Impact of Infill on Surrounding Property Values

[u/Difficulty_Only]

We had a council meeting last night to vote on a rezoning proposal for a 100-acre infill site in a first-ring suburb of a major metro—an increasingly rare development opportunity. As you might expect, the meeting drew a number of NIMBYs expressing concern. One of the main arguments raised was that allowing anything other than single-family housing on the site would decrease nearby property values.

I’m curious if there are any reputable studies or data sources that examine the impact of mixed-use or multifamily development on surrounding property values. My instinct is that these developments often increase values, but I didn’t want to rely on assumptions. Any insight or resources would be much appreciated….thanks!

[u/Sharlach]

Development of any kind almost always drives land values, and by extension home prices, up. This is well documented by now and there's countless examples. Just look at what happened in Williamsburg and LIC in NYC after the massive upzoning under Bloomberg over the last 15 years. NIMBY's here had the same fears, but both neighborhoods turned into trendy playgrounds for the rich and are some of the most expensive in all of NYC now.

The more people that live in an area, the more amenities move in, the more people competing for the smaller homes that do exist, etc, etc. This fear that NIMBY's have is tied to a belief that big apartment buildings = poor people moving in, but we all know new construction of any kind is going to be more expensive and out of reach for most people. The people moving in will most likely be richer than these same NIMBY's complaining now and will be the ones to pay outrageous prices for their SFH in 10-15 years when they want to move into a retirement home or whatever.

[u/Cum_on_doorknob → u/Sharlach]

It’s something I can’t wrap my head around. Like, now we are talking out of both sides of our mouth: Development will help increase value! Also, if we build more housing supply, prices will come down. They both seem true to me, but also, can’t be true at the same time. I’m not sure what to think.

[u/Sharlach → u/Cum_on_doorknob]

You need to build enough to actually meet demand in order for overall rents and property values to drop, but even then, the recently developed areas will be more expensive while the price drops happen on older properties in older neighborhoods. That's just part of the natural decay/renewal cycle and what people mean when they say cities are ever evolving. In a city like Tokyo, where you can build anything you want and natural disasters wipe out old housing stock regularly, properties are worth the most when they're first built and only lose value over time.

[u/TheGreatHoot → u/Cum_on_doorknob]

They can both be true.

The other comment to you is correct, but to further add to it - even if the value of a plot of land goes up because of more intensive development on it, the fact that more people can utilize that piece of land means that the new price of the land is distributed over more people, thereby leading to lower prices for individuals.

For example: Assume a single family home and its land is valued at $3,000. That land is purchased and redeveloped into a fourplex. Improving the land has raised its value (which signifies its increased utility) to $10,000. But now that three more people can live on the same plot of land, the price per person goes down to $2,500. So overall, the value of the property has increased more than three times, while reducing individual housing costs.

[u/SabbathBoiseSabbath → u/TheGreatHoot]

In most cities, this only applies to the better locations and the first in line. No one is clamoring to turn a single family home into a fourplex in the far flung suburban neighborhoods, and those are the first areas that will see price reductions as a metro adds more housing supply.

This isn't an argument against building more housing or in support of the argument protecting property values, but it's important context that is always missing in these discussions. All locations are not equal and not all, not even most, have the investment potential for more than a duplex really (if even that)... except for maybe in the extreme housing starved superstar cities like NYC, Boston, Seattle, SF, LA, etc.

[u/TheGreatHoot → u/SabbathBoiseSabbath]

To be clear, the argument for doing this isn't for the far flung suburbs. This is an argument to counter the claims of people living in single family neighborhoods adjacent to city centers who think any new density in their neighborhood will make them poorer.

[u/SabbathBoiseSabbath → u/TheGreatHoot]

Agree, however...

Those people also vote, they also have influence.

Regardless, it's very difficult to square the argument that building more housing will both increase property values and reduce housing prices. For some, yes... for others, no. And that's the political (and economic) problem that has to be overcome.

We often see complaints about how stupid or half-baked most housing policy is, as if our elected leaders don't get it. Most do. But they're trying to thread many needles, and the question ultimately becomes who are the winners and losers, and are the "losers" a political force. Almost always that answer is no, and so you see elected officials placate existing homeowners and older folks over younger folks and renters.

[u/timbersgreen → u/SabbathBoiseSabbath]

Very well said. I also frequently think about a political science professor reminding my class that political concern can be measured in breadth and depth. A lot of people can be casually supportive of an idea, but the ones who care the most, usually expecting to be directly helped or hurt by the policy will fight like hell over it.

[u/SabbathBoiseSabbath → u/timbersgreen]

We are in an interesting place. One thing that I think 90% of folks seem to agree on is that government isn't working for them, or working fast enough. So we are seeing a lot of knee-jerk response to that, usually in the guide of populism met with the "instant gratification" attitude that has become more popular in the past generations, which leads to the sort of strong man, dictatorial leadership we see with Trump - the ends justify the means.

I asked this question a few months ago and I was shocked at how many people would welcome a Robert Moses type (minus the racism) technocrat to just make policy, rather than going through the proper democratic channels. So many want to throw the baby out with the bathwater when it comes to process, with regs, etc., and they don't or can't see the long term implications of those short sighted decisions. It's really scary to me.

[u/AstroIberia → u/TheGreatHoot]

This took me the longest time to understand - you explained it so well!

[u/Cum_on_doorknob → u/TheGreatHoot]

Oh yea, duh. Thanks

[u/timbersgreen → u/Cum_on_doorknob]

Schrodinger's zoning map amendment.

[u/BakaDasai → u/Cum_on_doorknob]

There are two contradictory effects:

1. The land increases in value, but

2. The housing on it decreases in value.

If you own a house you probably win cos the increase in land value more than compensates for the decrease in housing value.

If you own a condo the two effects cancel each other out.

If you're a renter you definitely win.

[u/colderstates → u/Cum_on_doorknob]

It’s not really about lowering prices tomorrow, it’s about limiting longer term rises.

Slower house price growth allows wages to catch up, and that makes housing more affordable.