Blanket Upzoning—A Blunt Instrument—Will Not Solve the Affordable Housing Crisis

By Michael Storper : planningreport – excerpt

“The idea that upzoning will cause housing affordability to trickle down within our metropolis, while also setting up Los Angeles and San Francisco as the new golden land for people in less prosperous regions, is just a lot to promise—and it’s based on a narrative of housing as opportunity that is deeply flawed. We have to be very cautious when we use a storyline like that to justify public policy.” —Michael Storper

Immediate actions you may take to oppose SB 50

Last April, TPR interviewed UCLA and London School of Economics Professor Michael Storper on how to square urbanism, density, and economic development. Over the past year, Storper—a professor of economic geography whose last published book is The Rise and Fall of Urban Economies: Lessons from San Francisco and Los Angeles—has continued his research on inequality caused by globalization and technology, as well as on the impacts on inequality of housing, zoning, and migration decisions by city-regions. Rejoining TPR, Storper argues that the bulk of the claims of the trickle-down “housing-as-opportunity” school of thought are fundamentally flawed and lead to simplistic and misguided public policy recommendations. In light of the robust conversation around CA State Senator Scott Wiener’s proposed SB 50, Storper notes that there is no clear evidence that local housing regulation is crucial for differences in home availability or affordability across cities, or for interregional mobility, and that many have failed to fully consider the impacts of in-migration to economically prosperous cities.

Professor, you recently released new research challenging what you term the “housing as opportunity” school of thought. What is the premise of that school of thought, and what do advocates of “blanket upzoning” to increase supply miss with respect to housing economics?

Michael Storper: The “housing as opportunity” school of thought is a consensus in mainstream housing economics that makes a very ambitious set of claims about the world. First, it claims that the housing crisis in our major prosperous metropolitan regions is principally due to restrictive zoning and regulations. It follows by arguing that that we can solve this crisis through widespread upzoning, which it claims will increase the supply of housing in these prosperous regions, and that this overall supply increase will have a trickle-down effect by increasing affordability for lower income people and families. A novel argument then extends to bigger national picture, because this school of thought also claims that such upzoning in prosperous regions can also solve the problems of less prosperous regions…

Our paper reviews the existing literature in urban economics and provides a variety of evidence on how migration impacts city housing prices. We looked at three dimensions of cities—land area, population migration, and changes in housing prices—and showed that there isn’t any consistent relationship among those three variables. Then, we used other data to show that the real factor driving growth in housing prices is the income distribution across cities…

The core debate in California housing policy is with people who think that untargeted upzoning is a lever that will increase supply in vast metropolitan areas and produce widespread affordability while somehow avoiding the problems of displacement and bad urbanism.

But affordability and supply are not the same thing. In big, mature metropolitan areas like Los Angeles, affordability has to be produced through active housing market policy. That means directly targeting affordability and access for every group and every mix of housing.

Bills like SB 827 and SB 50 are essentially about trickle-down economics. The logic is that by creating more aggregate supply, every part of the demand curve—every different group demanding housing—will somehow benefit. I don’t think there’s any evidence in favor of that proposition.… (more)

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