The Storper paper: not exactly a bombshell

Some commentators are slightly agog over an academic paper by Andres Rodrieguz-Pose and Michael Storper; Richard Florida writes that they shows that ” the effect of [housing] supply has been blown far out of proportion. ”

Most of this paper isn’t really about the effect of housing supply on prices at all. Instead, the first 80 percent of the paper seems to argue that it makes no sense for low-skilled domestic workers to live in cities, because “Several decades ago mid-skilled work was clustered in big cities, while low-skilled work was most prevalent in the countryside. No longer; the mid-skilled jobs that remain are more likely to be found in rural areas than in urban ones.” (p. 20).

The authors’ attack on upzoning is in the last few pages, and is based on broad, sweeping generalizations rather than actual data. First, they say that upzoning “would very likely involve replacing older and lower-quality housing stock in areas highly favoured by the market, effectively decreasing housing supply for lower income households in desirable areas.” (p. 30). They cite no source or data for this assertion- just pure conjecture. What’s wrong with their claim? First, such gentrification happens without upzoning; for example, in Chicago’s Lincoln Park, gentrification occurred through renovation of existing structures, rather than new, taller buildings- and of course places where new construction is politically difficult (such as San Francisco and Manhattan) are notorious for gentrification. Second, it assumes that new housing inevitably replaces older housing, rather than, say, vacant lots- an obvious overgeneralization..

Second, they rely on the “but we’re already building new housing!” argument. They cite a paywalled newpaper article to support this statement: “rents are now declining for the highest earners while continuing to increase for the poorest in San Francisco, Atlanta, Nashville, Chicago, Philadelphia, Denver, Pittsburgh, and Washington, noting that a boom in luxury construction in these areas has failed to ease housing market competition for cheaper properties.” (p. 30). But of course there is a huge difference between rents in San Francisco (where development is in fact quite difficult and where new construction decreased by 41 percent in 2018) and rents in Atlanta (where development is less difficult).

They then proceed to rely on Yonah Freemark’s study of some neighborhoods in Chicago, citing his work for the claim that in “Chicago, for example, it has been found that upzoning has had unintended consequences, such as raising housing prices without necessarily triggering additional construction of newly permitted dwellings.” (p. 32). But as Freemark himself has noted, ” “b) 5 yrs [the period of his study] may not be enough time for full upzoning effects. c) Upzonings are still probably good for affordability @ metro scale.” So Freemark’s work doesn’t support their sweeping claims.

Finally, they (correctly) point out that more lenient zoning won’t cure segregation. But it also won’t cure Lyme disease. So what?