UCLA Housing Voice

Ep. 119: Responding to Supply Skepticism with Vicki Been

• UCLA Housing Voice Podcast • Season 6 • Episode 1

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Supply skeptics don’t believe that building more homes improves affordability. Vicki Been tells us what the latest research says about their main arguments.

Read about the Lewis Center's work at lewis.ucla.edu.

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Email Shane at at shanephillips@ucla.edu and follow him on Bluesky and LinkedIn.

Show notes:

Shane Phillips 00:00:06
Hello! This is the UCLA Housing Voice podcast and I'm your host, Shane Phillips. 

It is July 8th—happy belated 250th to these United States—and we are back to our regular schedule of episodes, with no particular theme or through line except a deep and abiding housing policy nerdery. 

We are joined this week by Vicki Been to talk about the topic of supply skepticism, which is that side eye you get when you tell someone that building new market rate apartments will lower their rent. To be fair, if you phrase it that way, then you probably deserve the side eye. But as regular listeners will know, more housing really does tend to relieve pressure on the growth of rents and home prices. Yet that is not always an easy case to make. 

And making that case was much harder seven years ago, in 2019, when Vicki and her colleagues published their first paper summarizing the main arguments of supply skeptics and the best available responses to them. That's why a major focus of that paper was a call for more and better research to support, with more empirical evidence—and better yet causal evidence—the arguments that, up to that point, relied mostly on theory.

In 2025, they published an update to that paper and, to a large extent, the call was heeded. We have much more and better research on what happens to rents and home prices when cities allow more housing to be built, not only at the citywide or metro area level, but even much more locally, down to the block or neighborhood. We have a better idea of what more supply means for gentrification and displacement, and we've developed a much stronger understanding, backed by real-world data, on the mechanics of how home building improves affordability. 

So that's the topic for today: Where things stood in 2019 on housing supply and the concerns of supply skeptics, what we've learned since then, and where we go from here. 

The Housing Voice podcast is a production of the UCLA Lewis Center for Regional Policy Studies, with production support from Claudia Bustamante, Brett Berndt, and Tiffany Lieu. You can reach me by email at shanephillips@ucla.edu, and you can reach me and our listeners in the comments of our Substack at uclahousingvoice.substack.com. With that, let's get to our conversation with Vicki Been. 

Vicki Been is the Weinfeld Professor of Law at NYU School of Law and a faculty director of NYU's Furman Center for Real Estate and Urban Policy. Among other roles, she was also New York City's deputy mayor for housing and economic development from May 2019 until the end of 2021. Vicki, thanks for joining us and welcome to the Housing Voice podcast.

Vicki Been 00:03:10
Thanks so much for having me.

Shane Phillips 00:03:11
And my co-host today is Mike Lens, Furmaner and former disciple of Professor Been—maybe forever disciple, you tell me Mike. Hey, Mike.

Mike Lens 00:03:20
Forever I think. Once a disciple, always a disciple. Once a Furmaner, always a Furmaner. I'm also very happy to be back on the pod. I feel like it's been a very long time. Shane's got a fancy new microphone, but it's maybe not even that new.

Shane Phillips 00:03:35
It's not, it's just on the screen more. Vicki, we start every episode by asking our guests for a tour of a place that they know well and want to share with our audience. City, neighborhood, block, town, street. Where are you taking us?

Vicki Been 00:03:48
So I'm going to take you to East New York, and that's totally topic appropriate because East New York was one of the very first rezonings that the de Blasio administration did. Before I was deputy mayor, I was housing commissioner, and this is the first community that I worked with to try to bring more housing supply into the community. East New York. For those of you who don't know, it includes the neighborhoods of Cypress Hills and Starrett City. Many of you will know Starrett City because it's a very important fair housing case from the past. East New York is in the far southeastern corner of Brooklyn. It borders Queens and it has a very storied history. It was once one of the city's most desirable working class neighborhoods. George and Ira Gershwin grew up there and wrote much of their music there. Other jazz legends came from East New York. The white flight that occurred in New York City in the 70s and 80s really emptied East New York out in many ways, and it hit some pretty hard times by really the 2000s, 2010s. It was one of the poorest neighborhoods in New York. It's home now to about 200,000 people with a very diverse population. It's about a quarter of the population are Black residents, 40% are Hispanic, and then the other 10% are Asian or white. It's got an incredibly varied immigrant community and that makes it just a really fun community to walk through: people from the Dominican Republic, Guyana, Trinidad, Tobago, Ecuador, Mexico, all over the place. So median household income was about $53,000 in 2024, which makes it almost 40% lower than New York City as a whole. So why do I want to take you over there? Because when Mayor de Blasio stepped into office and said we were going to build a ton of new homes, including new affordable homes, we needed to do a lot of upzoning. The prior administration had done a lot of downzoning. They had also done some upzoning, but they had done a lot of downzoning. And we went to East New York, in part because it had received a promise grant from HUD and had already done a lot of community planning. So, fast forward to today, about 6,000 new homes have been brought online and more are coming. There are new parks, there have been major traffic improvements and road improvements. There's a new school right next to a new, 100% affordable building, right next to a new park. So it's really been beautifully renovated, beautiful new amenities. But the thing that I really want to emphasize is the community planning that went in to the rezoning. So if I could take you just one place in the neighborhood, I would take you to an old county courthouse that is in a beautiful, beautiful building but was completely falling apart. And as part of the rezoning we rehabbed that courthouse and made it into the first of its kind community rec center for teens, staffed by NYPD officers. So kids can go. There's incredible music rooms, sound rooms, art rooms, dance studios, basketball courts, you name it. It's there, and they're working both with child development specialists and NYPD officers, you know, refereeing the games and teaching all kinds of classes. And it's just — it really shows what you can do in a neighborhood, with some really thoughtful integration of new housing along with amenities communities. So I love the neighborhood. It's very mixed. There's some high rises, but a lot of it is single-family homes. You know, the home ownership rate, even though it's a very poor community, still is not that far off from New York City's as a whole, and it's just a very vibrant and wonderful place.

