The Urbanist Musings of Pete Saunders

Notes From An Upzoning Heretic

A couple nights ago, I once again got into a discussion on Twitter about the soundness of upzoning, or the increase in the allowance of residential units in cities, as a rational and reasonable response to the lack of affordable housing in our nation’s large cities.  Anyone who’s been reading this site for some time knows that I’ve disagreed with this for quite some time, and tried many ways to articulate my views and reach some understanding.  As of last night I learned two things: 1) Twitter is a really poor vehicle for debate when nuance is critical (OK, I really knew that already), and 2) the orthodoxy of the upzoners is so strong that my views on this might put me on the pariah end of the urbanism spectrum.

It started innocently enough.  Ramsin Canon suggested upzoning major streets in Chicago for more residential units.  That brought several supporters, including City Observatory writer and fellow Chicago blogger Daniel Kay Hertz, who (gracefully, I might add) noted my objections.  I then chimed in, and shortly thereafter I found myself swimming against the tide of upzoners hoping to prove that upzoning helps improve housing affordability.

Look, upzoners, I understand the problem and the sentiment.  I understand the desire to find the right policy response to address the issue.  But I remain unconvinced that upzoning will help any more than a handful of American cities.  Here’s why.

An Abstract Argument

Surely a big part of the appeal of upzoning is its abstract simplicity.  Increasing the supply of housing units in extremely tight housing markets can unleash market forces that drive home prices and rents downward, making cities more affordable to affluent and poor alike.  And in housing markets that have an almost even distribution of high priced housing within them, like San Francisco or New York, this makes sense.  Allowing more units will have the effect of bringing prices down.  (I’d also add parenthetically that the tightest and most expensive housing markets nationally also tend to be the most geographically constrained, by either water or mountains, and that constraint does not hold for all cities nationwide.  This escapes many people.)

The reality, however, is that nationally gentrification is just a pittance compared to the expansion of urban poverty.  As Carol Coletta of the Knight Foundation put it in a speech last month at the Congress of the New Urbanism:

“In 1970, about eleven hundred urban Census tracts were classified as high poverty.

By 2010—40 years later—the number of high poverty Census tracts in urban America had increased from 1100 to more than 3,000. (3165)

The number of people living in those high poverty Census tracts had increased from 5 million to almost 11 million. And the number of poor people in high poverty Census tracts had increased from 2 million to more than 4 million.

So over a 40-year period, the number of high poverty Census tracts in America’s core cities had tripled, their population had doubled, and the number of poor people in those neighborhoods had doubled.

Given that record, I’ll bet a lot of people are hoping for a little gentrification– if gentrification means new investment, new housing, new shops without displacement.
The idea that places might benefit from gentrification runs against the popular narrative. But here’s the really startling fact: only 105 of the eleven hundred Census tracts that were high poverty in 1970 had rebounded to below poverty status by 2010. That’s only ten percent! Over 40 years!”

Most American cities are not like San Francisco or New York, where the high prices and rents cannot be avoided and the return-to-the-city demand remains very high.  Most cities have greater variance in prices and rents, from very high to very low.  This takes away the first layer of abstraction for prices and rents and allows those with money to rationally widen their consideration when choosing to live in cities.  On the surface this sounds great.

But — and this is where the second layer of abstraction is shed — people don’t make housing decisions or neighborhood decisions rationally.  They take in all sorts of information and put it to subjective use, and justify its rationality later.  Historical perceptions of neighborhoods linger far longer than their reality.  Media perceptions can distort the reality of neighborhoods.  Egos can get involved and people select neighborhoods that have a certain cache or brand.  For urban neighborhoods in most cities, we find that affluence clusters in certain areas and moves outward slowly.  Poverty expands quickly, as those who have the ability to escape it do so, and further destabilize a neighborhood in the process.  The end result, again for cities that do not have the same strong return-to-the-city demand or the uniformly high home prices and rents, is affluent enclaves surrounded by expansive and increasingly impoverished neighborhoods.

Upzoning can accelerate this process.  If a major city undergoes an upzoning process and allows a substantial increase in the number of housing units, what do you think the development community’s response to that will be?  My guess is that they will work hard to fulfill the market demand where the demand is strongest — in the most desirable neighborhoods or in the areas immediately adjacent to them.  Only after that demand is tapped out will developers move into other areas, and most will elect to build in areas that are adjacent to the newly saturated neighborhood.  Those who live in the path of development will see prices and rents remain high; those away from the path of development will likely see  prices and rents crater, and lament the lack of investment in their community.

The Need for Investment

TAt one point in the Twitter discussion.  Daniel Kay Hertz asked me, “Would there be more or fewer Latinos in Logan Square if there was more new housing in Lincoln Park?”  For non-Chicagoans, Logan Square is the rapidly gentrifying neighborhood immediately west of the quite-gentrified Lincoln Park neighborhood on the lakefront.  My response was that Logan Square would indeed have more Latinos in that scenario and that it would have no discernible impact on other neighborhoods outside of the “hot zone” as well.  But that sets up the scenario I cite above — an affluent neighborhood next to an eternally poor/working class one, possibly lamenting the lack of investment in their midst.  And the further one’s home or neighborhood is from the “hot zone”, the more that lament turns into angst, frustration and resentment.

