YIMBYs (Yes In My Backyard advocates) are riding a wave of policy momentum, as zoning reforms, developer-friendly tax incentives, and streamlined bureaucratic processes become increasingly popular tools to address housing affordability. The logic behind these measures is simple and appealing: boosting housing supply should help tame rising prices and improve affordability.
The Gowanus Example
Gowanus, Brooklyn, vividly illustrates what these policies can accomplish. Historically an industrial wasteland with a famously polluted canal, Gowanus has seen remarkable changes following rezoning and generous tax incentives enacted in 2021. Today, the area echoes with construction sounds—cement trucks rumbling, pile drivers pounding, and cranes moving steel girders—as apartment buildings rapidly transform the neighborhood.
These policy-driven developments have transformed a former no man's land into one of New York City's most dynamic neighborhoods, demonstrating the potential of targeted interventions. But does this kind of development meaningfully tackle broader affordability issues?
Home Prices and Purchasing Power
Rezoning and tax incentives undeniably inject new housing stock into urban centers. However, empirical evidence suggests local income levels are a more significant driver of housing prices than the supply of new units alone. An analysis of median household income versus home prices across U.S. counties confirms a robust correlation, with an r-squared of 0.51. While correlation isn't causation, it strongly indicates a fundamental linkage.
Home Price / Income Correlation
Notably, this relationship has only grown stronger over the past decade, underscoring the increasing interdependence between local incomes and home price appreciation.