Housing Complex

How Brookland—And Dupont Circle—Are Killing the American Economy

A proposed new apartment building in Dupont Circle, which some neighbors say is too large.

OK, not by themselves. But Brookland, in its fight over the years against additional density at its underutilized Metro station, is exhibit A in Arlington-based economist Ryan Avent's new argument—also summarized in Sunday's New York Times—that our failure to build more housing in America's most opportunity-rich cities is choking economic growth. I'm sure Avent must have been delighted to watch, as his 90-pager came together, the neighborhood's first big mixed-use project shrink as neighbors fretted that the building would increase traffic, destroy an "historic" building, and just be "unreasonable."

The case has been made before in bits and pieces by people like Ed Glaeser and Matt Yglesias, who figure that packing more people closer together in cities gives more people greater access to social and intellectual capital, fostering entrepreneurship and productivity. But Avent is the first to wrap it all together and cast things restrictive zoning and home-killing NIMBYism as an existential threat to the nation's economic health, leading people to move to Houston and Phoenix instead of places like San Francisco and New York City, where the jobs pay the best, energy use is lowest, and quality of life is high.

As it happens, I was scanning through the little book last night while sitting through a Dupont Circle Advisory Neighborhood Commission committee meeting on a new apartment building at 17th and O Street NW. I passed on word of the new building back in July, expecting little opposition; it was just a church development project that would fill a hole in the urban fabric, after all.

But of course opposition cropped up anyway. At the meeting—where commissioners were considering whether to grant a zoning variance that would simply allow the building to achieve the same 90-foot height of its neighbors—I listened to complaints about the fact that you might actually be able to see the building from 16th Street, that a "party room" on the roof might be audible to neighbors, that too many small rental apartments would destabilize the community, that parking would become impossible, and that the building just looked "too commercial."

At the point where I hit upon Avent's phrase, "A NIMBY neighborhood thrives by capturing available opportunities and then pulling up the ladder," I started to feel physically nauseous.

The development team, a partnership of First Baptist Church and Keener Squire Properties, will probably get their signoffs from the Historic Preservation Review Board and Board of Zoning Adjustment. But the more disturbing thing was how they had preemptively scaled the building back, in anticipation of neighborhood opposition. The existing zoning would actually have allowed 40 percent more square footage, but they decided to create more open space near the church by packing the mass to one side (thus creating the need for a variance). There are no balconies on the O Street side of the building, which might have infringed on the privacy of the residents of the Richmond Condominium to the north. They're building more parking spaces than tenants will likely use just to avoid fighting on another front.

"We know it's a loss leader," says a rep from Keener Squire. "We're just doing it because we're asking for one variance, we don't want to ask for another variance. We're building more vacant parking spaces, because we don't want to listen to people complain about parking."

That, of course, means rents will have to be even higher in order to pay off the cost of building unnecessary spaces.

Not to sound like a broken record, but with some of the highest rents and lowest vacancy rates in the country, the District is also the most confined of American cities, kept low by a federally-imposed height limit that isn't changing anytime soon. That only creates an additional burden to take advantage of what density we're allowed.

Avent's prescriptions for dealing with anti-density activism might sound a little outlandish. Tax developers for additional units they want to build and give the money to close-in neighbors, for example, to give them a stake in new housing nearby. Or, conversely, require neighbors to buy the site if they think the proposed building is too large.

The point, though, is that property rights need to be stronger so that NIMBYs can't kill a project for being too ambitious. As Avent outlines, the stakes are actually rather high.

  • Tom M.

    Population size = prosperity. Population density = creativity and productivity. Can you explain Silicon Valley in this context. Not among highest population metro regions (well out of top ten). Not among the most dense population regions (well out of the top ten). Not among the fastest growing population regions (well out of the top ten). Is it possible that quality of life and other aspects of a region -- social, environmental, built, natural, and other -- may be at least as important as the mantra of the density above all crowd would have us believe???

  • http://urbanplacesandspaces.blogspot.com Richard Layman

    Ryan's argument is pretty simplistic even though I agree with him in part.

    There is a good comment on the NPS bike share article in the Post where the person says something like "Great. People are complaining about govt. subsidized transit and biking infrastructure while enjoying their use of govt. subsidized roads and govt. subsidized gasoline."

    What is destroying the American economy is sprawl, deconcentrated land use, and an automobile centric land use and transportation planning paradigm.

