The Theology of YIMBY

The Minneapolis Comp Plan is built on a simple concept – density is good.  The plan purports a 12% growth but up-zoning the whole city means Minneapolis could take all the growth forecast for the Twin Cities and much more.  Any home can be demolished. 15-20 story towers are envisioned throughout the City.  Uptown and around the lakes becomes Manhattan.  And according to this theology of density called YIMBY – this is good.

Why do YIMBY?  The argument is that we are not producing enough housing to meet demand because of onerous regulations like zoning.  If we reduce regulations on developers, the marketplace will produce more housing and home prices will decline, rental costs will decline, income inequality will be reduced, historic racial inequities will be reduced and we will be a better city.  Clayton Nall, a professor of political science at Stanford, calls YIMBY “An economically progressive message tied with a pro-development message that can potentially ameliorate the concerns of liberal homeowners.”  (‘Not in My Backyard’ to ‘Yes in My Backyard.’ Alana Semuels. The Atlantic.  Jul 5, 2017)

Where does this pro-developer/anti-regulation thinking come from?  The Atlantic did a good review of this movement called “YIMBY.”  Unsurprisingly, it is a tech and developer-funded effort coming from San Francisco, a place that is truly having a housing shortage because of the large influx of people due to the tech boom.  North America’s first YIMBY convention, YIMBY2016, was funded by the National Association of Realtors and the Boulder Area Realtor Association among other groups.


But is Minneapolis having a housing crisis? Are we San Francisco?  Are we Seattle? No.  When adjusted for inflation, median housing prices in Minneapolis are what they were in 2003.  Apartment rents went up 3.3% overall last year.  We do have a small amount of inventory on the market currently for people buying new homes but that is because developers did not expect our current economic expansion to last as long as it has. Developers will build to meet demand as they always have and that will be addressed.  Minneapolis is not San Francisco.  Minneapolis is not Seattle.

Will reducing regulations on the development industry produce really produce more housing?  Undoubtedly, as that is the usual consequence from deregulation.  But will it produce more affordable housing as the YIMBY advocates claim?  More housing for historically oppressed groups?  No. New housing construction costs are too high for the private market to produce housing affordable to low income persons without government intervention.

In fact, existing naturally occurring affordable housing will be first to fall to the axe, as it is the housing that can provide the most profits.  This will reduce affordable housing and not help any historically oppressed groups.  It will also accelerate gentrification.  And because any home can be demolished and up-zoned, home prices overall will increase, making all existing housing less affordable.

Won’t supply and demand mean that if we have more supply, costs will go down?  First off, traditional thinking about supply and demand doesn’t work because people don’t have a cabin in the City. They don’t go out and buy another house when prices go down.  Every person buys only one housing unit.    So traditional supply and demand thinking doesn’t really work.  Builders don’t build housing they expect will be empty. Unless you are an extreme situation like Seattle or San Francisco where a large number of people are living doubled or tripled up waiting to buy housing, building more housing won’t drive down housing costs. In Minneapolis, new housing is much more expensive than existing housing and building more new housing will not drive down the cost of existing housing.

Also, our real-life experience shows that new housing is not driving down the cost of housing.  Minneapolis has added about 20,000 new housing units yet rents in Minneapolis have gone have gone up because of the new housing, not down as YIMBY advocates say it will.  New housing is just more expensive than 100-year-old, fully depreciated housing.

Average Rent

Who is helped by deregulating the housing industry?  Developers.  Rich people.  Here is a real example.  North Bay wants your money.   If you give North Bay $100,000, they will invest it in this rental property that will be built at 2407 2nd St NE:

2407 2nd st NE

Click to access 2407%202nd%20St%20NE%20Staff%20report%20attachments.pdf

And you will get back 15% a year each year for 20 years. Pretty sweet return, right?  That is the reality of market rate development in Minneapolis.

I have to give it to the YIMBY movement.  They have done a really good job of enlisting good people who care passionately about this City.  And telling them things that are just not true.  And those good people believe this stuff because they want solutions to things like historic racism and inequality and expensive housing.  We need solutions to those things.  But radically deregulating developers isn’t going to do that.

What do we need to do?

We do need to find housing for another 50,000 people over the next 20 years. But we also need to protect our existing housing stock because old houses are more affordable than new ones.  We should not up-zone the City and open it all up to bulldozers.  We need to invest government resources in more affordable housing and we need to do that smartly.  We need to stop teardowns of existing affordable homes.  We need to continue to focus new development in our existing walkable environments and at high frequency transit nodes throughout the City.

What shouldn’t we do? We shouldn’t just turn the keys of the City over to developers to let them have their way.  The YIMBY movement should be exposed for what it is: a de-regulation gift to developers.

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