing can raise rents or lower property values depending on context. But if we're talking about the same building proposal in the same zoning meeting, it can't do both. Property value is what you can rent it for so if a building increases amenities enough to raise rents then it raises property values and vice versa.
2.) There is a descriptive vs prescriptive divide which I am not explicit about in the essay. At the end I say that "Neither of them are correct" and I should be more clear that I mean they aren't right to oppose housing deregulation since it raises total welfare. One of them has to be right as to whether it will descriptively raise or lower property values.
I think you are still missing an important distinction. When folks speak about real estate values at a public meeting on some new project, they are rarely, if ever, complaining that the project will lower the value OF THE LOT BEING (RE)DEVELOPED. If a citizen speaks of lower property values, he is concerned that the new development will lower the value of HIS real estate, not the lot being developed. It kind of goes without saying that the developer (unless he is a really inept one, not long for that career), is raising at least the short-term market value of his own lot via the project. Likewise, the renter who complains that the new development will gentrify the area and drive him out of his rented apartment is not complaining about the effect of the project on ITS OWN LOT, but its projected effect on him as a member of the community. So, "the same building proposal in the same zoning meeting" CAN do both - raise one renter's rent in the near future, AND lower a nearby homeowner's home value. It is not even difficult, or rare, for it to do both. Yes, if rents go up, the property value of the other apartment buildings in the area, including that of the renter-speaker at the meeting, goes up. But that does not mean that the property value of single family homes in the area will go up. They may well go down, depending on circumstances. We have to get deep into the weeds to discuss what those circumstances might be, but to give just one example, again, if the project in question is altering the nature of a sizable block of single family homes, and the zoning for the rest of that block remains single family only (say, it was changed only for the corner lots, or only for the main street down the center of said block of homes), yes, the values of the remaining homes can and often does go DOWN, especially if one is comparing to a similar area that is not being similarly changed, rather than comparing value in that neighborhood alone over time (in other words, values may still go up, but go up much less than "comparables" nearby. And this, too, is loss in value.)
As to your last point, "...I mean they aren't right to oppose housing deregulation since it raises total welfare."... my response is... "Does it?" Determining that is kind of why we HAVE public involvement in a democratic republic. Your idea of what constitutes total welfare may well differ from mine. I don't think either of us would be "not right" to argue from our own sense of what is good for the community. I think it's rather breathtaking that you are so certain of what provides "total welfare" that you would declare public involvement from someone who has different hopes and dreams from your own to be "not right" to oppose a project.
You are misunderstanding the point of Max's article. The point is not to posit a hypothetical development proposal that some people believe raises nearby values and others believe lowers them, and then use this to say "both can't be true, thus we should ignore both NIMBYs"
The point is to dissect the different camps within NIMBYism, which as you point out (and Max already observed in the article!) includes renters who might suffer higher prices and homeowners who might suffer lower home values. So you've just spent hundreds of words articulating something that Max already pointed out!
In the future, it may be worth re-reading an article before replying
That's an excellent question! Especially since it DOES seem paradoxical at first blush.
Like so much else in economics, it comes back to the interaction of supply and demand. There are people (and, when I bought my current Minneapolis home over 30 years ago, I was one of them...) who really like the idea of an established neighborhood (i.e. - the houses are not even close to "new"), that is made up of lots large enough to have a nice yard for the kids, and the entire neighborhood is single family homes. Think "what (hopefully) happens to a suburban housing development when it 'grows up'". I grew up in the Chicago area - both in the city proper, and later, in an outer-ring suburb. There, what existed of these kinds of neighborhoods I like, by the '80's, were almost all in the first-ring suburbs. I had never actually lived in one. But in Minneapolis in the 80's-90's (and still today) one can find such neighborhoods IN the city proper, which makes them even more attractive to some potential buyers. Also, they are a limited commodity. You can't just build a new one - part of the charm is in the age, the vintage architecture, the proximity to downtown, etc. So the supply of such places only goes down over time, as real estate is "re-developed". That means that if the one you are living in is preserved, it remains a part of a diminishing resource that those who want that kind of housing are bidding for. But if it is the area YOU are living in that is changed into something other than what I just described, then those who want that are bidding over OTHER properties, and yours, while still nice, is not AS in-demand as before. Since the value of a property is what you can actually convince a buyer to pay, the value has either gone down, or at least has not kept pace with the rise in value of a once-comparable property in an area that HAS been so-preserved.