    Much much much of the nation's wealth has been and will continue to be destroyed in support of this paradigm because certain industries (oil, housing, automobile, parts of the banking industry, a good chunk of the military-industrial complex, highway and road construction, etc.) are dependent on it.

    As long as this remains the dominant paradigm, America's economy, in the face of increased global demand for oil (and other natural resources) will continue to languish, because that paradigm is based on the maintenance of access to relatively cheap oil at a price of maybe $1/gallon tops.

    As oil prices increase, this way of living becomes extremely unsustainable and is why the U.S. standard of living continues to decline.

    (There are other reasons too, in particular the creation of a global economy lowers prevailing wages, digitization allows for the reduction of employment within companies, concentration of industry through mergers on a national and global basis eliminates more employees, and increased capital investments reduce the need for labor in "large scale" manufacturing.)

    The failure to appropriately add density to particular locations in center cities, when for the most part, center cities have tens of thousands of acres of developable land, is basically a pimple on an otherwise very much attractive face.

    - beautiful face with pimple, comparable to the issue of not adding density in particular locations in in-demand center city locations, http://healthmedicals.com/wp-content/uploads/2011/07/acne-150x150.jpg

    - the correct analogy, lots of acne, comparable to the impact of sprawl, http://www.kidsolo.com/wp-content/uploads/2010/12/acne.jpg

    If Ryan and Ed Glaeser really wanted to make a difference, they would be discussing the creation of urban growth boundaries and the recentralization of commerce, housing, and transit. See the arguments of Steve Belmont in _Cities in Full_ for a greater explication of this thesis. Belmont said it better than either of them almost 10 years ago.

  • http://www.flickr.com/photos/mr_t_in_dc/ Mr T in DC

    I wholeheartedly agree with Lydia and Ryan on this. Density is good!

  • JM

    Avent's arguments make very little economic or logical sense.

    His first point is basically one of correlation. Coastal cities like San Francisco have high incomes and low unemployment. Therefore if everyone moves to coastal cities, national income will rise and unemployment will fall. Huh? Beverly Hills has even higher incomes - why not build lots of condos there? High-priced cities have a range of attributes (physical beauty, cultural diversity, etc) which make them attractive for elites who have the skills and education to reside there. It's pretty silly to believe that you can jump start the economy by packing more of the national population into their boundaries.

    He also makes a long argument about economic competition being a function of residential density and population. That's true - but only for independently-operated service and retail, which is a tiny sector of the US GNP. Sure, you'll get better, more efficient Vietnamese restaurants in a big city. But will you get more efficient auto parts plants? Better technology exports to India? Exports and manufacturing respond to global markets, not local density. Innovation can happen anywhere regardless of density (e.g. the Silicon Valley example above, or the Boston suburban tech corridor). What about Walmart, which franchises across the U.S. regardless of population density? Chains respond to national trends.

    Finally, note that his arguments are especially humorous if you try to apply them to Washington DC. Much of the job growth in DC is driven by law firms, lobbyists, consultants, and their associated business services. How many jobs across the US are being created by this activity in DC? If anything I'd guess the answer would be negative.

  • Tom M.

    As to the argument that low density leads to high rents, the correlation may not hold nor might cause and effect be all that strong. I just checked the craigslist for one bedroom apartments in the ten most dense US metro central cities. Multiple listings of one bedrooms at under $1,000/month are posted. In NYC for example, multiple one bedroom apartments are listed in Manhattan, Bronx, Brooklyn and Queens. As to parking and including parking in larger multifamily development, don't you think that some level of parking is used by residents of such? If parking is used, should it be paid for by the developer and rolled in to the cost of the development or should it become a cost to taxpayers and neighbors? If the later, why should they shoulder the negative externality?

  • AHK

    There are plenty of transportation centric properties in the DC Metro region that developers are ignoring because they aren't "hot" neighborhoods. There's no reason to build out in Brookland, when areas of Ward 8 and PG county are dying for development dollars and they have many transportation options. There's no reason Dupont Cir, with it's huge transportation choke needs more residents, when there are vacant properties all over Wards 7 and 8.

    But then this argument about height limits and zoning restrictions, repeated continuously through various media outlets, is just a smokes screen for maximizing developer profit at the expense of existing property owners.

    I guess if you repeat a lie enough times, people will start to believe it.

  • http://alexblock.net Alex B.

    @Lydia - one of your best MS Paint jobs yet.

