New MIT study suggests the Yimby narrative on housing is wrong

By Tim Redmond : 48hills – excerpt

Mission-Bay-at-Third

Third Street before the new buildings and platforms were added to the mix by zrants

Higher density leads to higher prices, not more affordability, a review of an upzoning experiment in Chicago shows.

The Yimby narrative – that higher density in US cities will bring down housing prices – doesn’t work in real life, a dramatic new study from an MIT doctoral student suggests.

In fact, the study, released today, shows that – at least in Chicago, where author Yonah Freemark complied the data – upzoning for greater density leads to increased housing costs.

There’s no evidence in the study that allowing greater density in areas close to transit actually leads to more construction – certainly not to the construction of affordable units.

Affordability in the areas where the city allowed increased density declined, he reports.

Freemark looked at places in Chicago where the city, in an effort to promote more “smart growth,” changed the zoning laws to allow more density near rail stops. That’s a concept that many modern urban planners have been promoting.

What he found is that the price of land rose in the upzoned areas, housing became more expensive – and there was no discernible increase in the number of building permits or new units constructed… (more)

Latest data shows you can’t bring prices down by building more housing

By Tim Redmond : 48hills – excerpt

When prices soften, developers stop building. So that plan isn’t going to work.

A Dec. 29 story by the Chron’s real-estate reporter, J.K. Dineen, who knows the market as well as anyone in town, shows exactly why the Yimby agenda will never work in San Francisco. The story dropped in the middle of the week when news readership is the lowest of the year, so I’m not sure how many policymakers saw it. But it has critical information about the way housing markets really work.

To wit: Developers now think that the market for condos and apartments is “softening” – that is, it’s not rising as fast as it used to – so they aren’t planning to build any more, except at the very high end.

In other words, you can’t bring down housing costs by removing barriers to more market-rate housing – because as soon as those costs come down, the developers (and more important, the speculative investors who finance them) put their money somewhere else…

“Everything that is going forward is falling above the $2,000 (per square foot) price point,” Garber said. Projects with a projected price of $1,300 or $1,400 per square foot are not worth it to developers, he said. “In the short term, we are not going to see a lot of those delivered.”(more)

These San Francisco neighborhoods will see price drops soon, according to Zillow

By Emily Landes : sfgate – excerpt (includes video)


Bernal Heights facing north – photo by zrants

The long-running seller’s market in San Francisco may finally be coming to an end — especially in certain neighborhoods — according to data from Zillow, which is predicting a half-percent drop overall in the city within the next year. The real estate site “takes into account factors like current home value appreciation, inventory, and incomes,” to come up with its forecast, according to Zillow’s Lauren Braun.

RELATED: Bay Area population growth slows, some counties losing people

The Marina is expected to see the biggest drop — 2.9 percent — over the next year. Given the neighborhood’s current average price tag of $1,957,900, if Zillow’s predictions are accurate, that represents an over-$50,000 savings for those willing to wait it out until 2018. Other neighborhoods likely to see a decline are the Financial District, SoMa and Civic Center; Zillow is predicting a 2 percent drop in these neighborhoods… (more)