A new post full of fun things to read this weekend in the realm of state and local government law
1. City-wide effects of new housing supply: Evidence from moving chains, Cristina Bratu, Oskari Harjunen, and Tuukka Saarimaa (HT: Stephen Smith)
Abstract:
We study the city-wide effects of new, centrally-located market-rate housing supply using geo-coded total population register data from the Helsinki Metropoli- tan Area. The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market- rate construction loosens the housing market in middle- and low-income areas even in the short run. Market-rate supply is likely to improve affordability outside the sub-markets where new construction occurs and to benefit low-income people.
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It is long been known to economists that new housing supply leads to lower prices. This is in part because housing 'filters' or becomes less valuable over time (like all depreciating assets) and in part due to the ordinary effect of supply on prices. It turns out this happens even in very small geographies -- new housing drives down prices nearby, even when it comes with new amenities. This is largely due to its effects on breaking up homeowner cartels that protect the value of their homes using land use controls.
But figuring out exactly how this works operationally has been quite difficult. One of my favorite papers of last year, Evan Mast's The Effect of New Market-Rate Housing Construction on the Low-Income Housing Market, showed that new construction created a chain that reduced prices. People who moved into the new building would move out of their old places, freeing up apartments and driving down prices even among those who couldn't afford new construction. "I illustrate how new market-rate construction loosens the market for lower-quality housing through a series of moves. First, I use address history data to identify 52,000 residents of new multifamily buildings in large cities, their previous address, the current residents of those addresses, and so on for six rounds. The sequence quickly reaches units in below-median income neighborhoods, which account for nearly 40 percent of the sixth round, and similar patterns appear for neighborhoods in the bottom quintile of income or percent white."
Along come Cristina Bratu et al, using an amazing Finish data set, testing a similar hypothesis. They find that new construction frees up units down market even faster than Mast does. "For each 100 new, centrally located market-rate units, roughly 29 (60) units are created in the bottom-quintile (bottom half) of neighborhood income distribution through vacancies." Further, they show that social housing frees up units as well.
Abstract:
Who governs America’s cities: organized interests or mass publics? Though recent scholarship finds that local governments enact policies that align with citizens’ preferences, others argue that it is organized interests, not mass publics that are influential. To reconcile these perspectives, we show that election timing can help shed light on when voters or groups will be pivotal in city politics. Examining 1,600 large US cities, we find that off-cycle elections affect city policy responsiveness asymmetrically, weakening responsiveness on those issues where there is an active and organized interest whose policy objectives deviate from the preferences of the median resident. Here, we focus on public employees’ interests and find that local governments that are elected off cycle spend more on city workers than would be preferred by citizens in more conservative cities. We conclude by discussing the implications of these findings for the study of interest groups and representation in local politics.
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Using cool new data on voter preferences, this finds -- much as Sarah Anzia did- - that holding elections off-cycle leads to greater interest group influence and less responsive policies.
Demsas is a terrific reporter covering housing and other issues for Vox. I wish I could just quote the whole damn thing. But here's a taste:
"Our focus on gentrification might lead people to believe that it is the dominant form of inequality in American cities (our outsized focus on the phenomenon may be due in part to the fact that gentrification scholars, journalists, and consumers of digital media tend to live in gentrifying neighborhoods themselves). But the core rot in American cities is not the gentrifying neighborhoods: It is exclusion, segregation, and concentrated poverty.
White, wealthy neighborhoods that have refused class and racial integration have successfully avoided much scrutiny as gentrification has taken center stage in urban political fights. On the other hand, predominantly Black and brown neighborhoods often don’t gentrify due to disinvestment and centuries of racist and classist policies."
Check it out!!!
4. Andrew Whitmore, Requiem for a Growth Machine, Homeowner Preeminence in 1980s Los Angeles (2011) (HT: Brian Hanlon)
This isn't a new paper, but it's a good one. Reading this history of how L.A. went NIMBY is horrifying, but enlightening.
Destin Jenkins's book, The Bonds of Inequality, was a smash hit over the summer, as much as a book about the use of municipal bonds in mid-century San Francisco can be a smash hit. It is a remarkably interesting book, full of both amazing detail and history and interesting ideas. But I had some trouble with it, trying to figure out what it thought the alternatives to the forms of bond financing used by cities in the period were. Highsmith has a clear normative view -- arguing that greater centralization of taxing authority is necessary. Whatever you think of this, it is cogent and powerful, a wonderful accompaniment to an excellent if sometimes vexing book.
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