    @JM - No, Avent's point is not one about correlation, nor is it about location. It's about density. It's kinda hard for you to refute his argument when you mis-state it from the start.

    @Tom M. - so, you're arguing that a restriction on supply won't increase rents, all else being equal? Uh, OK. Nothing at all in the history of economics would have us expect that, but OK.

    @AHK - As Avent notes, density alone isn't a solution, it's a tool. But you completely miss the reasons he states why density is good (which is the same reason why you see more development wanting to come to Dupont but not Ward 7). In other words, yes, there are many reasons why Dupont 'needs' more residents.

    How does maximizing developer profit (something you didn't demonstrate, BTW) matter? How is that come at the expense of existing property owners? If developers are creating all this value, then the existing owners ought to be realizing a massive windfall profit, no?

  • Tom M.

    @Alex B -- So a zoning restriction that causes a developer and purchasers to shoulder externality costs is inappropriate in a market economy because it would make markets work as markets are supposed to work? There are a number of factors that influence the rent charged. Density of a neighborhood is one factor that may be POSITIVE or may be NEGATIVE. Whether it is positive or negative is not JUST determined by a society-wide perspective. For example, if I build a trash transfer station next to your apartment somewhere near the densist points in DC, i would minimize transportation and environmental disposal costs for society. It might not be YOUR preference for conditions in your neighborhood. But all other things being equal, you would support it because it is GOOD FOR SOCIETY. Right? It is not JUST the creation and destruction of value to society as a whole. It is sometimes about the DISTRIBUTION and INCIDENCE of costs/benefits. That is why maximizing value for developers (often at the expense of others) matters.

  • http://alexblock.net Alex B.

    @Tom

    It's a mistake to think that increasing density is somehow and solely about maximizing developer profit. That's the point - density is beneficial. Certainly, many places in DC could stand to be denser than they are now. This is what the market tells us via prices.

  • JM

    @Alex B
    Fundamentally residents have a right to decide the density and character of their local communities, either city-wide through zoning, or locally through ANC's and grass-roots organization.

    The idea that this is somehow "harming" the national economy is laughable, and nothing in Avent's article convinces me otherwise.

  • Chris

    Not sure that I completelty agree with the NYTimes article. Yes, density at some levels fosters economic growth. By allowing more people and workers to congregate in a smaller areas you get deeper labor markets, industry clustering, knowledge spill overs, etc.

    Nevertheless, the arguements against density in Brookland and Dupont are silly. These are exactly the areas we should be encouraging growth, not apartment complexes in Charles and Loudoun counties. DC's population has fallen by 25% over the last 60 years, despite the phenominal growth in the city's employment base and the region's overall population. The city's density levels are well below peer cities like Bos/SF (not exactly Manhattan-style mega cities).

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  • Jimbo

    CAVE (citizens against virtually everything) is having it's weekly meeting tonight. Attend so you can fight this. Location: in the Dupont Circle tunnel. Don't have a real cave yet.

  • http://alexblock.net Alex B.

    @JM

    Maybe people do have that right - I don't think anyone is disputing that. Exercising that right, however, has costs. Avent and Glaeser and others are simply documenting those costs, and they are quite large. Just because they're hidden doesn't mean the costs aren't real.

    I'm also not sure which point in Avent's piece you are disputing. The fact that denser cities are more productive is just that - an empirical fact.

  • Tom M.

    So Avent's arguments are not that different than the approach by Porter regarding the potential and comparative advantage for cluster development of inner cities in the U.S. Indeed PART of Porter's ideas seem correct. Cities present comparative advantages that cause the clustering of some higher value (other lower value as well)sectors. One problem though is that FIRMS within those clusters ARE NOT SIGNIFICANT SOURCES OF EMPLOYMENT FOR INNER CITY RESIDENTS. They draw their employees from residences outside central cities of metro areas. Avent cites average wages as a proxy for local wealth creation. This is problemmatic for two reasons. First, earnings in a place may not be by those who live in the place. In fact, those at the top of the income pyramid may be the MOST likely to live elsewhere. Second, earnings is not the same as wealth creation. If you live in a high cost area (NYC or DC?) and are paid above average earnings, you may be equally likely falling behind as getting ahead. That may be creating wealth for others and distribution and incidence (i repeat myself here) is actually as or more important than averages. Does real estate speculation create wealth? Or is it a form of "economic rent"?

  • http://alexblock.net Alex B.

