The Economic Boost of Large-Scale Upzoning in High-Cost Areas

I've been thinking about housing a lot lately. Like, a lot a lot. It feels like we're at this weird inflection point in American cities where the way we've been doing things for the last 70-ish years just isn't working anymore.

So I dove into the research on upzoning—which is basically just allowing denser housing in places that previously only allowed single-family homes—and the numbers are kind of mind-blowing.

What Actually Happens When We Upzone?

Okay so first, what even is "builder's remedy" and why should you care? It's this provision that basically says if a city isn't meeting its housing needs, developers can bypass certain zoning restrictions to build more housing. It's like a cheat code for getting around decades of restrictive zoning!

Studies show that when we upzone, we actually get more housing (shocking, I know). We're talking about a 4% increase in housing units within seven years of implementation, and up to 8% growth in areas that get more intensive upzoning.

Let's do some back-of-the-napkin math here: If we converted just 10-20% of single-family lots in high-cost metro areas to multi-unit buildings, we could create between 30,000 and 220,000 new homes PER METRO REGION. That's not nothing!

The Economic Ripple Effects Are Huge

This isn't just about housing—it's about economic activity too! Construction is one of those industries that creates these amazing economic multipliers.

When developers build on a typical 10,000 square foot lot in an expensive metro area, we're talking about $5-14 million in direct construction spending. But because of how economics works, that spending ripples outward and generates $7.5-28 million in total economic activity.

Scale that up to thousands of lots, and we're talking about $75-560 BILLION in economic activity per metro area. That's jobs, that's materials, that's services, that's people buying lunch near construction sites!

Also! More people living in a neighborhood means more customers for local businesses. The corner store that was barely hanging on with just single-family customers might suddenly thrive when there are 4x as many people within walking distance!

What About Affordability? (The Thing We Actually Care About)

This is the question that keeps me up at night. And the research is pretty clear that "increases in housing supply slow the growth in rents in the region." That's according to NYU professors Been, Ellen, and O'Regan, who know WAY more about this than I do.

With the kind of upzoning I'm talking about, we could see rent reductions of 1-15% compared to what would happen otherwise. In a city where median rent is $2,500/month (which, oof), that's monthly savings of $25-375 for the average renter.

But here's something cool that doesn't get talked about enough: when we build more housing in neighborhoods near jobs and transit, we're also reducing transportation costs for families. Housing affordability isn't just about rent—it's about the total cost of living somewhere!

Cities Actually Make More Money From This

Now we're getting to the part that should make city officials really excited. When you replace a single-family home with a multi-unit building, property tax revenue more than doubles PER ACRE.

For a metro area converting just 10-20% of its single-family lots, we're looking at an additional $100-600 million in property taxes every year. Plus another $20-100 million in sales and income taxes from new residents.

Yes, there are infrastructure costs, but the math still works out to a net positive of $80-500 million annually per metro area. That's money that could fix potholes, improve schools, build parks, or even fund affordable housing programs!

A Tale of Five Cities

Let's get specific about how this might play out in different places:

New York City is already super dense, so the impact would be more targeted—mostly in places like Staten Island and parts of Queens. We'd probably see rent decreases of 5-10%, which doesn't sound like much until you remember how expensive NYC already is.

Los Angeles might be the poster child for upzoning potential. It's got tons of single-family neighborhoods and a severe housing shortage. Research shows 81% of viable builder's remedy projects would be in "exclusive, high-income and coastal enclaves." We could see 80,000-150,000 new homes and 8-15% lower rents over a decade!

Seattle is dominated by tech, which creates a unique dynamic. Builder's remedy projects might start with luxury housing, but as those higher-income folks move into new units, they free up existing housing. Seattle could add 25,000-60,000 new homes and see rents decrease by 7-12%.

Boston has those beautiful historic neighborhoods that make implementation tricky, but its strong knowledge economy and ridiculous housing costs create big incentives for densification. We're talking about 20,000-50,000 new homes and 5-10% rent reductions, which could help Boston keep its young talent instead of losing them to more affordable cities.

San Diego is perfectly positioned for climate-friendly growth with its mild weather and expanding transit. Upzoning could create 30,000-70,000 new homes and reduce rents by 8-13%. The benefits would be especially strong near transit stops where apartments currently aren't allowed.

The Big Picture: National Economic Effects

These five metro areas represent about 15% of US GDP, so improving their housing markets would actually boost national productivity.

We're looking at a potential GDP increase of 0.2-0.4% annually through:

1. Direct construction stimulus ($500B-1T over a decade)

2. Better job matching (when people can actually afford to live near good jobs)

3. Increased consumer spending (when people aren't spending half their income on rent)

And the environmental benefits are substantial too! Households in dense, transit-rich neighborhoods produce 30-70% fewer transportation emissions than similar households in car-dependent suburbs. Across these five metros, upzoning could reduce emissions equivalent to taking 500,000-1,000,000 cars off the road!

But Wait, There Are Complications

I wouldn't be doing my due diligence if I didn't talk about the challenges:

Displacement concerns are real, even though NYU researchers found that "while new supply is associated with gentrification, it has not been shown to cause significant displacement of lower income households." Still, we need tenant protections and affordable housing preservation alongside upzoning.

Infrastructure needs to keep pace with density increases. Water, sewer, transportation, and schools need upgrades to handle more residents. The good news is that increased tax revenue can pay for these improvements.

Property tax implications for existing homeowners are complicated. Research shows that "upzoning a single-family residence does not alone increase its or its neighbor's valuation for property tax purposes as long as it continues to be used as a homestead-protected single-family residence." But we still need thoughtful policies to protect long-term residents.

In Conclusion (Because This Is Getting Long)

Large-scale upzoning through builder's remedy provisions offers substantial economic, social, and environmental benefits for high-cost cities. The data is pretty clear that it would produce more housing, improve affordability, and generate fiscal benefits for municipalities.

Different cities will see different results based on their unique characteristics, which is why we need locally tailored approaches rather than one-size-fits-all solutions.

With careful implementation and complementary policies to address equity concerns, infrastructure needs, and homeowner stability, we can transform restrictive zoning from a barrier into an enabler of inclusive, sustainable growth.

And I, for one, am EXTREMELY here for it.