In a recent Realtor.com study, experts revealed that cities across the nation have been speculating that more housing and eventually lower housing costs will be made possible by looser zoning regulations. That same study suggested that the risk may be profitable—but “only in certain circumstances and not on demand.”
Researchers at the Urban Institute discovered that upzoning does result in increased housing supply when they examined significant rezoning initiatives in Philadelphia and New York City. However, the timing of the reforms, local market demand, and whether other policies made projects financially possible all had a significant impact on the gains.
In some places, like Philadelphia, the reforms successfully spurred more density while failing to increase the volume of projects. Others, such as the Bronx’s Jerome Avenue, had no appreciable rise in housing as a result of rezoning, indicating the significance of other economic variables in luring new development. The analysis provides a better understanding of where the plan is most likely to succeed—and where it may fail—as local, state, and even federal governments continue to push zoning reform as a response to the housing affordability crisis.
Measuring Regional Differences of Upzoning
The “Concrete Jungle”—New York—provides the best proof of upzoning’s effectiveness. According to many planners, housing shortages over the decades in New York were self-inflicted, by zoning regulations that grew more restrictive after the 1960s. Housing construction fell precipitously after those rules were established, and as of right now, the city’s vacancy rate is at a record low of 1.4%, and the housing gap is anticipated to be around 560,000 units.
Following a previous wave of rezonings during the Michael Bloomberg era in the 2000s, the Bill de Blasio administration implemented a series of neighborhood-by-neighbor upzonings between 2016 and 2021 in response to the situation. In comparison to comparable properties that were not upzoned, Urban Institute researchers estimate that seven of these neighborhood-scale upzonings collectively created roughly 4,100 additional housing units within four years.
Once more, these are not merely permits but genuine units. In a shortfall of more than 500,000 units, this distinction is crucial because they represent actual homes that people can move into rather than merely the prospect of future ones. However, experts revealed that the result that made headlines in New York had a catch.
With over 15 extra units per upzoned parcel four years after rezoning, compared to about 1.1 across all upzoned parcels citywide, one area, Gowanus, accounted for the majority of the gain, significantly surpassing the other rezonings.
As a result, Gowanus is practically a best-case scenario for upzoning. The area in northwest Brooklyn entered the rezoning process with some of the city’s highest demand. It is centered on a former industrial canal corridor that has been undergoing remediation for years. That kind of momentum can result in very favorable conditions for new homes, according to Christian Perry, a globally connected Realtor at Sotheby’s International Realty.
“Going back to my days at Merrill Lynch, I often decided which towns and cities were worth buying bonds in for my clients by simply counting the cranes,” Perry said. “Crane counts told you where capital had confidence and where real development was happening.”
For the larger case for upzoning, it is both promising and restrictive. Gowanus’ success raises more difficult concerns about how readily that success can be repeated elsewhere, but it also provides a clear example of where the strategy might be effective.
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