    @Tom M.

    Avent doesn't make the distinction between arbitrary political boundaries like inner city or suburban jurisdictions - and rightfully so, since we all function together in one metropolitan economy.

    However, you're missing the effect of the multipliers those clusters and agglomerations provide. DC's clusters of law firms provide all sorts of spin-off jobs in the District as well, for example.

  • Begla

    I didn't read the book but I'm a little confused. It seems like the American economy is getting killed by factors having not much to do with neighborhood NIMBYism and more to do with, you know, the global recession thing?

    And like how is this going to help me? They build this and I'm still going to have to move out of where I live near U Street and go towards Petworth.

  • Java Master

    Ahh..all the NIMBY's are out, I see.
    This was a fine building proposal, and the arguments against it from day one were all specious and misleading.
    Shame on all of you who opposed the original plans, you are all selfish and self-serving , if the shoe NIMBY fits, you gotta wear it!

  • Tom M.

    @Alex B. One person's "artificial distinctions" are another person's "key aspect." Porter says that cluster development bolsters metropolitan economies. If the people employed in those jobs mostly live in the suburbs, they're not contributing jobs, economic activity, or fiscal capacity to address the real and mounting challenges of central cities. If most of the K St lawyers live in Maryland or Virginia, are they contributing to DCPS? Improving the capacity to deliver education east of the river? Or are they taking advantage of the infrastructure paid for by DC taxpayers and taking the benefits home outside of our communities? Indicidence and distribution of pain and gain matter. That's why "these barriers" are not artificial. Anyone familiar with the arc of decline in most American central cities over the past 40 years would recognize that they are far far from artificial.

  • Chris

    #18, I think that would argue in favor of more DC development. If DC built more housing, more of the commuter crowd would live in the city, pay taxes, support DCPS, etc.

  • http://alexblock.net Alex B.

    @Tom M.

    All of those barriers you raise are political distinctions, not economic ones. What if DC's city limits were suddenly the size of New York (450 square miles instead of 68)? Those lawyers you fault for living outside of the city would now be inside the city limits. That's because the distinction you are making is entirely based on a political line, not the size of the area's economy or of its built environment.

    I'm not saying that distinction doesn't matter in terms of policy or politics, but it is undoubtedly an artificial boundary. People do not live their day to day lives according to those boundaries - they cross those boundaries on a daily basis as if they didn't even exist.

    And yes, those K St lawyers do contribute to DCPS. Their demand for office space creates demand for land, which drives up the commercial rents and property taxes in the area - which is a huge boon for the DC Government coffers in spite of DC's limited taxation authority.

    So, I'm not sure what kind of argument you're making. Are you talking about the political boundaries? If so, I don't see how that changes whether density is a good thing or not. Are you talking about the economic definitions of a city? If so, then the political boundaries aren't particularly relevant at all, the metropolitan economy is.

  • sdc085

    While I'm generally in support of the pro-density policies that are become a cliche in the left-of-center blogosphere, a lot of the proponents refuse to acknowledge second-order effects that don't fit the simplest economic models. Of course adding supply will lower prices! Except that's not always the case. A new luxury condo development (this seems to be all the development that's going on in DC right now) in Brookland WILL RAISE RENTS ON EXISTING HOUSING STOCK. In the very long run, new developments might help ease pressures on housing prices for the region as a whole, but that's not the case on any reasonable timeline.

    There's been a TON of development in the "NoMa" area of DC, largely in unoccupied land. Are you going to tell me with a straight face that this has eased pressures on housing prices for existing housing stock in the area?

  • Begla

    Lydia, I am fundamentally confused about some of this. I'm not an anti-density advocate--I actually aesthetically *prefer* cramped cities as it makes things a little crazier, but the notion that density will somehow get my overeducated-yet-still-unemployed-ass quality housing all of a sudden strikes me as hollow. The idea generating people who move in here aren't going to be bohemian artists, particularly when idea generating seems to be tied to entrepreneurship in sectors where I'd never be able to find employment.

    Also, I read that NYTimes piece and his use of Sartre is mistaken at best. Sartre lived in Paris before the highways split it up and before the forced relocation of the poor to the high-rises of banlieues.

    Like this is great and all but wheres a housing plan that can fit in the rest of us who aren't middle-class professionals? The argument I'm getting goes something like "higher density means more professionals moving in meaning more tax dollars meaning...magically you'll have a job and income and housing"--which sounds like New Urbanist Trickle Down Economics. I'm open to being wrong here, but as articulated, this gives me neither comfort nor reason to support it. Maybe some greater clarity would be useful?