Mike Lens 00:08:12
That's so interesting just to me personally, as somebody who lived in New York for several years and lived in Brooklyn for the back half of that time. And my kind of understanding, which now that I think of it was incredibly limited, of East New York was – of what I did have is kind of frozen in time in about 2005, 2010. And to me it just had like this dangerous reputation that I knew about. Interestingly that you bring up, you know, the history of jazz musicians coming from that area. I know of East New York primarily through rap lyrics. And that's not often a good thing.

Shane Phillips 00:08:55
That's usually not a good thing, I feel like.

Mike Lens 00:08:56
Not typically a great indicator. So a lot of, you know, a lot of references to violence in the drug trade and, you know, to me East New York in the time I was living there is certainly somewhere where nobody in like my social circle would be considering living, you know. And so this is a much more complicated and interesting and optimistic picture of East New York than I certainly had back then.

Vicki Been 00:09:22
I think before the rezonings, a couple of years before the rezoning, there were 123 murders. So yes, it has come a long way. And the idea behind the police working with the teens in the community center was that they would get to know each other in a friendly setting so that later, when they saw each other on the street, it would be a much better encounter. So, you know, we put a lot of money into the amenities. And I think that's one of the things that doesn't get discussed enough with these rezonings is, you know, you have to bring good things to the neighborhood and you have to correct problems that are in the neighborhood in order to really make it work.

Shane Phillips 00:10:07
I have felt like here in California that's one of the next frontiers of housing reform. You know, we did have to, and still have to, do more of zoning reform and building code reform and permitting reform and these things just to build more housing, because housing affordability is such a central and fundamental issue. But we still have not really figured out how to ensure that new housing is coming along with other good things, not just the affordability that it brings, but, you know, parks and open space and community centers and just better design. I think we still have a ways to go there, so that's promising.

Vicki Been 00:10:47
It's really critical, I will say. I mean, we put aside a billion dollars into a fund to help the neighborhoods that we were rezoning. But we also did something that I think you might want to consider out in California and across the country, which is we put affordable housing on top of libraries. Libraries are often, you know, single story, two story buildings, and that land was owned by the city. So we were able to build a new library at the, you know, first, second floor of the building and then put affordable housing above it, and that's been tremendously successful.

Shane Phillips 00:11:23
So today's papers are titled Supply Skepticism and Supply Skepticism Revisited, published in Housing Policy Debate in 2019 and 2024, respectively, both authored by Vicki and former guests Ingrid Gould Ellen and Kathy O'Regan. If you guessed that Supply Skepticism Revisited is a follow-up to Supply Skepticism, yes, correct. These papers respond to people who, to quote, question the premise that increasing the supply of market rate housing will result in housing that is more affordable, which is a topic near and dear to our hearts. On Housing Voice, we've had a few authors cited in these papers on previous episodes, including Evan Mast way back in episode five, and Simone Buechler and Elena Lutz in episode 83. But for a long time we have wanted to have a member of the NYU Furman Triforce on the show to give us a big picture overview of where this field of research is at, beyond the findings of any particular study by itself. So here we are. I will surprise absolutely none of our listeners by sharing that Vicki and her co-authors find that supply skeptics' concerns are weakly supported at best in most cases, in contrast to strong and growing evidence that supply really does improve affordability. But, as always, there are nuances and research gaps worth discussing. So that is what we're going to do. Vicki, I said that this 2024 paper is a follow-up to the original one from 2019. The last time I'd read the first one was probably back around 2021, if not earlier, so I had totally overlooked or not realized — maybe until preparing for this episode — that the two are actually quite different. There's definitely some overlap, but the new paper is not just an updated version of the older one, so folks who are interested in reading them should check out both. What really stands out to me is how much more rhetorical the first paper is than the second, which is a lot more evidence-based. That's really the part that I had forgotten for this conversation. I think it makes sense to start with the original paper and the questions that it addressed. Then we can bring in content from the revisited paper when it adds more evidence to those earlier questions and when it tackles new questions as more research has been published. But we'll just start with an overview of the major questions and concerns addressed in both of these papers. Tell us what those were and Mike and I can ask you to elaborate if we feel like we need more context on any of these.

Vicki Been 00:13:54
Great. So we were hearing over and over and over again, both in, you know, community meetings that I was doing for the city and in just the general media. We were hearing over and over and over again concerns that supply would not be helpful. Right, and part of the argument was supply won't be helpful because it will just bring more people into my neighborhood and that will, in turn, drive up prices rather than control the growth of housing prices or rents, and it will result in a different kind of people than are currently living in the neighborhood. So more people, no help on prices or rents, and different kinds of amenities, different kinds of coffee shops, art galleries et cetera. That will bring people who don't feel like, you know, my neighbors. So we were hearing that over and over again and when we would counter that by saying: well, but you know, all the theoretical debates show that when you have more demand, you need more supply.

Mike Lens 00:15:01
Theory.

Shane Phillips 00:15:04
I've changed my mind. Thank you, That's all I needed to hear.

Mike Lens 00:15:09
Did you actually draw a supply and demand graph on a chalkboard?

Vicki Been 00:15:13
Probably. Yes, Mike, you know me. So we weren't obviously getting anywhere. And at the same time we thought that there was something similar going on the other side of the equation is when we would talk to researchers and economists and we would say, hey, you know, people don't believe this. We need more than just the sort of theoretical evidence. We need on-the-ground research that shows what's happened in particular neighborhoods to refute what people were feeling was happening, right, or to address- not necessarily refute, but to tackle- that question. So the first paper was really designed to say to the research world: hey, we're not succeeding in these theoretical arguments, we need more research. And so it was really designed to spur research and to help articulate the best version of the arguments that we were hearing and ask the research community let's do a better job of addressing those arguments. So we tried in the paper certainly to marshal the existing both theoretical arguments and the existing evidence. But we also said there are a lot of gaps here, folks, and we as researchers aren't doing our job if we're not doing more on-the-ground research that could be more persuasive to people. So that was the basic thrust of the paper. And it did require- I have to say it did require a lot of thought to better articulate what the arguments were, because they were being brought all across the country in different forums. People articulated them in different ways, and so we saw part of our goal as let's get down to brass tacks about what these arguments really were, right.