It’s worth bringing back a portion of the quote above from Carol Coletta:

Given that record, I’ll bet a lot of people are hoping for a little gentrification– if gentrification means new investment, new housing, new shops without displacement.The idea that places might benefit from gentrification runs against the popular narrative.

Despite the growing problems of affordability in select neighborhoods in major cities across the nation, there are many more neighborhoods that wish they had that problem.  Many people rue the fact that maybe one-quarter or one-third of a city is priced beyond their means.  That leaves two-thirds to three-quarters of a city to explore and find a place worthy of investment.  Upzoning can have the impact of further concentrating development within the “hot zone” and drive a deeper inequality wedge between urban haves and have-nots.

Upzoners are not doing cities a favor more broadly by addressing an issue that helps them directly.

Ultimately I see high prices and rents as being demand-driven and not supply-driven.  Prices and rents are high because there are too many people focusing on too few neighborhoods — and squandering the opportunity to take some of that investment to other neighborhoods that could use it.

9 Responses to “Notes From An Upzoning Heretic”

  1. Alex Cecchini

    I've been thinking this for a while as well, but I'm still somewhat torn. I think you're right that for most American cities, there are a handful of neighborhoods that have unique amenities – great riverfront views, access to lakes (ex. Minneapolis), enough of a historic district that draws people in for the architecture, or even man-made positives like a legacy (or new) transit line with really quick access to a job center or a great bike trail (Midtown Greenway in Mpls), or the job center itself may be enough. These places never saw the decline of other urban neighborhoods in the 60s-80s, and while you could maybe have afforded an apartment or home as a lower-to-middle income person a decade or more ago, prices are now skyrocketing. All while literally a mile or so in most directions you don't see the same phenomenon. However, and maybe Minneapolis is less like other cities, but prices are actually getting out of hand for single family homes in most of the city, not just the areas in SW (where most of the lakes and historic wealth is). The only major area where this isn't the case is North Minneapolis. Maybe that's because Minneapolis is relatively small geographically for its region compared to other core cities, but if you combine Mpls + St Paul that trend is still largely true.In any case, I think there's still a good argument that \”up-zoning\” in those areas of the city lacking or wanting investment is still a good idea. This doesn't have to be major steps in the zoning code, but easy simple things. Reducing setbacks, eliminating roommate caps, allowing existing homes to be subdivided to duplexes or triplexes, allowing small commercial on more parcels (not just on designated districts), etc. These are all things that allow investment and growth in those areas without resorting to larger-scale developments that typically spell fast-paced change. There's also the huge discussion about what investments the public should be making to counter the (historic, lingering) negative perceptions of those places. Urbanists (including myself) maybe place too much weight on these things relative to all the factors people consider when deciding where to live, but it is still true that transit, bike facilities, parks, etc are systemically under-funded in many of these neighborhoods. Some cities are doing better than others to right that wrong, but in my opinion no city is doing it fast enough.Anyway, nice post. Thanks!

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  2. Alon

    Well… Chicago isn't upzoning much, outside the Loop and surrounding areas. Daniel notes that Lincoln Park's number of housing units went down 4.1% between 2000 and 2012 – worse than Englewood, which only went down 3%. So the setup you lament of Chicago, with South Side neighborhoods that get no investment as the white middle class only looks at the North Side, exists in an environment in which building in most of the North Side is constrained.I'll add that we see a similar issue in New York. New York is tightly zoned, and has no area of fast residential growth like the Near North Side. It has higher incomes than Chicago, especially in Manhattan, and much higher rents. On the East Side, East Harlem abuts the Upper East Side. And yet, while people talk a lot about gentrification in Harlem, the white population of Harlem remains very low. Community Board 11, i.e. East Harlem, was 12% white in 2010 – and a quarter of those whites lived in just two white-majority four-block census tracts at the southwestern end of the neighborhood, contiguous with the Upper East Side and Central Park. The trend is toward an increase in the white population, from 7.3% in 2000, but the overall level is still very low. There's more white spillover from Columbia, which unlike the Upper East Side generates more gentrification (to wit, students and academics are more likely to be gentrifiers than stably upper middle-class people like the residents of the UES). This is in an environment where the media trumpets how Harlem is gentrifying, where Harlem rents are already higher than Chicago North Side rents, where people who have lived in New York for many years tell me the South Bronx is poor but \”Harlem is the new Upper West Side.\” Middle-class New Yorkers do not look down on Harlem the way they look down on the South Bronx or East New York; even Washington Heights had a poorer reputation than Harlem ten years ago, even though in reality it had somewhat higher average incomes and lower unemployment.You're arguing that upzoning rich neighborhoods is going to lead to disinvestment in poor neighborhoods in the same city, but what we see is tight zoning in rich neighborhood and disinvestment at the same time.

