89% of New Yorkers stand to gain from housing abundance

Legalizing denser housing benefits renters and low-rise homeowners alike. We need to improve how we talk about this win-win future to make it a reality.

A substantial coalition of New York's renters and low-rise homeowners could see huge financial gains from reforming the city's land use policies to enable denser housing construction. Advocates and politicians championing the abundance agenda must now ensure this majority realizes the significant benefits that await.

The urgency of housing reform

High housing costs are the biggest problem that stifles the wellbeing of New Yorkers. Half of New York’s renting households pay more than 30% of their income on rent.¹ The dream of homeownership is unattainable for many in New York. Low and middle income families are being pushed out of the city by the high cost of living.

New York’s high housing costs are the direct result of laws that make it illegal or uneconomical to build more homes. Prices to rent or buy a home are mechanically set by the law of supply and demand, so constrained housing supply combined with huge demand to live in New York results in high and rising housing prices.

The only actions that will reduce the price of market-rate housing are increasing the supply of homes or reducing the number of people who want to live in New York. We saw rents plummet during COVID, when the city’s population briefly dropped. Now, with vacancy rates back below 2%, prices are soaring.²

(It is, of course, possible for the government to subsidize housing or restrict rent increases. These policies are great for their lucky few beneficiaries. However, they’re very expensive and don’t increase the number of New Yorkers — they just shift who gets to live here.)

Who benefits from denser housing?

Fortunately, there is actually a huge proportion of New Yorkers who will benefit from increasing the supply of housing.

Let’s consider a scenario where the city legalizes building apartments anywhere in New York. This would be in contrast to today, where the rules basically forbid constructing anything more dense than terraced, single-family houses across almost all of Staten Island, most of Queens, and much of southern Brooklyn.

Under this scenario, property developers would offer large sums to buy low-density land in desirable locations. Standalone homes and low-rise townhouses would be prime targets for redevelopment into apartment buildings. This transformation could increase a plot's capacity from a single-family home to housing dozens or hundreds of people.

To be clear, no homeowner would be forced to build an apartment building on their land; they would just now have the freedom to do so if they wanted.

Renters would benefit from lower rents, thanks to the increase in housing supply. In addition, these new apartments would on average be higher quality than existing dwellings, with modern materials, sound insulation, fireproofing, and efficient systems for heating and cooling.

New York City is unusual in having a huge share of our population living in rented apartments: 67% of NYC households rent, compared to just one-third elsewhere in the country.³

Most of New York’s renters already embrace high-density, transit-oriented lifestyles: 75% of renters live in buildings with five or more apartments, and 57% of renters live in large buildings containing 20 or more units. 75% of New York’s renters who work outside the home commute to work by transit, on foot, or by bike.⁴

These renters form the core of any movement in favor of increasing housing supply and improving our urban fabric, but they need to be persuaded of the benefits.

Existing owners of low-density housing also stand to benefit hugely from allowing the intensification of their land. Under more permissive land use rules, owners of land that currently carries single-family homes and low-rise townhouses could benefit from multi-million dollar windfalls by upgrading their plots to apartments.

Once bought out, these former owners of low-density land could either buy luxurious new apartments in New York, or — if they still prefer suburban living — take their millions to buy a mansion almost anywhere else in the country. Even for homeowners who prefer not to sell right now, the mere possibility that their land could house more people would increase their property value. The increased value of their land would be accessible today through home equity loans or reverse mortgages.

This group of low-density homeowners is large and influential. 14% of New York City’s households are owner-occupied single-family homes (either standalone or terraced townhouses). A further 8% of homes are owner-occupied units in buildings with two, three, or four units. This 22% share of low-density homeowners would be the prime candidates for financial windfalls from upzoning. 

When we unite the 67% of renters and 22% of low-density homeowners, this gives us a potential coalition of 89% of New York City households that would directly financially benefit from the legalization of denser housing. This is a great foundation.