Shane Phillips 00:17:09
So not just your response to them, but actually just summarizing what people's concerns and arguments were against this idea. Yeah, as a starting point.

Vicki Been 00:17:17
Yes, absolutely. And so, you know, one of the things that we were hearing over and over again is: look, you're building new supply but none of it is affordable. It's, quote unquote, luxury housing, and that does nobody in my neighborhood any good. And it just brings in wealthier people. So, you know, we tried to articulate that as both a problem of sort of induced demand — right, when you build new market rate housing or even new affordable housing, it does tend to make the neighborhood more interesting and desirable and may bring people into the neighborhood, right. But the argument that people were making was often derived from the sort of induced demand arguments that were made about building highways: right, if you build a new highway, people drive more. And so one of the things that we said is we need to unpack that and we need to show why it is that highways are different than housing and that housing is not going to induce a lot more demand in the way that new transportation may induce demand. So that was one concern: is it just bringing more people into the neighborhood and that's not doing the neighborhood and its existing residents any good? It's just causing them to come here when they wouldn't otherwise come here. So that was one of the issues. A second issue was: look, it won't do anything to reduce my rents or control the growth in my rents or the growth in housing prices. It's luxury apartments, so the things that it's competing against are other luxury apartments, and it won't do anything to help control my rents. And so we thought and challenged the research world: okay, we really need to show how new housing affects the growth in rents or the growth in housing prices in the neighborhood and in the city or the region as a whole, and those may be different things. So those were the sort of two main points that we were trying to really address. There were also arguments that, hey, land is a limited resource. Because it's a limited resource and because the need is greatest for affordable housing, we should only be using it for affordable housing. Right, and that really required us to think about: well, how would you even do that when wealthier people with more resources can outbid people with lower incomes and lower resources for the existing market rate housing? Maybe if we built it all as social housing or all as income-restricted, subsidized affordable housing. But that's an enormous amount of money that we're talking, an enormous amount of public resources that we're talking about. So how should we think about those kinds of arguments? So those are some of the main things that we were trying to better articulate and then to really say to researchers: here's the current state of the evidence. What more is needed?

Shane Phillips 00:20:36
And I think what we'll get to is the state of the evidence at that time was pretty weak. Honestly, there was not a lot to respond to many of those. I did want to mention one other one which I think was not stated by you explicitly here, and it's really top of mind for me because I remember at this time around 2019, 2020, saying essentially, yes, you know, the research, or at least the theory is pretty clear that building more housing would reduce rents at the citywide level, at the regional level, metro area level. But it's possible we don't really know what the effect will be at the neighborhood level, at the block level. You could make arguments kind of in either direction. Maybe the supply effect is stronger than the amenity effect that you were talking about, and so rents go down, but maybe the quote unquote improvement to the neighborhood raises rents more than the supply effect lowers them. And so that was another open question that I think stood out to me in this original one that I think we just did not know a lot about.

Vicki Been 00:21:39
Yes, and implicit in all of this is a concern about gentrification and displacement, right. So people worry it's not helping anybody in my neighborhood and we will have to leave, right?

Shane Phillips 00:21:50
Exactly. So before we get into the evidence responding to each of those concerns, it's probably a good idea to clarify a point about where you focused your attention in these papers, and I think particularly in the 2024 one, where there was more evidence. Your focus is on empirical evidence that tries to address the endogeneity problem, which we can boil down to the fact that developers don't build housing in random locations or at random times. When we see an apartment building going up in a neighborhood where rents are rising faster than its surroundings, it's possible that the apartment building is the cause of that increased rent growth, but it's also possible that increased rent growth is causing the apartment building to be built. Developers want to build where they expect rents to go up because that makes them more money, and they try to identify those places when choosing where to build. But if you can find unusual circumstances where the timing or location of new supply is essentially random, then there's a better chance that you'll be able to isolate the effects of that new supply itself rather than unintentionally measuring the effects of whatever changes or circumstances led a developer to choose to build in that location rather than in another place or at another time. So we'll talk about some of the strategies used to do that as we go through this research, but just want to make that point that was kind of a focus for you all in this as a higher tier of housing research quality able to show some causality. So I want to just summarize the big four concerns as I saw them in these papers. We have the idea that scarce land should be devoted to affordable housing, not market rate. That building housing serving the top of the market won't help people at the middle and bottom of the market. That it will induce the in-migration of more rich people and that will drive up rents and prices and potentially cause displacement. And that the local, neighborhood or block level effects of building market rate housing will be harmful, even if there are benefits to the city or metro area overall, starting with the concern about building market rate housing on land that should go to affordable housing and the more general assertion that land is special and so the laws of supply and demand don't apply or they don't apply in the same way, what did we know in 2019 and what have we learned since?

