Are NIMBY Economics Wrong?

By. Neil Williamson, President

As Charlottesville is evaluating its Future Land Use Map (FLUM) and Albemarle County is reexamining its priorities in the Crozet Master Plan, it may be appropriate to take a high altitude look on how Not-In-My-Backyard (NIMBY) driven regulations restricting housing supply impact long term economic vitality.

Throughout both Charlottesville’s and Crozet public engagement processes, we have heard existing property owners regularly speak up at rezoning hearings (and Letters to the Editor and in “comments”) indicating economic concerns that their personal property values will plummet based on the change for increased density on a neighboring parcel.

What if, as a community, such tight housing controls constrict economic vitality.

That’s the finding of a recent paper by Robert W. Wassmer of California State University, Sacramento (AKA Sacramento State) Department of Public Policy and Administration.  Published this month in the academic journal Economic Development Quarterly, examines panel-data regression evidence in support of high residential land prices discouraging new workers’ entry to such areas or encouraging existing workers’ exits.

According to the paper:

The choice of a stringent local regulatory environment on residential land often results from existing homeowners’ not-in-my-backyard-based (NIMBY) desire to maximize the value of their assets by preserving the character of their location and generating scarcity to its access (Gyourko & Molloy, 2015). However, the outcome of many jurisdictions pursuing this is a higher average home price in the entire metropolitan area that can lead to adverse external effects (Wassmer & Williams, 2021). Such effects include a constraint on potential new entrants’ ability to afford a home in the area or an inducement toward mobility out of the area to renters desiring
homeownership and to existing homeowners desiring bigger or better homes. These influences on mobility offer Americans a second motive for labeling their country’s lack of housing affordability in many of its metro areas as a crisis warranting intervention—a crisis that restricts a burgeoning metropolitan economy’s ability to attract and retain the labor necessary to continue its economic growth. Emphasis added-NW

In other words, landowners stoking the fires of exclusivity and reduced density to favor their personal economic gain are likely hindering the community at large’s economic vitality.

Looking at the supporting literature on the topic, Wassmer found significant evidence that increased regulatory review had a stifling influence on housing supply.

Using recently released county Gross Domestic Product data, 2010 census population data, Acre Residential Land Price and non farm payrolls.

Wassmer’s statistical research found:

This research offers evidence that high-priced new housing (as proxied by likely high prices for an acre of land available for single-family residential housing) in U.S. metro areas influences metro-wide economic outcomes by diminishing the trajectory of economic output and reducing employment….Besides the metropolitan-wide effects of high home prices found here, a high cost of shelter in a metro area relative to income imposes welfare burdens on low- and moderate-income
households….Local governments respond to such NIMBYism through the imposition of local housing and land use regulations. These regulations
achieve the parochial goal of keeping new housing out of a community and, if enough of the metro area’s localities pursue it, out of the entire metropolitan area. All this results in the nonconstruction of the number of new houses needed metropolitan-wide to bring down the housing prices in an unaffordable
metro area. Emphasis added-nw

The NIMBY voices have part of the equation correct – If you build no more housing my property value may increase for some time – they miss the bigger twenty to fifty year picture – absent workforce housing, companies will not come and existing companies will leave pushing the County GDP lower and reducing demand for the very housing they were trying to protect.

Looking at Crozet Master Plan Update and Charlottesville’s Future Land Use Map, we recognize discerning land use designations are tough.  Which lens do you use – do you value the voices (and voters) of today or do you plan for the community’s long term economic vitality?

That is the question. The answer may resonate for generations.

Respectfully Submitted,

Neil Williamson

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