Now, you didn't ask, but I will: Is that "bad"? Does is lower 'total welfare" to elevate the value of some properties and lower the value of others, all in the same area? Not actually being a NIMBY of either of Mr. Tabarrok's classes, I'll be the first to say "No!" There are SO many other factors to consider that contribute to "total welfare" of a community. My objection was not to any such assertion, but only to Mr. Tabarrok's analysis, which relied entirely on real estate value alone - in his original essay, to the values of individual properties, and, in his response to my first note (as I understand it) to the TOTAL value of ALL the properties in a given area. Both analyses are simply incorrect on economic grounds. Again, the same new development CAN cause one existing other property in an area to increase in value; and another, simultaneously, to decrease in value; and, in some cases, this can result even in the summed values for an entire area to decline (or increase! ...either is possible). And, again, to be clear - A VALUE DECREASE IS NOT NECESSARILY BAD, because there are so many other factors that enter into the concept of "welfare" than just economic value in the short term (especially since values can, and almost certainly will, change over time going forward for both related and unrelated reasons). But, if one is going to make an argument on economic 'values' alone, it pays to actually get the economics right, and Mr. Tabarrok's original analysis, and his amended version, are simply in error. This is also why I've chosen not to reply substantively to the comments of Kartik, who appears challenged in one, or each, of two areas - reading comprehension and/or reasoning, having mis-read and/or mis-interpreted each of Mr. Tabarrok's entries in this thread as well as each of mine. I cannot find anything in his entries to respond to.
I still don’t understand- wouldn’t my house retain value because of the potential for redevelopment? After all, if you can build an apartment building next door to my house, you could swap out my house for an apartment building too
Yes, if that is the way that the local zoning, and the proposed project, are set up. The scenario I described, though, is not that - and is not that uncommon a scenario, either.
Consider a zoning change in an all-single-family-homes area that allows for new large apartment buildings ONLY on the corner lots. Then, if you own a home in the middle of a block, on a sidestreet, you are NOT sitting on a lot that is a candidate for redevelopment, but your neighborhood gets changed in a way that some potential buyers will find unattractive.
Even more common is the scenario in which the zoning is not changed, but the reason there is a public input meeting is that a developer has applied for a variance to zoning, which must be approved by some elected or appointed body. Then, if the variance is granted, the developer can do his project, but NO ONE else in the area is sitting on a lot that they could redevelop or sell to someone else for that purpose.
Of course you have the right to oppose more housing construction, and other people have the right to advocate for more housing construction, and the balance of political forces will determine what will happen, and that is in fact what is happening.
Now, obviously, YIMBYs won't just accept NIMBYs dominance of local politics, they will go to the state government, which has a broader view of the public interest because they have to worry about the state economy, and lobby there for localities to be forced to allow for more housing construction. YIMBYs are completely within their rights to do this. If, as a NINBY, you don't like this, you will have the option to vote for different politicians at the state level.
Regarding total welfare, I think a comparison between California and Texas makes it difficult to argue that housing restriction is good for your economy or home affordability. To the extent that NINBYs are concerned about safety/crime and traffic congestion, I think these are completely legitimate concerns, but rather than using their political capital to advocate for housing restrictions, which has general welfare losses, they should use their political capital to advocate for more police/longer prison sentences and for more public transportation, things that have general welfare gains.
Well, it's true though. Perhaps not the length of any particular sentence, but more incarceration leads to less crime, which has overall welfare gains.
Wow, you wrote a whole lot of words just to ignore the obvious. It's ENTIRELY possible for both to be true - it just depends on what the nature of the neighborhood is pre-new-project(s), and what the nature of the new project is. To cite just one example, in a good-sized neighborhood with both single-family and apartment building housing types, a project that replaces single family housing - especially one that puts apartment buildings on blocks that previously didn't have any - and even more especially on blocks that did not previously have any for several blocks around - WILL depress the future value of the single family homes. Period. Not even debatable. AND, if there is a sufficient amount of such development to fundamentally change the nature of the neighborhood into a more desirable place for apartment dwellers - "gentrification" - it will ALSO raise the rents for the existing apartments. Sorry, but this is just how real estate works in the real world that us real people have to inhabit.
If this is really hard for you to understand - i.e., you're not just posturing here, but really believe what you're writing - then, think of it this way: The two people in the quotes at the top of the article can BOTH be right because, more often than not, they are talking about different SEGMENTS of the housing market in that neighborhood. They may well break down into the categories you cite - after all, homeowners of well established single family homes in a nice-enough neighborhood (lets say an outer urban or inner-ring suburban 'hood originally built in the early 50's), and renters in older rental property in the same neighborhood, are likely to be members of different demographics on more axes than one. But that doesn't mean their arguments cannot be right - either individually or both at the the same time. Very, very often, at least one of them is right, and I am personally aware of quite a few cases where both are correct simultaneously.
