Debunking the Myth

Does Higher Density Actually Create Affordable Housing?

Our City leaders, and their “housing expert” and urban planning advisors like Mark Egge, staunchly promote higher-density housing, “infill” or “upzoning” as the solution to affordable housing in Bozeman. It is, in effect, the central premise of their argument for removing zoning protections and land use rules to allow developers to essentially build anything, anywhere in the City in hopes that these additional units, whether high-end luxury condos or not, will free up housing elsewhere and make it affordable by simply increasing supply.

Yet, we never hear or read about these leaders and experts in meetings, planning policy documents, and local news media articles mentioning or considering the evidence that increased housing density and up-zoning does not often produce more affordability. In fact, in many cases, as one former city planner and architecture professor shows, upzoning and higher density housing can actually increase land costs and values, thus decreasing affordability.

Here is a summary of the data and findings from the opposing side of urban planners and economists refuting the claim that building more units and more stories on smaller plots of land can solve our housing problem.

The Opposite Effect: Upzoning Increases Land Value and Leads to Higher Home Prices and Rents

Patrick Condon, an urban design expert at the School of Architecture and Landscape Architecture from the University of British Columbia and former city planner, found that efforts to upzone land for more density in Vancouver, Canada actually drove up land values and costs, thus making all housing more expensive.

Here are some findings from his articles, “When Will Rents Come Down?” published on February 2, 2023 in the independent news outlet The Tyee and his book Sick City: Disease, Race, Inequality, and .

“Since the early 2000s, [in Vancouver] the production of purpose-built rental units has risen by over 500 percent………..with the expectation that adding new rental supply would lead to increased competition between landlords and thus lower rents.” Another key assumption of this approach, notes Condon, “was that adding brand new higher cost rental units would free up moderately priced older units in a process called “filtering.””

However, a January 2023 report from the Canada Mortgage and Housing Corporation found that “average rents for new two-bedroom units ($2,823) were nearly identical to the asking rent ($2,865) for vacant two-bedroom units of all ages. This report also found that new two-bedroom units were not affordable based on median renter income of $50,000 with any rent above $1300 being unaffordable for this group.

Both competition and “filtering” theories of housing affordability have their roots in free-market canons originating in the 1980s by postulating that the free market for housing is blocked by cumbersome externalities like zoning and land use regulations that “impede the free flow of supply to demand.”

For Condon, the problem lies not in zoning restrictions or land use regulations but rather in the escalating cost of land further driven higher by upzoning and infill density pursuits.

“We have incrementally quadrupled the density of Vancouver, but we haven’t seen any decrease in the per square foot costs. That evidence is indisputable. We can conclude there is a problem beyond restrictive zoning….No amount of opening zoning or allowing for development will cause prices to go down. We’ve seen no evidence of that at all. ¬¬It’s not the NIMBYs that are the problem – it’s the global increase in land value in urban areas that is the problem.”

Increasing Housing Supply Predicted to Have Minimal Impact on Rental Affordability

In 2018, a group of economists ran a simulation that increased housing supply in various cities across the US and found that increasing housing units by 20% would only result in a minimal decrease in rent costs of less than 2%.

Source: Anenberg, Elliot, and Edward Kung (2018). “Can More Housing Supply Solve the Affordability Crisis? Evidence from a Neighborhood Choice Model,” Finance and Economics Discussion Series 2018-035. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2018.035

Taken Together, this evidence shows that the freemarket-based de-zoning approach pursued by the City of Bozeman is unlikely to deliver on their promise of affordable housing.

If it is not working in Vancouver, Canada, a city with some of highest housing density rates and land costs in the world, it will also not work in the City of Bozeman, another location with very high land costs that make providing affordable housing prohibitive.

Ken Silvestri
Treasurer, Better Bozeman Coalition