How more residential Buildings CAn Impact Housing Affordability

Over the last month, the City of Evanston has held a series of focus groups as part of Envision Evanston 2045, its initiative to write a new Comprehensive Plan and a new zoning code for the City. One topic that participants discussed was whether the new zoning code should be changed to allow increased development of residential buildings and how such an increase could impact housing affordability.  ​

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Research Shows Affordability Impact of Housing Supply 
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More and more, evidence is showing that increasing the housing supply can halt increases in housing prices and lead to actual decreases. This Research Roundup prepared by UCLA’s Lewis Center for Policy Studies does a great job summarizing some of the most recent research on this topic. The researchers conclude their report with the following: ​

The supply effects described in these papers are not large, but the authors make a persuasive case that market-rate development causes rents in nearby buildings to fall rather than rise. Their findings conform with long-standing planning and economic theory about the relationship between housing supply and affordability, and the commonsense notion that the problem of too few homes cannot be solved without building more homes. Theory, evidence, and common sense are all in agreement, so we should approach claims to the contrary with a healthy dose of skepticism. (p. 15) ​

What about Affordability? 
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This is not to say that an increase in housing by itself will create more affordable housing—particularly not for very low-income households, and not within any reasonable time frame. Joining Forces would argue, rather, that increasing the housing supply is a prerequisite for creating more affordable housing. While an increase in the number of housing units could eventually lead to a significant increase in affordable units, incremental increases, even small ones, can make a difference now in the following ways: 

• Inclusionary zoning ordinances require new market rate residential developments to make a percentage of their units affordable, which means that new affordable units will appear in almost all new multi-family buildings in communities with such ordinances.  
• While most new units, including the inclusionary units, will not be affordable for very low-income families, some will appeal to moderate and middle-income households, who will then vacate units they are currently in. Some of these will be more deeply affordable or have owners who are willing to rent to people with subsidies—with subsidies being a very important way to increase affordability. 
• In the northern suburbs, the “Fair Market Value” that the government uses to determine what their subsidies will cover in housing costs is lower than the actual market value. For example, when Connections for the Homeless wants to use government funding to pay for a market rate apartment, the cost is still higher than the Fair Market Value that the subsidy will cover. This means that we either need to give up the apartment or find other sources to pay the balance. So, increasing the housing supply enough to lower housing costs to the Fair Market Value will greatly increase the supply of housing that can be used for subsidy programs. 

 
As the UCLA Research Roundup states:  ​

Market-rate housing should be assumed to complement rather than undermine other affordability and economic empowerment strategies. If market-rate housing lowers nearby rents, it can help stabilize property values so that affordable housing construction and acquisition is less costly. It can lower the per-household cost of housing voucher subsidies so that we can help more people afford their rent, and limit the rising prices that are forcing residents out of their homes and onto the streets. It can be harnessed to cross-subsidize affordable units through policies like density bonuses and inclusionary zoning, and generate property taxes to support other essential public services. (p.15)​

Planning Is Key 
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Clearly, not all development is good development. Joining Forces advocates for zoning code reform, as well as review and approval processes that support housing increases that will help communities improve the well-being of all residents. Such processes need to take into account the opinions and needs of homeowners and renters, high-income and low-income residents, the young and the old, and those whose needs are not currently being met. The City of Evanston appears to be seeking such input as it works through Envision Evanston 2045. We encourage advocates to share their opinions and support for increased density and the affordability it can help to create. ​