The Enemies of Density

Timothy B. Lee -- Writer with Ars Technica and the Cato Institute

In my last post I promised to discuss why the political forces opposing greater density are so strong. Reader JonF311 helpfully chimed in with an example of one of the concerns I had in mind:

And how are we to get a whole block of homewoners to sell out and let their houses be torn down and replaced with some high-rise? Kelo-like laws? That's the real reason we aren't building that sort of housing in near-in suburbs. People already live there and they don't want to give up their homes to yet another social experiment.

I think ghhar's response was spot-on:

There is some middle ground between "Single Family Homes Only" and "Dystopian Eminent Domain Sim-City Arcology Social Engineering." Maybe no houses get torn down at all. In my area some developers are going to tear down some old storefronts and build a mixed shops+apartments building. They originally wanted it to be 4 stories but didn't want a zoning fight so they're settling for two. There's a 12 story hospital building not two blocks away, but I guess it wasn't worth the fight. Or maybe some homeowner sells their kind of rundown mid-50s house. What's so bad about a builder splitting the lot into a new duplex or triplex?

Again, this isn't primarily about 50-story apartment towers. In many suburban neighborhoods, lots are large enough to have room for two or three townhouse units or row houses. Combine two or three adjacent lots and you've got space for a small apartment building. This kind of small-scale development need not be a big logistical burden for developers, nor is it especially onerous for nearby homeowners. But in the aggregate, allowing this kind of development across a metro area can create housing for thousands of new residents.

In the chapter of his book titled "The Mirage of Gentrification," Matt Yglesias patiently debunks the common misperception that higher-density development causes rising rents. In reality, he points out, rising rents and new developments are both symptoms of an underlying increase in demand for housing. Restricting density would actually make rents rise even faster.

He's right, but fear of higher rents isn't the only reason people are wary of "redevelopment" occurring in their neighborhood. Sometimes, "redevelopment" involves developers purchasing individual buildings from willing sellers, knocking them down, and replacing them with higher-density developments. But other times it means the government forcibly taking entire blocks of homes, knocking them all down, and replacing them with something totally different. Understandably, incumbent property owners aren't very enthusiastic about this latter approach, which involves them losing their homes without their consent.

And unfortunately when urban planners and elected officials announce a new project, they're often vague about which kind of project it will be. When cities undertake the coercive kind of redevelopment project, they almost never announce that fact at the outset. To the contrary, they often describe eminent domain as a "last resort," and they sometimes dismiss those who warn about the use of eminent domain as fear-mongers. Only after "voluntary" negotiations break down do cities start talking about invoking eminent domain powers.

Yet the threat of invoking eminent domain fundamentally alters the respective bargaining positions of developers and homeowners. Developers routinely point out to property owners that if they don't accept the developer's offer, the developer can always seek to take the land via eminent domain. Property owners may accept a lowball offer just to avoid the hassle, uncertainty, and legal bills associated with a protracted court battle. Thus, even if eminent domain is only rarely invoked, the threat of it puts downward pressure on sale prices in redevelopment projects generally.

The phrase "eminent domain" appears only once in Matt's book, and it's in a quote from an anti-density conservative activist. This seems like a significant oversight. Ideally, I'd like to see Matt explicitly endorse limits on the use of eminent domain for private development. Combining upzoning with stronger protections for property rights would allaying peoples' fears of being forced out of their homes. But even if that's not Matt's position (and I don't think it is), the abuse of eminent domain is a concern that needs to be addressed if you're making the case for pro-development housing policies.