Of course, there are some people who would lose out from densification. Existing high-density apartment buildings would lose value due to increased competition from new supply coming onto the market. It’s unlikely to be profitable to knock down existing tall buildings, just to replace them with even taller buildings. Owner-occupied units in large buildings are rare: only 10% of households own and occupy an apartment in a building with 20 or more units.

We’d also expect property investment firms operating large rental buildings to see their portfolios decline in value. These investors have significant cash they can use to influence politics, but ultimately our democracy is based on one-person-one-vote, not property ownership.

I dug into Census Bureau data to chart out the breakdown of New York City households, sliced by renters/owner-occupied households and by the number of units in the dwelling:

The importance of messaging

The primary policy of the abundance agenda — that we should legalize the construction of more homes — stands to benefit the overwhelming majority of New Yorkers. Many residents are already supportive, and prominent leaders from the governor to the mayor, and the city council speaker, have made encouraging statements in favor of increasing housing supply.

However, the translation of these words into action has fallen far short of what New York needs. The recent state budget and the mayor’s City of Yes land use reforms definitely move in the right direction. But there remains land in Brooklyn only a 26-minute, direct subway ride from Union Square on which it is illegal to build anything denser than a two-family home with a yard – and nothing in the plans released so far proposes to fix this.

116 Lincoln Road, Prospect Lefferts Gardens, Brooklyn is zoned R2. It’s a one minute walk to the Q train, which offers access to millions of jobs, schools, and vitality in Downtown Brooklyn and in Manhattan in under 30 minutes. City law makes it illegal to build anything denser on this land.

I interpret our politicians’ reluctance to more boldly pursue housing abundance as a symptom of many voters genuinely being hesitant to increase housing supply. Existing residents are often skeptical of any changes to their neighborhood. Perhaps they fear that denser housing will increase competition for the limited number of free on-street car parking spots near their home. Some cite “shadows” or the burden on local schools and medical facilities as their reasons for opposing new housing. It is inconvenient to live near a construction site. And some people simply place a very high value on living in low-density neighborhoods.

At their core, those concerns are all fears of losing something: losing parking, losing easy access to local amenities, losing peace and quiet. We know from research that loss aversion is typically a much more powerful feeling than the excitement of gaining something. People perceive that it’s just “developers” or “yuppies” who will benefit from new “luxury” housing.

But the reality is that almost all New Yorkers have a lot to gain from increasing housing supply. They just don’t know it. The more we can do to carefully communicate with all New Yorkers how they stand to benefit from abundant housing, the better.

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Actions you can take

Are you looking for how you can personally help change our laws to allow building more homes for New Yorkers? Over May and June 2024 the mayor’s “City of Yes for Housing Opportunity” proposal to update New York’s land use rules is being reviewed by community boards and city council members. City of Yes contains a lot of great, modest improvements to our laws, like allowing accessory dwelling units and removing parking mandates.

The NIMBYs will be out in large numbers to try to stifle or water down the proposals. The two actions you can take are:

1. Send a message to your city council member expressing your support for the City of Yes. Here’s a template you can use that auto-sends an email to the council member who represents your district.

2. Speak in favor of housing abundance at your neighborhood’s community board meeting. Here’s a list of upcoming community meetings focused on the City of Yes.

1. New York City's Rental Housing Market report by NYC Comptroller Brad Lander (page 10)

2. Spotlight: New York City’s Housing Supply Challenge and New York by the Numbers Monthly Economic and Fiscal Outlook No. 88 – April 9th, 2024, both from NYC Comptroller Brad Lander

3. All data in this post about the breakdown of NYC households sliced by ownership status and dwelling size is from the Census Bureau’s 2018-2022 American Community Survey, analyzed using the University of Minnesota’s IPUMS USA tool. To access IPUMS, you'll need to create an account, which is free.

4. Means of transportation to work among NYC renters from the Census Bureau’s 2018-2022 American Community Survey / IPUMS.