When Renters Behave Like Homeowners

NIMBY: Not In My Back Yard. Long the rallying cry of people opposed to landfills, Wal-Marts and other “undesirable” projects, it’s now become a rallying cry of both homeowners and renters for a new proposal–housing.

A new paper from the Joint Center for Housing Studies at Harvard University notes while in theory, renters and homeowners disagree about proposals to build new housing in their communities, particularly if that housing is close to where they live. However, in practice, this is not always the case.

The paper, When Do Renters Behave Like Homeowners? High Rent, Price Anxiety and NIMBYism (http://housingperspectives.blogspot.com/2017/02/when-do-renters-behave-like-homeowners.html), authored by Michael Hankinson, Meyer Fellow at Harvard, suggests in high-housing cost cities, renters and homeowners both oppose new residential developments proposed for their neighborhoods. However, in high-cost markets renters are still more likely than homeowners to support citywide increases in the supply of housing.

“This conflict of supporting housing citywide, but not in one’s neighborhood rejects a collective action problem based on spatial proximity,” Hankinson said. “When paired with institutional changes that amplify the influence of local opposition to new supply, renter NIMBYism helps to explain why housing has become increasingly difficult to build in cities with high housing prices.”

The paper noted since 1970, housing prices in the nation’s most expensive metropolitan areas have dramatically increased. Real prices have doubled in New York City and Los Angeles and nearly tripled in San Francisco. Driving this appreciation is an inability of new housing supply to keep up with demand. Even accounting for the cost of materials and natural geographic constraints on supply, the dominant factor behind this decoupling of supply and demand is political regulation, such as limits on the density of new housing developments and caps on the number of permits issued by a localities’ government.

“These limits are a classic example of the NIMBY phenomenon,” the paper said. “Even if residents support a citywide increase in the supply of housing, they may still oppose specific projects in their neighborhood. This seeming disconnect between views on citywide and local development policies creates a classic collective action problem for those policymakers who must find ways to reconcile the conflicting views.”

“Renters and homeowners are expected to disagree on support for new housing, with NIMBY homeowners opposing citywide and neighborhood development and renters likely supporting the new supply,” the paper said. “However, in high-rent cities, renters look far more like homeowners. Instead of paying little attention to the location of proposed new housing, renters in expensive cities are just as NIMBY towards market-rate housing as homeowners. Moreover, this renter opposition to nearby development does not mean they support less new development overall. In fact, renters in expensive cities show just as much support for a 10 percent increase in their city’s housing supply as renters in more affordable cities. The main difference between these groups of renters is their NIMBYism.”

The paper said over the past 40 years, city governments have increasingly empowered neighborhoods to weigh-in on housing proposals through formal planning institutions. “In doing so, these decisions have amplified NIMBYism and the ability to reject new housing, without maintaining a counterweight for the broader interest for new supply citywide,” the paper said. “In other words, while most residents may support new housing for the city as a whole, both homeowners and renters are willing and increasingly able to block that supply in their own neighborhood, effectively constraining the housing supply citywide. This is housing’s collective action problem.”