Vicki Been 00:24:14
So, and, Shane, I just want to add one other thing to what you were saying about the endogeneity problem. Another endogeneity problem that we were really facing is people saying: I see people leaving my neighborhood, right, and so I know that this is displacement. I know that this causes gentrification, I know that it causes displacement. But of course, people move, not since the pandemic, but in earlier times. People move a fair amount, and low income people move more than higher income people in general. And so one of the things that we also sought to dispel is the notion that just the fact that your neighbor had moved was proof positive that the new housing was responsible, that gentrification was occurring and that was leading to displacement. Right, and so that was another area where I think it was really important to deal with that. You know, causal studies. So one of the things that we saw in the 2019 literature was there wasn't really much by way of causal studies. They're hard to come by. It's a very difficult randomized study to try to set up, needless to say, and there weren't a lot of papers that really tackled the endogeneity problem. I think one of the best and one of the clearest examples of the kinds of things that researchers were trying was really Kate Pennington's paper, where she looked at fires that had destroyed buildings in neighborhoods across San Francisco. The fires were essentially random — at least random in terms of housing demand and that kind of thing — and she really looked at, well, what happens when new housing gets built in those random sites, what happens to the rents and prices around them and what happens to the demographic change, right. And she found that it did slow the growth in rents and that it was actually helpful in terms of keeping people at lower incomes in the neighborhoods, rather than seeing more out migration of lower income households. You were seeing that to be more stable. So I think that's a really good example of how hard it is to get these situations where you can really isolate the causal effects of new housing. But I think that paper was a really good one to show exactly what we need, right: the kinds of random variation that can help us identify the causal effects of new housing. So is land different? I mean, what we argued as a theoretical matter is: sure, we have a limited supply of land, but we're not really reaching those limits in most places, except hemmed in cities like New York that is hemmed in by water or San Francisco that's facing water and those kinds of things. And so don't overstate the problem, right. And of course you can build higher on the land that we have. So density can address that scarcity problem that people pointed to. So we really tried to address that. Again, at a more theoretical level, there's always research that indicates that land is disappearing, farmland is disappearing, that kind of thing, but it never really addresses the fact that, well, we could just build more densely. And part of that is many people don't like density and so they reject that kind of argument out of hand because they don't want to see more density. But still, as a matter of supply and demand, we have an ability to both have more dense housing and of course we have the ability to have denser housing that costs less, if we made it easier to build that dense housing.

Shane Phillips 00:28:21
It's one thing to say there's no solution available to this problem, another to say I just don't really like the best solution available, which is to build more intensively in places where people really want to live.

Vicki Been 00:28:33
Which is a problem with our regulatory system in general, right? Is that we talk about, oh, this housing proposal will have a terrible effect on X, and we don't ever ask: well, where will people live otherwise and what effects will it have there?

Mike Lens 00:28:53
The cost of doing nothing.

Shane Phillips 00:28:55
And I think the challenges to policies like inclusionary housing, affordability mandates, that kind of thing are also a part of this in some ways, where, you know, these are policies that in a very direct way are trying to say, no, you know, we want all land to have some affordable housing at least. And I've done work on this. Others have done work on the fact that there are real costs to that kind of policy and they're not necessarily borne exclusively by developers or by landowners. But if it means we're building less housing overall, it means that renters themselves are paying those costs as well. It's a little bit of a different issue, but it's also, I think, very much in this same space. So let's move on to the next one in the list: this idea that new market rate housing does not help lower income people or lower their rents. This seems like the area that we've maybe seen the most progress on over the past six or seven years, would you say.

Vicki Been 00:29:52
Absolutely. The housing move study, or what some people call the chain studies, have been really, really helpful here. And there were, I guess, two studies that we referred to, but there are even more now since we published even in 2024. And so the housing chain studies say, okay, family A moves into the new market rate housing. Family A did that by moving out of some other housing. So who moves in to the housing that family A vacated? That's family B. And then if family B moves and on down the chain. And what the research has shown is as you open up housing at whatever income level, you also open up a whole bunch of housing below that, at lower, lower income levels. And so it does redound to the benefit of people at different income stratas as you look at who moved where and moved up the housing chain, so to speak. And the concern about filtering, I mean first of all, that's a, you know, unfortunate word because of the sort of trickle down theories that many people associate it with. But also people say, well, but filtering, that takes forever and it doesn't benefit the low-income families right now. But the housing chain studies show no, it does help within a few years of the development of the new housing because somebody moves in each of those chains. And so some of the studies showed it made a difference within a two-year period, that kind of thing. And the research was really compelling. Compelling in part because some of the research that was coming out of Norway—Norway? I always get this wrong.

Shane Phillips 00:31:44
Yeah, Oslo.

Vicki Been 00:31:44
Yeah, Oslo had amazing data, data that us in the United States would you know, would be willing to—we might even give up Knicks tickets to get this kind of data.

Shane Phillips 00:31:59
Game three anyway.

Vicki Been 00:32:00
Game three anyway, definitely. So they had amazing data about the income levels of the families that were moving in, and they had this sort of natural control in that they had a social housing development in the very same neighborhoods as some of the purely market rate development. And they showed that as between the market rate development and the income restricted development, once you got to the second level of the chain that was no longer income restricted because it wasn't moving into the actual affordable building, that you were seeing the same results in terms of income strata. So those were very powerful studies that have now been added, and there's new research that's come online. The Minneapolis Fed has done some work, others have done more of the moving chain studies, and so pretty strong and compelling evidence that actually market rate housing opens up a lot of less costly housing down the chain.

Shane Phillips 00:33:12
And I think I misunderstood the paper you were referring to. I think the paper you're referring to was Helsinki, probably in Finland.

Vicki Been 00:33:20
Helsinki: yes, okay.

Shane Phillips 00:33:20
And so that was the Christina Bratu paper. I mentioned Oslo because you also have a paper from 2019. So the Helsinki paper, I think, is 2023. So it was after your first paper. But this 2019 paper by Magnusson, Turner, and Wessel — I'm not sure their first names here, but they were looking in Oslo and they found actually that this vacancy chain wasn't really functioning properly. Could you share a little bit about that? Because it sounds like that was maybe the first of these studies, or at least in the modern era, and it found something contradictory. And I think, when that's all we have, that could lead us to believe that vacancy chains, moving chains, don't really work. But it sounds like Oslo had some kind of unique circumstances that led to that outcome.

Vicki Been 00:34:09
Yes, thank you And thank you. I need to go walk around Oslo and Helsinki so that they are distinguished in my mind. I haven't spent enough time in either one of them.

