Chicago Densification: A Building Industry Brain Fever? Or A True Affordable Housing Solution?

Upzoning! Beloved by the housing industry. Championed by the recent so-called YIMBY movement (Yes In My Back Yard).¹

The affordable housing benefits supposedly come in two simple steps.

First, upzone. Rezone a neighbourhood to increase the density, by allowing duplexes, triplexes, low rise apartments, high rise apartments, whatever density increase can be finagled into the particular neighbourhood.

Second, as night follows day (Laws of Physics), new housing can be built within the neighbourhood, increasing the supply. This will lower demand, causing housing prices to fall (Laws of Supply and Demand).²

Whether they are true YIMBY believers in upzoning, or eager-to-build-your-luxury-condo developers, all are quite certain that it will not matter whether the housing added to the neighbourhood is affordable housing or luxury housing. Either way, in the fullness of time, the Laws of Supply and Demand will inevitably reduce neighbourhood housing prices. And by this miracle of economic ‘Law’, a nation can build its way out of an affordable housing crisis.

Yes, all it takes is upzoning.

Alas, it’s only a matter of time before these ideas for creating affordable housing can be tested in real life. In Chicago, upzoning changes in 2013 and 2015 are beginning to tell us what actually happens when a neighbourhood is upzoned.

Read more in CITYLAB: Does Upzoning Boost the Housing Supply and Lower Prices? Maybe Not.

1. We consider YIMBY’s acronym to be ‘so called’ because it does not reflect advocates demanding change in their actual backyards/neighborhoods, but in a notional ‘every person’ backyard neighbourhood.

   This makes it quite unlike NIMBY (Not in My Back Yard) activism which is invariably fought by neighbours resisting housing changes in their actual back yards/neighbourhoods.

2.  It should be noted here that more cautious souls might do well to refer to these supply and demand influences as THEORIES of supply and demand. Indeed, the man who proposed them centuries ago, Adam Smith, recognized that they do not work in every instance.