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Abstract
Problem, research strategy, and findings
In December 2018, the Minneapolis (MN) city council approved a new comprehensive plan that proposed eliminating single-family zoning restrictions throughout the city. In this project, I study the initial impact of this change on the sales prices of affected housing units. I estimate a series of difference-in-differences models comparing the sales price of houses within 3 km of the Minneapolis border in the year before and year after the city adopted the plan. I find that compared with similar unaffected properties in surrounding cities, the Minneapolis plan change was associated with a 3% and 5% increase in the price of affected housing units. In addition, there is some evidence that this price increase is due to the new development option it offers property owners. I find that the plan-related price increases are larger in inexpensive neighborhoods and for properties that are small relative to their immediate neighbors.
Takeaway for practice
By examining the short-term effect of the Minneapolis 2040 Plan’s elimination of single-family zoning, my study is useful for planners working in cities considering similar reforms. My analysis, though preliminary, suggests that there is indeed demand for denser development in the city. But the price increases associated with the upzoning redounds most directly to relatively small properties and those in inexpensive neighborhoods. Planners should thus be sensitive to how this type of change can affect housing affordability and housing stock diversity.
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Supplemental Material
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Notes
1 For example, in a July 2019 article (Meyer, 2019), The New York Times issued a correction on an earlier version that stated that the Minneapolis 2040 plan banned single-family housing. The correction reads, “An earlier version of this article misstated the nature of an effort in Minneapolis to encourage construction of multifamily housing. The city eliminated single-family zoning, it did not ban single-family homes” (Meyer, 2019).
2 In a CBC interview, Tom Davidoff cleverly suggested that this subsidy amounts to “socialism for the rich” (Meuse, 2016).
3 Data provided by Zillow through the Zillow Transaction and Assessment Dataset (ZTRAX). More information on accessing the data can be found at http://www.zillow.com/ztrax. The results and opinions are those of the author and do not reflect the position of Zillow Group.
4 I used the R 4.0.2 (R Core Team, 2020) to clean and analyze the data. I used several packages in the “tidyverse” suite (Wickham et al., 2019) to prepare those data for my analysis. I used the “sf” package (Pebesma, 2018) to conduct the spatial analysis, “tidycensus” to download American Community Survey data and boundaries (Wickham et al., 2019), and “stargazer” to create formatted tables (Hlavac, 2018).
5 Although redeveloping single-family houses into denser 2- and 3-unit structures may do little to directly displace lower income families, if these changes alter patterns of investment and development across the city, they could contribute to larger trends in neighborhood change and, ultimately, displacement of people with low incomes from the city. Though outside the scope of my present analysis, this question is indeed an important topic of future research. Although some researchers have studied the impact that redevelopment plays in neighborhood change and displacement (Helms, 2003), and others have studied the impact that government-led transportation investment (Dawkins & Moeckel, 2016), there has been little empirical research on how zoning reforms affect neighborhood change and investment. This is an important question, particularly because some of the most trenchant opposition to upzoning concerns the potential of such changes to lead to displacement of people with low incomes.