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  3. Mike Linksvayer

    Have you suggested to the upzoning people that they should advocate for upzoning in transit corridors that currently lack demand and/or have they suggested same to you?

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  4. Pete Saunders

    I do recognize that Chicago isn't upzoning much right now, and that housing unit numbers are in fact declining in some of the most in-demand neighborhoods in the city. But some of that is relative to the long term historical pattern of growth and change here. In fact, for another piece I'm preparing on how decreases in average household size account for much of urban population decline, I found that Chicago added just 220,000 total housing units between 1950 and 2010 — a 0.33% annual increase and just under 3,700 a year. For occupied units, the number is even lower — 88,000 more than in 1950, a 0.13% annual increase accounting for just under 1,500 units a year. Of course, Chicago's population declined from 3.6 million in 1950 to 2.7 million in 2010. (A quick aside, since I have New York's numbers too. New York's gone from 7.9 million residents in 1950 to 8.2 million in 2010. During that time New York added 1.1 million housing units, a 0.75% annual increase averaging nearly 19,000 a year. There are 940,000 more occupied units in NYC between 1950 and 2010, a 0.64% annual increase, or just under 16,000 added annually.)I'm not surprised at the process you describe. It's just that I view upzoning in some ways as codifying this process and accelerating it.

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  5. NickD

    A few pointsThe population in low income census tracts maybe have slightly more than doubled, but the overall population of urban areas has also increased significantly from 1970 to 2010. So the proportion of the population in low income tracts has probably increased by something closer to 30-40% during that time period.The expansion of low income census tracts, has, as far as I know, always been outwards into more outlying neighbourhoods, whether that's from close-in city neighbourhoods to outlying city neighbourhoods, or crossing over the city limits into inner suburbs or even more distant suburbs. Increasing the number of gentrifying neighbourhoods might accelerate this trend.I don't think very many of the upzoning advocates are based in cities like Baltimore, St Louis or Cleveland. Most of them are living and advocating for upzoning in cities with more expensive housing markets, which are not limited to just New York and San Francisco. Other cities that lack low-rent urban neighbourhoods would also include Boston, Portland, Seattle, Los Angeles, San Diego, Denver, DC and Austin.You also have cities that either have only 1-2 low-rent urban neighbourhoods, or where numerous cheaper neighbourhoods are starting to approach the point of being more like medium-rent. That includes cities like Pittsburgh, Atlanta, Dallas, Houston, New Orleans, Minneapolis, Miami, Tampa, Charlotte, Orlando and Sacramento. In many of these cities, part of what's going on is that there simply aren't very many urban neighbourhoods to go around. Some of these cities allow quite a lot of development and might have more of an affordability problem if they did not. Others might not need upzoning yet, but should probably start thinking about it. Often once the gentrifiers have established themselves, they're reluctant to let anyone else into their neighbourhood, so you need to start upzoning before gentrification happens. If you're upzoning poor or working class neighbourhoods that have not yet gentrified, I don't think that's going to cause any problems in terms of preventing them from improving.

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  6. Brennan Griffin

    What's the alternative? Ok if you don't have one, but its always nice to have some proposed policy solution. I'm skeptical of your claims that development will only happen in the hottest areas. That's where it will be most intense, but that's not the only place it happens, at least in Austin, which is a very high demand city. I get worried about a lot of the Bay Area and New York City urbanist solutions when applied to my home city of Austin. We are producing a fair amount of new housing, its just concentrated in sprawling subdivisions, both inside and outside city boundaries. But we saw upzoning in the central business district and, crucially, in an area near the University of Texas. Downtown started off luxury and largely remains luxury, but we have some filtering down of older condos from luxury to within reach for the middle class. Near campus (West Campus for those familiar with the city) became *more* racially diverse, and saw the smallest increases in house/condo sale prices of any central Austin neighborhood by a good margin from 2010 to 2015. Now, West Campus a weird neighborhood – its catering largely to students at a diverse public university, so I'd be hesitant to generalize too quickly. It does have a core of resident homeowners, though.

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  7. Janne K. Flisrand

    As an upzoning proponent (from Minneapolis), upzoning is not a stand-alone solution. There is no silver bullet, so let's stop debating \”either/or\” policies.To really address affordable housing needs, we need an all of the above solution. I want upzoning because without it, nothing else can overcome the huge market forces of income disparities. AND we need to address wages, and construction costs, and neighborhood perceptions, and dis-amenities that make some neighborhoods actually crummy to live in, and consider inclusionary housing, and improve schools, and fight racism, and use housing trust models. AND we need to shift our federal housing subsidy from SF ownership to low-income households. What strategies did I forget? I'm sure I missed somewhere between several and many.

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  8. hcat

    If the new units are occupied full time, and not used for short term rentals or sitting empty as pied a terres, filtering should take place – after all, the household occupying the new unit is by definition not living someplace else. A stiff tax ought to be placed on places deliberately left vacant or dedicated to short term rentals. Whether the owner is \”foreign\” is irrelevant.

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