  • Steve

    Why is it that NIMBYs can prevent these beneficial projects, and yet building single-use Walmarts is a foregone conclusion?

  • http://alexblock.net Alex B.

    @sdc085

    The question isn't if there's been a 'ton' of development in the NoMa area - the question is if there's been enough development there. I'd also note that there really hasn't been too much residential development in that area just yet, though more is coming online now and in the near future.

    If new buildings and new supply aren't relieving pressure on upward rents for existing housing stock, then my argument would be that the new development isn't really enough to match the demand for walkable urban places.

    Also, it's a mistake to look at it in such a hyper-local way. Does a new building in NoMa mean that rents will stay the same for a rowhouse in nearby Eckington? Maybe not - but that's probably because the wholesale redevelopment of NoMa is adding a lot more value than just the new apartments - also a grocery store, new retail, new jobs, a new metro station, etc. However, this additional capacity will surely help maintain affordability on a broader basis. The smaller scale challenges are, admittedly, much trickier - that doesn't mean that forgoing the density is a good option.

    The bigger point is that cities are (and should be) dynamic places that change a great deal over time. The notion that they should be preserved as-is undermines the very reason why cities exist and why we find them compelling places.

  • Begla

    @Steve: Yeah, that's always confused me. Aside from the density question, it's annoying that the only power we have to affect development seems to come from the power of a fake-community representative like an ANC to say no to something on NIMBYish grounds.

    Which means most of us have no power.

  • JM

    "The bigger point is that cities are (and should be) dynamic places that change a great deal over time. The notion that they should be preserved as-is undermines the very reason why cities exist and why we find them compelling places."

    Precisely the argument used in the 1960's to justify bulldozing freeways through urban cores. Conversely, a prime reason that DC has "rejuvenated" over the last 20 years is its supply of interesting, historical housing stock.

  • http://alexblock.net Alex B.

    @JM

    No, that's not the argument used in the 1960s at all. Don't equate slum clearance and urban renewal with the acknowledgement that cities naturally change and evolve over time.

    Also, who's arguing to bulldoze anything? Take this Dupont project as an example - a surface parking lot will become a dense, beneficial addition to the neighborhood.

  • Lance

    "That, of course, means rents will have to be even higher in order to pay off the cost of building unnecessary spaces"

    Anyone who's lived through the recent housing price decline would know that it's not was something cost to build or buy that determines what it ultimately sells or rents for. The buyers/renters are the ones who end up setting the selling price/ rent by competing between themselves over who will pay more (or less) for the property.

  • Lydia DePillis

    @Begla

    Good questions. For sure, an apartment building in Dupont Circle isn't the whole answer to our productivity and housing needs. And you're 100% right about the need for a city-wide, multi-level housing strategy. In fact, that's what the Department of Housing and Community Development is working on right now: Figuring out what kind of housing is needed where, and how to get it built. There are acres of space and thousands of cheap rentals, available mostly in Wards 5, 7, and 8. A whole lot of people who might move to D.C.--or from D.C.'s increasingly expensive core neighborhoods--don't consider those areas, because they lack commercial development and have problems with crime/schools/etc. So all those things need to improve at the same time.

    Doing that, though, requires public funding as a catalyst. You can grumble about luxury apartments, but they'll generate more property taxes and bring in higher income residents who'll pay more in sales taxes, which can in turn be invested in things like better transportation, parks, and recreation facilities all over the city. It all connects.