Development, and even more so, redevelopment can be hyperlocal issues with real winners and real losers - and the losers frequently end up being losers through nothing they DID (unless you count NOT getting out of a changing neighborhood, "in time", that once suited them, but no longer does). These issues deserved open-eyed public discussion. Shouting "NIMBY!" and "YIMBY!" at each other, fingers pointed, is rarely helpful, and that's pretty much what your article promotes...
Two responses:
1.) I agree with this "The two people in the quotes at the top of the article can BOTH be right because, more often than not, they are talking about different SEGMENTS of the housing market in that neighborhood."
I explain in the essay that expanding the supply of housing can raise rents or lower property values depending on context. But if we're talking about the same building proposal in the same zoning meeting, it can't do both. Property value is what you can rent it for so if a building increases amenities enough to raise rents then it raises property values and vice versa.
2.) There is a descriptive vs prescriptive divide which I am not explicit about in the essay. At the end I say that "Neither of them are correct" and I should be more clear that I mean they aren't right to oppose housing deregulation since it raises total welfare. One of them has to be right as to whether it will descriptively raise or lower property values.
I think you are still missing an important distinction. When folks speak about real estate values at a public meeting on some new project, they are rarely, if ever, complaining that the project will lower the value OF THE LOT BEING (RE)DEVELOPED. If a citizen speaks of lower property values, he is concerned that the new development will lower the value of HIS real estate, not the lot being developed. It kind of goes without saying that the developer (unless he is a really inept one, not long for that career), is raising at least the short-term market value of his own lot via the project. Likewise, the renter who complains that the new development will gentrify the area and drive him out of his rented apartment is not complaining about the effect of the project on ITS OWN LOT, but its projected effect on him as a member of the community. So, "the same building proposal in the same zoning meeting" CAN do both - raise one renter's rent in the near future, AND lower a nearby homeowner's home value. It is not even difficult, or rare, for it to do both. Yes, if rents go up, the property value of the other apartment buildings in the area, including that of the renter-speaker at the meeting, goes up. But that does not mean that the property value of single family homes in the area will go up. They may well go down, depending on circumstances. We have to get deep into the weeds to discuss what those circumstances might be, but to give just one example, again, if the project in question is altering the nature of a sizable block of single family homes, and the zoning for the rest of that block remains single family only (say, it was changed only for the corner lots, or only for the main street down the center of said block of homes), yes, the values of the remaining homes can and often does go DOWN, especially if one is comparing to a similar area that is not being similarly changed, rather than comparing value in that neighborhood alone over time (in other words, values may still go up, but go up much less than "comparables" nearby. And this, too, is loss in value.)
As to your last point, "...I mean they aren't right to oppose housing deregulation since it raises total welfare."... my response is... "Does it?" Determining that is kind of why we HAVE public involvement in a democratic republic. Your idea of what constitutes total welfare may well differ from mine. I don't think either of us would be "not right" to argue from our own sense of what is good for the community. I think it's rather breathtaking that you are so certain of what provides "total welfare" that you would declare public involvement from someone who has different hopes and dreams from your own to be "not right" to oppose a project.
THE MYTH OF "CONSENSUAL" HOUSING
👷♂️Developer willing to build housing: "I consent!"
🧍Person looking to live in said housing: "I consent!"
Isn't there somebody you forgot to ask?
🤬 Jim Klein: "I don't!"
I guess you are right, we should get your "democratic" approval before giving someone a place to live 👍 "Breathtaking" to suggest otherwise
You are misunderstanding the point of Max's article. The point is not to posit a hypothetical development proposal that some people believe raises nearby values and others believe lowers them, and then use this to say "both can't be true, thus we should ignore both NIMBYs"
The point is to dissect the different camps within NIMBYism, which as you point out (and Max already observed in the article!) includes renters who might suffer higher prices and homeowners who might suffer lower home values. So you've just spent hundreds of words articulating something that Max already pointed out!
In the future, it may be worth re-reading an article before replying
But how does the apartment building make the value of my house go down?
That's an excellent question! Especially since it DOES seem paradoxical at first blush.
