Coase-Sandor Working Paper Series in Law and Economics

Document Type

Working Paper

Publication Date



Incumbent residents routinely oppose residential development.1 Interestingly, this is true of both homeowners and renters, if for opposite reasons. Homeowners typically worry that new housing will cause the market value of their own homes to fall, resulting in a hit to what is usually a house-heavy personal wealth portfolio.2 Tenants typically worry that new housing will cause the market value of their own homes to rise, generating pressure toward higher rents and displacement.3 Both homeowners and tenants also express concern that new housing development will change the character of their neighborhoods in unwanted ways.4

Resident opposition to housing plays out in community after community across the country, with pernicious effects on productivity and equity.5 These efforts choke off the supply of homes—essential ingredients in every human being’s life plan—in the very places where people most wish to live. The consensus view among housing scholars is that all of this opposition to residential development is wrongheaded. While homeowner opposition is often cast as normatively illegitimate NIMBYism, tenant opposition is criticized for just plain getting the facts wrong. Citing the law of supply and demand, academics point out that adding more housing will tend to decrease, not increase, the price of housing, which should help rather than harm the pocketbooks of tenants.6

Professor John Infranca’s thoughtful and well-reasoned piece accepts this premise, but asks whether we should nonetheless view antidevelopment opposition by incumbent residents of some communities differently, not just as a matter of political expediency, but as a normative matter.7 Specifically, should people residing in lower-income communities that have been historically disadvantaged by redlining and other forms of racism and disinvestment have a greater say in what happens next, development-wise? For Infranca, such differential treatment “should be designed primarily to address unwanted changes to neighborhood character and the claims of long-term residents to a distinct stake in the neighborhood,” while “[o]ther local concerns, most notably concerns regarding displacement and rent increases, do not justify special treatment in the form of greater local control.”8

Infranca’s “modest case for distinct treatment”9 thus rests on two hard-to-dispute claims: (1) that housing supply is the solution to, and not the cause of, housing unaffordability; and (2) that people living in lower-income communities long ravaged by racism and economic exclusion have a stronger normative basis for resisting neighborhood change than do affluent NIMBYs.10 Yet taking the first proposition seriously means that the people who are in the strongest normative position in opposing housing also tend to be on the shakiest ground empirically.11 Infranca addresses this tension by shifting attention away from incumbents’ arguments about rent levels and displacement risks—the subjects of quantitative empirical work—and toward incumbents’ efforts to protect interests like community character.12 This move cannot fully escape the empirical shakiness at the heart of opposition in lower-income communities, however, as many of the qualitative changes that incumbents oppose may not be substantially caused by (and indeed, should be mitigated by) the addition of new housing.13

In this response, I suggest repurposing this causal weakness in the case against housing into a fulcrum for policy. The fact that adding housing supply reduces rather than increases home prices makes it workable— and incentive-compatible—to pair new housing development with protection against rising local housing costs.14 Notably, this approach distinguishes between two sets of fears voiced by housing opponents: those that relate to increasing home values (more commonly expressed in prototypical gentrification scenarios) and those that relate to decreasing home values (more commonly raised in traditional exclusionary zoning scenarios). Concerns about housing price increases stand on different empirical and normative footing than those relating to home value declines, which makes them both especially important and unusually feasible to address.15 Protecting incumbents against rising housing costs in neighborhoods experiencing growth in housing supply aligns both with current empirical understandings and with the normative distinctions that Infranca draws.

This essay proceeds in two steps. Part I reviews reasons for opposition to housing development and discusses how incumbents’ arguments interact with the empirics of housing supply. Part II makes a case for addressing incumbent concerns about housing price increases while expanding housing supply. Such a policy response would not be premised (counterfactually) on new supply causing price increases, but rather on the potential for exogenous changes in demand to drive up prices. Residents would be insured against catastrophic losses caused by these external forces if (and only if) their neighborhoods undertook loss mitigation by adding significant new housing supply.16

Included in

Law Commons