Why Do So Many Affordable-Housing Advocates Reject the Law of Supply and Demand?


Why Do So Many Affordable-Housing Advocates Reject the Law of Supply and Demand?

2018-09-19T14:10:29+00:00September 19th, 2018|Advocacy, Local Updates|

“Housing prices are famously out of control in many cities — the average studio apartment in San Francisco goes for nearly $2,500 a month, more than $2,900 in Manhattan. This trend has inspired a movement called “YIMBY,” for “Yes in My Back Yard.”

YIMBYs push for reductions on zoning restrictions to increase the supply of housing, reasoning that all new housing, market-rate as well as subsidized, helps to keep housing prices under control.

“We should build more housing in every neighborhood — especially high-income neighborhoods,” reads the mission statement of the YIMBY Party, based in San Francisco. “… Increasing supply will lower prices for all and expand the number of people who can live in the Bay Area.”

The YIMBY movement has become popular enough to win some bipartisan support: Housing and Urban Development Secretary Ben Carson endorsed on Twitter a pro-YIMBY column by Bloomberg’s Noah Smith.

To some people, the YIMBY platform will sound painfully obvious. But YIMBYs face enormous opposition from self-styled progressives who flatly dismiss the idea that adding new market-rate housing to a city will improve housing affordability. Sometimes these activists go even further and argue that adding market-rate housing to cities actively hurts the poor (on the grounds that expensive apartments attract wealthier residents who bid up rents). Such activists will fiercely oppose even new market-rate buildings that include subsidized units.

They end up allying themselves with NIMBY (“Not in My Back Yard”) homeowners who oppose all new construction in their neighborhoods. Working together, the two groups help choke off new construction that could ease housing prices.

Call this attitude “Left NIMBYism.” Left NIMBYism not only flatly contradicts the logic of supply and demand but also flies in the face of empirical studies of what happens when cities see new construction. In its stubborn rejection of empirical reality, the Left NIMBYist view of housing markets shares characteristics of ideologically motivated refusals to accept evidence in other contexts, such as climate change or the safety of vaccines.

Four authors for the Coalition for Community Advancement flatly asserted in 2016 that market-rate housing had no role to play in the policy discussion over housing affordability. Under a headline that said “Supply is not the Solution,” they wrote: “The only increase in housing supply that will help to alleviate New York’s affordable housing crisis is housing that is truly affordable to low-income and working-class people.” Bizarrely, the group was arguing against a plan to build 6,500 new apartments, of which fully half would go for below-market rents. The Los Angeles chapter of the Democratic Socialists of America put that idea more bluntly: “New housing is built at the high end of the market not to bring working-class people of color in, but to shut them out.”

The logic underlying those sorts of statements is remarkably flimsy. Attributing rent increases to new market-rate housing is like attributing rainstorms to umbrellas. High demand for housing is driven by jobs that attract newcomers who bid up rents. New construction follows along. If new market-rate housing is not built, then wealthier-than-average people will just place higher bids on existing units, thereby preventing “filtering.”

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