  • Daniel Wolkoff

    This trip that people like this writer and Lidia DePillis are on, is such a small space. Don't try to include historic preservation, keep some beautifull trees, aportion space for nature, or anything but construction and "density".
    If you so much as try to exercise real community input, other than going gaga for anything the business community wants to do, your a NIMBY, obstructionist. Lidia called the Brookland Green"some grassy lot". A bveautiful central commons of 40 mature trees at the metro stop for all to enjoy,including the 2400 new residences she advocates. She doesn't belong in a column in the City Paper.. The arrogance of negating anyone who holds values other than ,cut it down, knock it down, build, and build, pave it over and don't stop to think, is sick. Lidia Depillis job is to report the news, tell us about thje city plans top denude all these developments, , tell the community the many sides of public issues. I don't know when her job became advocating for a certain model of development and dismissing everyone elses concerns. If you live in an area where parking is a nightmare, that is a legitimate concern. If you don't want walls blocking you in, or bricks where the sun once shown, that is also legitimate. From the windows of the new Harris Teeter at the NY ave. Metro, you cannot see the sky. I personnaly don't think living on a metro track is desirable. The housing opportunies by the thousands are being bypassed to crowd people around the metro. Fine.Crowd in the over the parking lots, but leave some of the nice green and trees, like every single educated urban planner would do. office of Planning in DC are shills for big developemnt and are sdestroying everything in it's path.So when people say leave the gracious green space, preserve the trees and historic character, where do journalist come off with slanted one sided articles. We are not obstructing anything, they are,how discredited can a city govt. get?
    Our government has chosen to make a big stink about community input, it is a public relations farce,. contemptuous of the citizen. I have wasted hundreds of hours on their charades and then they support even more development than in their own so-called "guidelines for developemnt" The Brookland-CUA Small Area Plan is paid for by the citizens just as it sucks up our time and good efforts to effect our own lives and community. It is a COVER for, fraud, as it has no enforcible control, pretends not to allow for all kinds of density, building heights, removal of public greenspace, cutting down whole stands of healthful , beautiful living trees. The stand of trees at the Brookland Metro is a little space to walk in shade, you and I have paid for, and a political/development.backward citizen team wants a building there. When it is not necessary to destroy it.. Even this is not enough for the politicians who serve only the businesses, as they are gutting the zoning laws, and again allowing only one short public meeting per ward to "get citizen input".
    Just like any onther compulsion that is misguided and refuses to honestly take into account differing views, the "smart growth" fanatics need to discredit and dismiss anything that legitimately questions the "New Religion". The most dissappointing thing to me, is not the politicians who have gathered so much power around their corrupt selves. They are smart, they smile and learn to shmooz the votrers while they could care less about the safety and health of the community, as demonstrated daily in DC. What is really sad, is the average resident who hands them so much power despite how badly they discredit themselves or, steal, or promote a hideous agenda like gambling.
    The priority to pave under so much that is good about the city, in a mad rush to build everything, everywhere is distorted and destructive of environmental health. I still do not understand where the district got the exemption from conservation, providing parkland equitably, preserving the variety of neighborhoods, the diversity of choices. I don't agree that the city has to sell all it's values to refill a city budget poured down the toilet by our employees (fiefdoms) for the benefit of classes of people with many choices in life. Five or six Walmarts is a mistake, online gambling a mistake, losing McMillan Park atrocious, let them develop Rock Creek Park when this side of town has 20% of the parkland in NW. When people want to keep the valuable things in their community they better fight these powers that do not care about them. The people in this neighborhood are particulairly slow to understand their power to assert what is objectably healthful for any community. We can't let the self appointed cheerleaders write simplistic distorted articles, that leave out our legitimate issues and call everyone who doesn't drool at big ugly projects a NIMBY or harming the economy,,,Trust me the empty strip malls, and box stores, bankruptcies, destruction of the forests, mountaintop coal removal, oil spills, insane pipelines, fracking the earths crust for gas, nuclear power plants shifting around during earthquakes, or the economic refusal to convert to peaceful industries and sustainable development and energy, that's not the fault of people who sincerely analyse and question the sense of this ALL. Including how to control overurbanising the cities.

    Daniel Goldon Wolkoff

  • sdc085

    @Alex B.

    NoMa has seen a ton of new buildings. Using Avent's simple models we would predict that due to an increase in housing supply in the neighborhood, prices will go down.

    What's actually happening is that an influx of luxury-type housing and the people who live in those buildings make the neighborhood as a whole more attractive to more people who are willing and able to pay more than the residents who had been in the neighborhood all along. The old run-down rowhouse in a dangerous neighborhood has become a fixer-upper in a neighborhood filled with rich young professionals, and it will accordingly command a higher price.

    Higher density isn't a solution to gentrification-related dislocation in the forseeable future.

  • http://alexblock.net Alex B.

    @sdc085

    NoMa has seen a ton of new buildings. Using Avent's simple models we would predict that due to an increase in housing supply in the neighborhood, prices will go down.

    That's not what Avent says at all.

    Let's say you've got demand for 10,000 new units. But, you build only 5,000 new units (which is still a lot of new units!) - but that increase in supply still hasn't matched the demand, therefore prices continue to rise.