Shane Phillips 00:34:14
Yes, It really does make a difference.

Mike Lens 00:34:21
There's a film, the Oslo Trilogy, that I've been meaning to watch, so you could stay at home and do some of this work.

Vicki Been 00:34:31
I'd really rather go, but I'll watch the movie and hopefully go.

Mike Lens 00:34:33
Me too. Me too, to be clear.

Vicki Been 00:34:33
So the Oslo study was interesting in that what it showed is that the moving chain that I described in the Helsinki study was being interrupted, and it was being interrupted because there was enormous pent up demand for housing in younger people from basically, you know, middle class and further up income groups that were living at home and desperately wanted to move out, and they were able to grab the now empty apartments that were being vacated by people who were moving into the brand new housing and they were being able to buy in many cases because they had resources from their families. So that was interrupting the housing chain in a very significant way. That wasn't the case in Helsinki and it hasn't been the case in several of the in the studies that have been done in the United States.

Shane Phillips 00:35:34
And I think even in Oslo you think about: OK, so what do we do with this information? Clearly, the answer would not be to stop building housing because it's just, you know, these moving chains are being disrupted because there's all this pent up demand. Like, you have to eventually meet that pent up demand or you're just not going to make any progress. But it might mean that in the near term you're not really getting the same kinds of benefits that you might hope for.

Vicki Been 00:36:01
Yes, I think it does two things: It illustrates the importance of context and how these other aspects of the pent-up demand, whether it's rental or purchase for purchase housing. And also I think it's really important to realize that the filtering question works both ways, right. And so when you don't have new supply, you often have better resourced households being able to outbid the lower resourced households for the housing that's existing. So that pushes the lower income families out of being able to afford that housing because now they're competing against higher income families who have no place else to go. Right, so it works both ways. And I think the Oslo and Helsinki and then all the other studies that have come since have really, really illustrated that point. But what I loved about Helsinki, right, was this also comparison to the income-restricted affordable social housing. And so I thought that was extremely powerful to show that, you know, even rungs down the ladder, where you no longer were imposing the income restriction, you were serving the same income levels in both the chain from the market rate housing and the chain from the affordable housing.

Shane Phillips 00:37:23
The market rate housing just took a few extra links in the chain before it reached those lower levels, but it did get there. Yeah, I did want to bring up one other paper that came out really only, I think, a couple of years ago and was published last year. This is by Fong, Kim, and Tyndall. It's a moving chain paper but on a single 500-ish unit condo building in Honolulu, Hawaii, and about 60% of the units were income restricted there, income restricted for ownership though, meaning they were— I don't know— 110 or 120% area median income. So they were below market but like $600,000, $700,000 still, they're still expensive versus the market rate ones that were closer to a million dollars. And even there they found very similar results. But the thing that stood out most to me about that paper, which I think it's Henry Grabar, writes about this specific anecdote in an Atlantic piece. The researchers talked to a woman who had moved from a low income neighborhood rental unit into one of these condos. And the person who moved into the unit that she had vacated had actually come from a homeless shelter directly. And so this like just two links in the chain from a quite expensive condo to creating space in a homeless shelter that might not have been there otherwise, I think, just obviously a very extreme example and not the norm.

Mike Lens 00:38:48
And creating an incredibly- you know- rare and good outcome for this person who was in a homeless shelter, right? Yeah.

Shane Phillips 00:38:55
And for someone who might be waiting to get into that homeless shelter. Yeah, I will note, and I'll put this in the show notes, that Pew Charitable Trusts created a video, just published a video just a few weeks ago — maybe a couple months ago by the time this comes out — that showed something very similar in D.C. It has a woman who became homeless, lost custody of her child, and they were able to link this new market rate building opening up several links back to a vacancy opening up in an affordable unit that she was able to move into and reunite with her child. So this is not just a one-off story. Again, I don't want to overstate it and say that this kind of thing is like what happens every time you open up a new market rate building or unit, but it's clearly more common than people might expect. And even something that is, you know, half as effective as that and just helps someone who's making 30 or 40,000 and is just struggling is still a really big benefit. So we've spent enough time on that one, I think. Third on the list is this induced demand idea, which is the fear that new housing will attract all those pesky rich people whose presence also drives up the price of older housing. So what is the story there, and what would it actually mean for new housing to create as much demand as it satisfies, or even more than it satisfies, as I think this kind of argument implicitly assumes?

Vicki Been 00:40:19
I think part of this goes back to what we were talking about in terms of the geography that we look at, right. So the notion is somebody will move into my city or my neighborhood who wouldn't otherwise have moved if we hadn't seen this new housing come online, and so we're somehow pulling people into the city who wouldn't otherwise be here. So we're not really addressing the demand problem, we're just bringing in people who otherwise would stay away. But of course, several things there, right. One is, if people want to live in the city, just like you wanted to live in the city, right, it's hard to say that you take so much greater priority, right, just because you got there first. But second, the research that's come online since then tends to show that it's not a big share of the people who are moving into new housing who are coming from a completely different city, and of course we don't know that they wouldn't have come there anyway. Again, they might have come and outbid people in the neighborhood for the housing that they needed because they were coming for their job or for family reasons or whatever. So I think the research has shown that you may be getting some share — that seems to be in the 25 to 30 percent share — of people who are coming from another city or from the suburbs into the center city. But you are also opening up new, more affordable housing — not new as in brand new, but newly vacant, lower income housing in the cities. Those people left and you're still serving basically two thirds, or 75% of the people that you're serving are people who are coming from within the city itself. So I think that's really important to recognize. But it also does, as I said, take us back to this notion of, well, who should we be thinking about? Just the people in the neighborhood? The people in the city as a whole? The people across the region as a whole? How mobile of a society do we really want to have?

