Does density promote affordability? Economists say yes, Minneapolis residents are skeptical

A dozen people sat at a table in a rec center in south Minneapolis, debating the city's comprehensive plan as a giant fan roared nearby.

A city staffer explained the rising burden of rental prices on poor residents, and gently pushed a central theme of the draft plan — that the city must build more homes in more places — to a group peppered with skeptics.

"If you just let the market promote density, that doesn't necessarily trickle down to affordable housing," said Lara Norkus-Crampton, a south Minneapolis resident. "If it was just density that provided affordable housing, then Hong Kong and New York City would be the most affordable places on the planet, and they're not."

Norkus-Crampton's view cuts to the core of the debate as the city takes public comment on a comprehensive plan that will be finalized before the end of the year. It would be a bold experiment, allowing fourplexes the same size as a large home in every residential neighborhood, and dramatically loosening restrictions on the height and type of buildings allowed on dozens of transit routes throughout the city as part of an effort to drive down rental prices.

Economists agree that cities can stabilize the cost of housing by loosening zoning to allow more construction in more places. But few cities have done this since the 1950s, and those who study the economics of housing admit both that prices won't immediately fall in neighborhoods with new apartments, and that without a regional or even national move to relax single-family zoning laws, the effect of rising density on rents will be difficult to discern in Minneapolis.

"You still see prices that go up," said Bryce Ward, an economist at the University of Montana. "It just means that they may not have gone up by as much as they would have otherwise."

Residential density is politically unpopular everywhere. San Francisco residents have successfully resisted density for decades. A new law passed by the California state legislature that would allow denser construction near public transit was unanimously opposed by the Los Angeles City Council in March.

Ward, who has co-authored several papers on zoning and affordability, said the public must understand that opposing density is a choice in favor of either sprawl or high prices.

"If you don't like to densify and you don't like sprawl, then the only other option is to just say 'Sorry. Prices are going to be high,' " he said.

A fourth option, Ward said, would be much larger subsidies for housing or imposing rent control.

Heather Worthington, the city's director of long-range planning, said the comprehensive plan is about far more than density. Promoting job growth, expanding access to public transit, adding different types of housing in different neighborhoods and making the city more resilient to climate change are all parts of the plan.

"Building more housing in the city will not drive affordability on its own, but it is necessary as a prerequisite to other affordable housing strategies," Worthington said.

"Density can be a dirty word in development, especially in a city where a single-family, 40- to 50-foot lot, has been a fairly dominant development type," Worthington said. "So, I think pushback is natural."

Minneapolis has grown somewhat more dense in the past 10 years. The population grew by about 40,000 over that period, and the city has added about 14,000 housing units, according to the Metropolitan Council.

The city is taking public comments on the draft plan until July 22. Residents are starting to organize in opposition, and they're focused on density. A group called Concerned Residents of Linden Hills sent an e-mail blast arguing that denser zoning will open the door for developer speculation and called for people to contact city elected officials to demand an extension of the deadline for public comment.

"Many Minneapolis neighborhoods are feeling the impacts of disruptive and profit-driven real estate speculation, density-at-all-costs approvals at City Hall, and gentrification at the expense of livability and affordability," the e-mail said. "We residents need more time to review the plan and demand changes now, before it's approved and implemented!"

The e-mail was not signed and a message seeking comment was not returned.

She said she agrees the city needs more density, but only in places "where it makes sense," such as downtown or the North Loop or along Hiawatha Avenue. Because Minneapolis represents only a fraction of the home and rental market in the Twin Cities, Becker said, higher density within city limits will do little to drive down rents.

"Do we use a scalpel to put density where it will be most successful?" Becker asked. "Or do we open it up to developers to do whatever they want? I'm against that."

David Albouy, an economist at the University of Illinois, who wrote a 2016 paper on density and affordability, said Becker is right in that the only surefire way to drive down prices is for cities all over a region to build more homes quickly. But he rejects the idea that more units don't drive down prices. His models estimate that if the population remains constant, every 3 percent increase in the number of housing units results in a 2 percent decline in prices.

"It's simple supply and demand," he said. "When people start saying you build more and that shouldn't bring prices down, that's a little bit ridiculous."

But on the neighborhood level, the benefits of density may not be apparent, said Jenny Schuetz, an economist at the Brookings Institution, because newer housing is usually more expensive than the older housing it replaces, even though the increase in supply relieves pressure on the region as a whole.