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ABSTRACT
NIMBYism (not in my backyard) decreases the amount of affordable housing construction. A possible motivator for this is an existing homeowner’s fear that proximity to affordable housing depresses property value. Using a hedonic regression analysis of the sales prices of homes in Sacramento County, California, this study finds that increases in the demographic characteristics in a census tract that are likely to increase if more affordable housing is built there lower the sales price of a home. This finding holds even after controlling for the percentages of racial/ethnic groups more likely to face discrimination. Policymakers should recognize this economic element of NIMBYism as they consider instruments to increase the amount of affordable housing built. We conclude with a suggestion for a knowingly controversial policy mechanism based upon cap and trade with the hope it will spur further debate on this issue.
Disclosure Statement
No potential conflict of interest was reported by the authors.
Notes
1. Values drawn June 14, 2018, from CA Association of Realtors (http://www.car.org/marketdata/data/countysalesactivity) and Census Bureau (https://www.census.gov/construction/nrs/pdf/uspricemon.pdf).
2. Nichols (Citation2017) notes that California’s rate of poverty is the highest in the nation after consideration of its high cost of living.
3. An alternative explanation is that even absent these reasons, the typical homebuyer prejudges the likely occupants of affordable housing and does not desire them in their neighborhood. Regardless of whether this is true, the logic behind NIMBYism being a protection of home value still holds.
4. See Lewis (Citation2003) and Ramsey-Musolf (Citation2016) for background on California’s Housing Element Law.
5. We are aware of the potential limitations of the broader usefulness of our findings caused by using only a single geography. In response we can only add that the racial/ethnic diversity of Sacramento County, as described by Narula (Citation2014) citing the work of Randy Olson, is in the top 5% of all United States counties and in the same highly diverse category as Los Angeles County and counties in the San Francisco Bay Area. Furthermore, Graham (Citation2018, p. 458) identifies the Sacramento Metropolitan Area as the eighth most racially integrated in the United States. If such diversity results in greater tolerance, the magnitude of the NIMBY influence detected here may be lower than if a similar analysis done for a less diverse county. We leave it to others to confirm this.
6. Census block groups are divisions of census tracts that generally contain between 600 and 3,000 people. Each census tract contains at least one block group, but larger census tracts can contain more than one block group.
7. This is standard in hedonic regression analysis. Although some confusion occurs when the measure of an explanatory variable is a percentage point value (as are all the variables in with % as the unit of measurement), here a 1-unit change is a 1-percentage-point change, that leads to a 1-percentage-point change in home value as represented by the regression coefficient multiplied by 100.
Additional information
Notes on contributors
Robert W. Wassmer
Robert W. Wassmer is Professor and Acting Chairperson of the Department of Public Policy and Administration at California State University that offers a master’s degree of the same title. He is also an Associate Editor of the academic journal Economic Development Quarterly and has previously published in the related areas of local development incentives, urban sprawl, housing foreclosure, and housing short-term rentals.
Imaez Wahid
Imaez Wahid completed his master’s thesis on the topic of this article and is now employed at the California Department of Housing and Community Development as an analyst in the Financial Assistance Program Design and Development Unit.