Mike Lens 00:42:40
I also find that this is a place that is easy to start talking yourself in circles. And what I mean is, you know, we talk a lot in California about how people are leaving California because of the cost of housing, and there's a big population of people that we don't even know about that are not moving to California because of the cost of housing. But then at the same time, we talk about how it's pretty unlikely that any given person that moves into a new housing development is going to come from outside of California or outside of Los Angeles, if we're talking about Los Angeles, or outside of New York City, if we're talking about New York City like. Both of these things can be true, but they're also kind of intellectually consistent, or at least hard to absorb at the same time. Right, because if you're saying we need to build more housing to make it more affordable so that people can live in a place or move to a place, but then also people are concerned, then you might also actually be kind of amplifying concerns that you know new housing is going to end up being occupied by these new residents, you know. So, again, like I think it's, really this is a place where I at least find myself kind of chasing my tail a little bit rhetorically, and I feel like I just chased my tail rhetorically over the last 90 seconds, so I don't know what we do with that. I don't know.

Shane Phillips 00:44:06
I mean, I've been really interested in this for a long time and Claude Code just made it possible for me to finally just create a quick dashboard thing of census data to just show, at the metro area level or the public use microdata area level, what share of people who moved into the home they're living in the last year came from the same metro area or nearby, versus another metro area or further away. And particularly for larger metro areas, it's pretty consistently about 60 or 70 percent of households, if not more, are coming from that same metro area. And what I think is really important there is not just that percentage is pretty high and maybe higher than people expect, but that it is that high for new housing, for housing built, say, in the past three years. So it's very likely these people are the first or at most second occupant. And I think, even more importantly than that, it's not meaningfully different for older housing. So I compared housing built in the last three years to housing that was built between, say, 2000 and 2015 or 2019 or 2020 and housing built before 2000. And it varies a little bit but it's pretty close, which just suggests that, you know, there's not many people that are coming because of the new housing. They're just going into whatever housing is available and you find that places that don't build a lot of housing do not really seem to have a smaller share of people living in older or relatively newer housing that are coming from other metro areas. It's just all of this really suggests very strongly to me, which makes perfect common sense, that people don't, you know, go on Redfin and, like, search for new housing in any metro area in any state in the country, like they get a job offer, they get a college acceptance offer, they want to move close to family, further from family, whatever — and then they look for housing in that place. So I think, just, you don't really have to have any data to make this argument, but I do think it is helpful and, you know, I made a point of looking at Evan Mast's paper from 2023, since that was the big moving chain paper in the US — and he actually found about 70%, pretty consistently, of the people moving into those new market rate units that he was looking at in these 12 different metro areas across the United States. About 70% were coming from the same metro area, which aligned with the data that I saw. So that whole line of research, the moving chain research, really does depend on a fairly high share of people coming from nearby. Otherwise the chain doesn't necessarily break but it kind of departs for another place. And that place might benefit. But, you know, the locals may not care so much about that.

Vicki Been 00:47:05
It's interesting though that you add this additional piece of the number is about the same for existing, for not new, housing. Right, and but I also want to plus one Michael's comment about, there is a lot of tension here in that, you know, we want people to be able to live where they want to live, but not if it's my city. And it's interesting that a lot of the some of the initial research on the housing supply problem was this is making people be stuck in less productive areas where they actually don't have good job opportunities, They don't have interesting things going on, and as somebody who came from one of those areas to New York, I am particularly sympathetic to those arguments. But it is a there. There are lots in our housing policy discourse. There are lots of tensions. Right, Homeownership builds wealth. Oh, that's because housing costs appreciate. Oh, you know- and this is another one- we want people to be able to live where they want to live, but not in my neighborhood, right? So I guess that could lead us into, I think, one of the hardest of the questions that we tried to get researchers to work on, which is the question of what happens at the neighborhood level as opposed to—

Shane Phillips 00:48:25
Let's hear about that.

Vicki Been 00:48:26
The city level, right, and so I mean that's a really tough one. Even in 2019, there was a fair amount of research that showed that at a city or a regional level, having more supply meant lower housing price or rent growth. I want to say sometimes people say, well, it will decrease rents. Usually what is going on is that it slows the growth in rents, right, and the growth in prices.

Shane Phillips 00:48:54
Much like what rent control does. To be clear, I think sometimes that's framed as a critique of it doesn't really lower rents. But it's like the people most likely to make that kind of argument are often also very strong supporters of rent control, which I'm very open to in certain forms as well. But rent control also doesn't lower people's rents. It just slows the pace at which they increase in most cases.

Vicki Been 00:49:17
Even in cities that are talking about freezes. It's just a freeze, not a lowering. Yes—

Shane Phillips 00:49:21
And a freeze temporarily. You know like I think even Mayor Mamdani is not saying we're going to freeze it forever.

Vicki Been 00:49:24
And a freeze temporarily.

Vicki Been 00:49:27
I mean we do hear calls at the public hearings on rent stabilization here for lowering the rent.

Mike Lens 00:49:34
I was just going to say you could do it.

Vicki Been 00:49:37
You could do it, but that would bring a new level to the legal challenges to rent stabilization and rent control. So the evidence, you know, pretty uniformly showed more supply at a citywide level or a regional level reduces the growth in rents and housing prices. But what was missing was, well, that may be good for the city as a whole, but what about my neighborhood? Right, isn't it going to bring the prices and the rents of the existing housing in my neighborhood up to the level of the new housing? And obviously that in part is going to depend on whether those submarkets are really competing with each other. If the housing stock that's existing is quite different than the market rate housing, new housing that's being built, then they aren't so much in competition unless they are being bought up to be upgraded, to be renovated in some way. But the difficulty there is really the endogeneity problem. Right, you're not seeing new housing being built in neighborhoods that the developers think people won't buy in or don't want to live in. You see neighborhoods being chosen by developers because they think that the demand is there, or the demand is going there, or this is an area where new housing could bring new amenities, bring some life to the community. And so it's very hard to separate out the effect of the developer's decisions from the effect of the new housing itself. Right, the developer is responding to existing levels of demand and that demand may be driving up prices, not the new housing that's meeting that demand, driving up the new prices. So that was an area where, in 2019, there was really difficulty in answering that question. It continues to be really one of the harder questions to answer, but we're making progress, I think, in the literature there. I will just do a little side tangent here, Shane, to say part of the issue is people say, for example, to go back to East New York, right, people would say you're going to rezone. But what we've seen since the 2019 paper is studies that are really trying to tease out what is happening because of demand — increased demand in the neighborhood — versus what is happening because of a supply increase because new housing was built. And so we've seen a variety of papers. As I mentioned the Kate Pennington paper earlier, there's a paper from Lee looking at the prices of the rents in existing housing when new buildings were built in response to some rezonings in New York, and she found that the trends in the rents in the older existing buildings decreased, right. The rate of rent growth, compared to where the trends predicted it would be, fell by about 1% in some of those New York City neighborhoods.

