de Blasio's zoning policies will exacerbate unaffordability and gentrification according to housing study

Crain's

A recent study on rezonings could prove problematic for the de Blasio administration the next time it tries to rewrite the rules for development to promote affordable housing.

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.

Both sides have a point.

"The funny thing about my study is that … everybody is convinced that it proves their side of the equation," said Yonah Freemark, an MIT doctoral student, who authored the report.

Although rezoning for greater density seems like a logical way to alleviate housing crises in big cities, the effects on the neighborhoods themselves are not well understood. Most studies tend to take very broad views of housing policy to draw conclusions, such as cities with stricter zoning tend to have higher land-use costs. Studying the effects on a neighborhood level, however, has been more difficult. In New York, for example, many neighborhoods are rezoned precisely because they are already growing, making it difficult to attribute changes to pre-existing market forces or to the rezoning itself.

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.