Rich Neighborhoods, High Barriers: Study Maps NIMBY Opposition

New research reveals affluent homeowners require up to $263,000 in compensation to accept nearby apartments, while lower-income areas ask just $5,000

Photo by Khamkéo on Unsplash

As housing prices reach record highs across America, new research provides unprecedented insight into one of the biggest obstacles to increasing housing supply: the significant value many suburban homeowners place on low density. Economists Joseph Gyourko and Sean McCulloch's NBER working paper, The Distaste for Housing Density, offers the first rigorous quantification of how much homeowners value low-density neighborhoods and what that means for housing policy.

Understanding the Research

The study analyzed over 263,000 home sales across 217 municipal borders in 32 metropolitan areas, comparing areas with different density restrictions. The findings are striking:

• Homes cost $40,000 more in regions with stricter density limits

• Lots are typically 3,000 square feet larger

• These differences persist even when controlling for school quality and other amenities

• The effects are consistent across different regions and market types

This comprehensive analysis provides the first rigorous measurement of how much homeowners value low density, moving beyond anecdotal evidence to hard data.

The Numbers Behind Housing Preferences

The research reveals a complex landscape of preferences regarding density:

Strong but Variable Opposition:

• 65% of homeowners would experience some welfare loss from increased density

• The median homeowner would require $5,164 in compensation for modest density increases

• The average compensation needed is $9,500

• Some, tend to be wealthier home owners, would require up to $150,000 in compensation

Support for Density:

• 35% are either neutral or would welcome more density

• Support is stronger in already-dense areas

The Rental Factor:

• Opposition to rental housing is 5-6 times stronger than to owner-occupied homes

• Median compensation needed for rental density: $12,732

• Average compensation needed for rental density: $56,392

• This gap persists even after controlling for other factors

Geographic and Demographic Patterns

The study reveals important variations across different types of neighborhoods:

Low-Density, Higher-Income Areas:

• Average compensation needed: $29,655

• For rental-specific density: $263,192

• Strongest opposition to any kind of density increase

• Particularly strong resistance to rental housing

Higher-Density, Lower-Income Areas:

• Average compensation needed: $2,125

• For rental-specific density: $4,724

• More openness to various housing types

• Less distinction between rental and owner-occupied housing

Understanding Opposition to Rental Housing

The study's findings on rental housing deserve special attention:

Root Causes:

• When controlling for demographics, opposition drops 63%

• The remaining opposition suggests other factors beyond demographics play a role

• The distaste for owner-occupied housing slightly increased after controlling for demographics

What This Means for Housing Policy

The research findings help explain several key challenges:

1. Local Control Dynamics:

   1. The combination of widespread moderate opposition and intense minority opposition creates difficult political dynamics

   2. The strongest opposition comes from areas that often have the most political influence

   3. The compensation required would be both expensive and highly regressive

2. The Rental Housing Challenge:

   1. The particularly strong opposition to rental housing suggests special challenges for multifamily development

   2. The intensity of opposition increases in wealthy, low-density areas

   3. Even after controlling for demographics, significant opposition remains

3. Geographic Considerations:

   1. Opposition varies significantly by neighborhood type.

   2. The strongest opposition exists in areas that might otherwise be prime candidates for density.

   3. The variation in opposition suggests different areas may require different approaches.

Research Implications

The study provides several important insights for understanding housing policy:

1. It quantifies real preferences that need to be considered in any density discussion

2. It shows why local control often results in density restrictions

3. It helps explain why rental housing faces particular challenges

4. It demonstrates why purely local solutions may be difficult

The researchers note that their findings pose significant challenges for increasing suburban density through local political processes. Given the strength of local opposition, they suggest that state-level interventions may be necessary, though they don't specifically advocate for any particular policy approach.

Looking Forward

While the study doesn't make specific policy recommendations, it helps explain why increasing suburban density has proved challenging. The combination of:

• Widespread moderate opposition

• Intense opposition from a vocal minority

• Particularly strong resistance to rental housing

• Concentration of opposition in politically influential areas

Local political processes create significant obstacles to increasing housing supply. Understanding these obstacles is crucial for any discussion of potential solutions.

The research provides valuable context for ongoing housing policy debates, even as it leaves open the question of how best to balance local preferences with broader housing needs. These findings can help inform discussions about potential solutions, even though determining those solutions will require additional research and policy debate.