Like so much else in economics, it comes back to the interaction of supply and demand. There are people (and, when I bought my current Minneapolis home over 30 years ago, I was one of them...) who really like the idea of an established neighborhood (i.e. - the houses are not even close to "new"), that is made up of lots large enough to have a nice yard for the kids, and the entire neighborhood is single family homes. Think "what (hopefully) happens to a suburban housing development when it 'grows up'". I grew up in the Chicago area - both in the city proper, and later, in an outer-ring suburb. There, what existed of these kinds of neighborhoods I like, by the '80's, were almost all in the first-ring suburbs. I had never actually lived in one. But in Minneapolis in the 80's-90's (and still today) one can find such neighborhoods IN the city proper, which makes them even more attractive to some potential buyers. Also, they are a limited commodity. You can't just build a new one - part of the charm is in the age, the vintage architecture, the proximity to downtown, etc. So the supply of such places only goes down over time, as real estate is "re-developed". That means that if the one you are living in is preserved, it remains a part of a diminishing resource that those who want that kind of housing are bidding for. But if it is the area YOU are living in that is changed into something other than what I just described, then those who want that are bidding over OTHER properties, and yours, while still nice, is not AS in-demand as before. Since the value of a property is what you can actually convince a buyer to pay, the value has either gone down, or at least has not kept pace with the rise in value of a once-comparable property in an area that HAS been so-preserved.
Now, you didn't ask, but I will: Is that "bad"? Does is lower 'total welfare" to elevate the value of some properties and lower the value of others, all in the same area? Not actually being a NIMBY of either of Mr. Tabarrok's classes, I'll be the first to say "No!" There are SO many other factors to consider that contribute to "total welfare" of a community. My objection was not to any such assertion, but only to Mr. Tabarrok's analysis, which relied entirely on real estate value alone - in his original essay, to the values of individual properties, and, in his response to my first note (as I understand it) to the TOTAL value of ALL the properties in a given area. Both analyses are simply incorrect on economic grounds. Again, the same new development CAN cause one existing other property in an area to increase in value; and another, simultaneously, to decrease in value; and, in some cases, this can result even in the summed values for an entire area to decline (or increase! ...either is possible). And, again, to be clear - A VALUE DECREASE IS NOT NECESSARILY BAD, because there are so many other factors that enter into the concept of "welfare" than just economic value in the short term (especially since values can, and almost certainly will, change over time going forward for both related and unrelated reasons). But, if one is going to make an argument on economic 'values' alone, it pays to actually get the economics right, and Mr. Tabarrok's original analysis, and his amended version, are simply in error. This is also why I've chosen not to reply substantively to the comments of Kartik, who appears challenged in one, or each, of two areas - reading comprehension and/or reasoning, having mis-read and/or mis-interpreted each of Mr. Tabarrok's entries in this thread as well as each of mine. I cannot find anything in his entries to respond to.
I still don’t understand- wouldn’t my house retain value because of the potential for redevelopment? After all, if you can build an apartment building next door to my house, you could swap out my house for an apartment building too
Yes, if that is the way that the local zoning, and the proposed project, are set up. The scenario I described, though, is not that - and is not that uncommon a scenario, either.
Consider a zoning change in an all-single-family-homes area that allows for new large apartment buildings ONLY on the corner lots. Then, if you own a home in the middle of a block, on a sidestreet, you are NOT sitting on a lot that is a candidate for redevelopment, but your neighborhood gets changed in a way that some potential buyers will find unattractive.
Even more common is the scenario in which the zoning is not changed, but the reason there is a public input meeting is that a developer has applied for a variance to zoning, which must be approved by some elected or appointed body. Then, if the variance is granted, the developer can do his project, but NO ONE else in the area is sitting on a lot that they could redevelop or sell to someone else for that purpose.
Of course you have the right to oppose more housing construction, and other people have the right to advocate for more housing construction, and the balance of political forces will determine what will happen, and that is in fact what is happening.
Now, obviously, YIMBYs won't just accept NIMBYs dominance of local politics, they will go to the state government, which has a broader view of the public interest because they have to worry about the state economy, and lobby there for localities to be forced to allow for more housing construction. YIMBYs are completely within their rights to do this. If, as a NINBY, you don't like this, you will have the option to vote for different politicians at the state level.
Regarding total welfare, I think a comparison between California and Texas makes it difficult to argue that housing restriction is good for your economy or home affordability. To the extent that NINBYs are concerned about safety/crime and traffic congestion, I think these are completely legitimate concerns, but rather than using their political capital to advocate for housing restrictions, which has general welfare losses, they should use their political capital to advocate for more police/longer prison sentences and for more public transportation, things that have general welfare gains.
You had me until "longer prison sentences" = "general welfare gains"
Well, it's true though. Perhaps not the length of any particular sentence, but more incarceration leads to less crime, which has overall welfare gains.
But keeping someone in prison denies any chance of reintegrating and contributing productively to the economy, so there's a tradeoff. It's not clear to me that the US has too *low* sentence lengths (https://marginalrevolution.com/marginalrevolution/2015/09/what-was-gary-beckers-biggest-mistake.html)