Shane Phillips 00:53:06
Was the idea there that these rezonings were, you know, not necessarily random, but also not necessarily tied to, you know, demand such that developers would have wanted to build in exactly those places anyway? It was rather that now they were able to when they hadn't been able to before.

Vicki Been 00:53:24
There was certainly demand in those neighborhoods before. This is like the Williamsburg Greenpoint area of New York. There was certainly demand, and the way that rezonings happen in New York, and I think in most cities, is that where the city is rezoning not in response to a developer-initiated rezoning but in response to a city rezoning, the city tries to draw boundaries that are not just for today, not just answering the demand for today, but really expanding out somewhat. So that reduces that sort of, makes the boundaries a little bit more random and therefore able to be used to identify causally some of the effects. Now, you know, you can argue with that, because planners, obviously there are all kinds of reasons why you draw boundaries where you do, and we'd have to unpack that in a lot more detail. Nevertheless, papers like Lee's are an advance in the literature. You know, we need to look for other ways of dealing with the endogeneity problem. Jenny Schuetz has written a paper about how hard it is to measure the impact of the land use reforms that are sweeping the country, and that's a major problem there as well. Right, but nevertheless, I think that the thing that I want to walk away with is we have seen more carefully, rigorously constructed, causally oriented papers that are looking at the neighborhood effects, and most of them — not all of them, but most of them — are finding that even at the neighborhood level, new housing does tend to slow the growth in rents of the existing housing.

Mike Lens 00:55:18
That's my interpretation of a lot of this new and exciting research. I want to add one more piece to this that I see a lot of. I hear it in class, I see it in the rhetoric, in upzoning discussions across the state and country — which is this question of, like, what's going to happen to my neighborhood, right? Which is the question that we're really only able to answer in research is what's like the average effect, what's the typical outcome? And so, understandably, people want to know what's going to happen in my neighborhood, right. And not only can we not predict the future, so we can't really answer that question for those reasons, but we don't know if there's some kind of special sauce about any given neighborhood that's going to greatly complicate that. I think it's even more complicated than delivering blood pressure medicine to somebody and there might be unanticipated side effects of that medicine or that individual is not actually treatable with that particular prescription, right. Like it's even more complicated for an individual neighborhood and in either case, whether it's blood pressure or upzoning, like we only know like the average or the typical effect and outcome, right.

Vicki Been 00:56:39
Absolutely. And people want to know both what is going to happen in my neighborhood and can you guarantee that? And you know, and no, you can't. And that's, I think, pushing us to do more research about which neighborhoods actually respond to land use reforms. Right. If you rezone a whole area, so let's go back to you know the boundaries in Greenpoint, Williamsburg, that the lease study looked at. Not all of those blocks. If you and I went back and walked the blocks of that rezoning, not all blocks would be responding in the same way. And, truthfully, we don't know why. Right. And so more of the research now is really trying to figure out, well, which of these land use reforms actually ends up producing more housing supply and why. What are the neighborhood contexts that really matter and how do we get at that? But also, one of the things that I've been talking to a number of researchers about is more sort of early warning or early success measures, right. Are there things that could show us that this isn't working?

Mike Lens 00:57:52
That's interesting.

Vicki Been 00:57:52
We need to rethink this earlier on than waiting 10, 20 years to find out that it didn't really work.

Shane Phillips 00:57:59
That was the comment that I wanted to make, partly in response to what Mike had said about medicine. You know, a doctor who's prescribing a statin or something can say: you know, the research shows, my experience shows, this works for 85% of people, 5% have a bad reaction, that kind of thing. Aside from there just being probably better research with clinical trials and things like that, in medicine you also get feedback much more quickly. You know if there is a bad reaction, you find out almost right away. If there's no reaction, you'll know within a few days or weeks or months. With housing and with policy reform like this, it could take years, decades before you can really know what the effects were. And even then there's so many other things happening, in part because of how much time passes, that you can't necessarily ascribe a positive or negative change to any particular policy. Which is not to say that this research we're talking about is not very persuasive. I think they're structured in such a way where they are really able to show effects of these policy changes, but I do just think it's worth underscoring. I mean, I'm constantly struck, even today, despite how much better research there is on these questions than there was five years ago. How little there really is and how much we still do depend on theory. Because studying these things has been so challenging and I guess also because there's been, until recently, very few reforms to increase supply, to build more housing that have been enacted for us to study.

Vicki Been 00:59:32
Yes, well, that is progress, but we still need more of it and we need a better understanding. And I think there's a new paper out that I saw presented at the American Real Estate and Urban Economics Conference in Washington a couple of weeks ago, and that is looking at a study. Now, again, I'm going to get- let me get- my cities right. Well, actually, it was all across the Dutch landscape in the Netherlands, because it was a change to their essentially like their growth boundaries or their greenbelt areas that opened up some of that agricultural land for new supply in communities across the entire country. And so you had this interesting big land use reform and with different timing going into effect, which gave you some causal ability to look at what's really happening. And so I think that paper is really interesting. It also raises some very important points about, well, what happens to jobs and if we're worrying about the affordability of homes. Of course, affordability is both a question of how much the housing costs and how much people are making in income, and so if we look at the effects of land use reforms on both of those, we'll have a fuller picture. So there are wonderful and fascinating things going on, but it's slow.

