Upzoning and gentrification: Heterogeneous impacts of neighbourhood-level upzoning in New York City

Abstract

In light of the calls to relax restrictive density regulations, this paper examines how increasing residential development capacity, i.e. upzoning, may change the demographic, socio-economic and housing characteristics of the affected neighbourhoods. We examine the neighbourhood-level upzonings of New York City to answer this question. We find that upzoning is positively associated with signs of gentrification – upzoned neighbourhoods became whiter, more educated and more affluent in the long run. Upzoning is also associated with increases in housing production, but housing prices also increased. Most importantly, we find that these effects varied significantly by the intensity of upzoning and the pre-upzoning local contexts. Neighbourhoods affected by intense upzonings experienced gentrification more intensely, along with greater housing production, rent growth and housing price appreciation. Black-majority and low-income neighbourhoods experienced gentrification to the greatest extent, while neighbourhoods with high demand for housing saw the greatest increases in housing supply. We discuss different mechanisms of gentrification likely at play for the different types of neighbourhoods.