    Avent has quite clearly avoided answering the question of how much density is enough, because that answer would have to depend on the market conditions and the specifics of a place.

    But let's consider the converse of your argument. If adding more supply to an area that's clearly in high demand isn't the answer, then what would you propose to do? Build nothing and prices will skyrocket. Use rent controls and prices will also skyrocket for those outside of that system.

    What's actually happening is that an influx of luxury-type housing and the people who live in those buildings make the neighborhood as a whole more attractive to more people who are willing and able to pay more than the residents who had been in the neighborhood all along. The old run-down rowhouse in a dangerous neighborhood has become a fixer-upper in a neighborhood filled with rich young professionals, and it will accordingly command a higher price.

    I don't see how this is different from what I'm saying - it all amounts to a large increase in demand (as indicated by the price). You're describing filtering:

    http://www.austincontrarian.com/austincontrarian/2008/06/filtering.html

    Point being: The remedy for "filtering up" is more housing, not less. If we halt new construction in order to preserve the existing stock of low-quality units, we guarantee that more of the low-quality units will eventually filter up. We cannot predict exactly which units will filter up and which will remain affordable. We just know that there will be more of the former and fewer of the latter.

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  • sdc085

    "Let's say you've got demand for 10,000 new units. But, you build only 5,000 new units (which is still a lot of new units!) - but that increase in supply still hasn't matched the demand, therefore prices continue to rise."

    That's not what the standard economic model would predict. If I find new gold, I'm driving down the price of gold even though the increase in supply hasn't "matched the demand," because there are still people who want gold but can't afford it. That's not what happens with housing.

    New buildings often boost demand at the same time that they're boosting supply for the reasons I discussed in my last post.

    I'm pro-density, I just think a lot of advocates ignore some of the negative consequences of new development. True, new luxury condos will make cities more affordable for people marginally less rich than those who can afford to live in existing luxury condos. But if Avent and friends are serious about making cities accessible to people who are being driven out, they need to focus on affordable housing policies to go along with the construction of new, taller buildings.

  • http://alexblock.net Alex B.

    That's not what the standard economic model would predict.

    How so? Demand still exceeds supply - that new supply has only slowed the rate of demand growth, but it hasn't met the demand at all.

    Those new units do decrease the price from what it would have been had nothing been built at all - but that doesn't mean the price won't still be rising.

    It's the same math as the stimulus - it did help the economy quite a bit, but just not enough to get things turned around. Unemployment would've been far worse without it - but that doesn't mean the rate still didn't increase in spite of the stimulus.

    Let's put it this way: Current prices are X. If no new units are built, then this area that's in demand would see prices rise to X+2. If new units are built to meet all of the demand, prices would stay at X. However, if only half of that new demand is met with new units, then prices will rise to X+1 - which slows the rate of growth, but prices continue to rise.

    Obviously, hyperlocal impacts are subject to a lot more vagaries of the housing market and the designs of specific buildings, but on the broader scale, I'm not sure what you're arguing here.

  • Begla

    @Lydia: Super thanks for the response. And side note: I *reeaaaallllyyyy* like the column.

  • Jeremy

    @Alex B

    If adding more supply to an area that's clearly in high demand isn't the answer, then what would you propose to do?

    Perhaps nothing. More people = more congestion, crowding, noise, litter, etc. Since these costs are not internalized in market prices, communities pass laws to internalize them through supply constraints. If you want to get rid of the supply constraints, you'll have to find another way of internalizing them.

  • sdc085

    @Alex B

    I don't have enough time to continue this discussion in detail, but I'll just say that you're employing a very limited definition of "demand" in this conversation. There is no single number of houses that is demanded ("let's say you've got demand for 10,000 new units..."); demand curves slope downward. The housing market is also rife with externalities and it just doesn't fit extremely simple non-dynamic models that you're assuming. This has a lot to do with why we seem to be talking past each other. Also the fact that the "hyperlocal" effects that you're dismissing are ubiquitous consequences of development and mean that people can't afford to live in their homes anymore. More construction isn't going to help them.

  • Mark

    Why would anyone scale back their plans from matter of right zoning to accommodate the residents of the Richmond- a PUD which itself exceeded matter of right zoning?
    Will any provisions be made to put additional eyes and feet on the 1600 block of O, which is notorious for crime because there is no through traffic and not a single domicile fronts it?

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