The January report studied two citywide rezonings in Chicago and found that housing prices there increased shortly after the zoning changes went into effect, while permits for new construction didn't increase. That conclusion could bolster New Yorkers' fears that the city's policy of rezoning neighborhoods for greater density will simply raise housing prices and increase the risk of displacement without delivering enough market-rate and affordable units to ease pressure on the housing market.
The de Blasio administration countered that rezonings in New York typically have spurred serious amounts of construction. And because City Hall has instituted a policy requiring some of that production to be permanently affordable and has created protections for existing tenants, the city argues the 15 neighborhoods targeted by the mayor for greater density will ultimately be a net win for New Yorkers.In addition, existing homeowners might expect that new development will bring more amenities to the area and so they jacked up their prices in response. Yet the study found that new building permits never materially expanded in any meaningful way after five years.
"If the product of upzoning is no change in construction levels but increases in property transaction values, including for some existing housing units," Freemark wrote, "this policy may have some negative consequences in upzoned neighborhoods that rapidly become more expensive." In other words, a rise in housing costs without more supply could put existing residents at risk for displacement.