Shane Phillips 01:00:55
I'll put this in the show notes. It's still a working paper, but another paper, also on New York City, that I think is really fascinating and has so much good information and analysis in it, which is, I think, by Vincent Rowlett or Rowley, who looked at, among other things, the likelihood that a site will be redeveloped based on the intensity of development that is allowed compared to the intensity of development that is there right now. And, as you might expect — but there's not really been a lot of research to actually document this — the more capacity you have relative to what is there now, the more likely you are to see that site be redeveloped, and that also goes for places that have higher rents and home prices. You're more likely to see those sites developed as well, and so I'm looking forward to seeing that kind of be turned into a peer review paper or multiple, because there's so much in there. But that brings me to my last question at least, which is: is there anything? I guess two questions. Is there anything we missed of research that's come out recently that didn't make it into either of these supply skepticism papers, or maybe specifically the revisited one that you are excited about? And then flip side to that, what do you think is still really needed? Where is the most attention needed?

Vicki Been 01:02:13
Well, I am excited about this paper that I mentioned, which is by Marco Ghioccholetti and Matthias Korvar and Franklin Quinn, and so I'll send you that link so we can put it in the notes. I think that's an interesting paper and it's like the Roulet or Roulette paper: it's dense, 125 pages and a lot going on there. But tying the where are job opportunities being opened up and what is happening there to what's also happening on the housing front, I think is very important. And then these national looks I think are incredibly important, sort of you know, across the entire country or whatever. One of the problems obviously that we have in the United States is we get a land use reform in California — is how does that translate to Nevada? Or, much less, how does it translate to Maine? Right? So, in terms of what we need to focus on, still clearly we still need to do more work to deal with this endogeneity problem, right, and we're. I wish we could have clinical trials, but that isn't the way the world works. But we need to do more work there. We need more to look at sort of the early indicators. We need to look at which of the land use reforms really makes a difference. But that too is hard to isolate, because when a legislature gets going they tend to throw the entire kitchen sink at a problem. They don't tend to do it in a way that allows you to say, oh well, but the ADU part of this legislation was what really worked and everything else didn't.

Shane Phillips 01:03:53
We're going to stagger our laws. We're going to pass one law every three years, first on density, then on floor area, then on height, then on setbacks. That would be great for researchers, terrible for everyone else.

Vicki Been 01:04:05
That would make our lives easier but definitely slow things down to a crawl. But we need to really be — as researchers — really be conscious of: well, could we compare the ADU laws in California to the very different ADU laws in some other state and isolate enough that we could draw some conclusions there? So we definitely need to be working on that. I'll just give a plug — a shameless plug — for the Furman Center's land use reform tracker, which we now are tracking land use reforms in some 40 states since 2017 and in pretty nerdy levels of detail about the differences between the legislation to help on exactly this question of how do we compare them across jurisdictions. So we definitely need to be doing more work there. And I think another interesting new paper that I've seen is Evan Soltis and Jonathan Gruber's paper on permitting, where they are looking at the sale of already permitted plans. They see that the chance that a proposed development on an already permitted site is about 70%, compared to only about 30% when you don't have those permits already in place. So they're able to really isolate the cost, both in terms of money and in terms of time, of those permitting processes. And I think we need to do a lot more of that kind of research that really says to legislators: hey, the research shows this is going to add 30% to the cost of housing or that kind of thing.

Shane Phillips 01:05:53
I think that study was on the city of Los Angeles specifically, or in L.A. County, and my recollection is they found that land that has received its permits — that is, the permits are ready to issue for whenever someone wants to start construction — that it sells for something like $50 per square foot more than land without permits, and that's real money. And, as you say, I think actually assigning a value to that lays the costs of delay and uncertainty. It makes much more plain the costs of delay and uncertainty, whereas most of the time, when researchers like us talk about it, it's just yeah, kind of hand wavy. This definitely increases costs, slows things down, but it's very, very helpful to have actual numbers that you can put to that.

Vicki Been 01:06:44
It's helpful. It's really critical because, especially in areas like New York City and many others, where you have term limits for the legislators — the local legislators who are enacting these zoning restrictions and land use restrictions — you know, what's their currency? They need to pass legislation. That's the main currency that they have. And you have to be able to say, well, you're passing legislation, yes, but that's not a success because it's going to add, you know, $50 a square foot to the price of the land, right, or whatever you can say. So I think it's really, really a critical area of research that we need to do, but very difficult. So those are some of the things that I would suggest. I mean, we still, of course, need to understand that there will be people whose incomes will never support the cost of operating housing, and so we will always need some alternate kinds of support, and so, to the extent that we can do more research on how do we do that as cheaply and fairly and humanely as possible, will also be important here.

Mike Lens 01:08:00
100%.

Shane Phillips 01:08:02
All right, I think that is where we will end it. Vicki Been, thank you for joining us on the Housing Voice podcast, and we'll have you back here in five years for Supply Skepticism: Revisited Redux.

Vicki Been 01:08:20
Thank you so much for having me And thank you for this podcast, which is wonderful resource to all of us, and thank you both for all the work that you do, which we follow very carefully out here on the East Coast. So thank you all.

Mike Lens 01:08:37
Thank you, Vicki.

Shane Phillips 01:08:43
You can find our show notes and a transcript of the episode on our website, lewis.ucla.edu. Talk with us and other listeners at uclahousingvoice.substack.com. The UCLA Lewis Center is on the socials. I'm on Bluesky and LinkedIn at @shanedphillips and Mike is on Bluesky at @mc-lens. Thanks for listening, we'll see you next time.

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Michael Lens

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Michael Manville

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Paavo Monkkonen

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Shane Phillips

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