Windsor Terrace is a small, leafy, mostly residential neighborhood in Brooklyn, just south of Park Slope. Having grown up nearby, I’m struck by how little it has changed—and how much. The rowhouses and small apartment buildings look much as I remember them, at least from the outside.
The key difference is that Windsor Terrace has grown significantly wealthier. Forty years ago, it was home to working- and middle-class Irish and Italian Catholic families, many of whom had lived there for generations. Today, its rowhouses are more likely occupied by affluent professionals, part of the broader gentrification of Brooklyn’s brownstone neighborhoods.
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In one sense, Windsor Terrace has remained static: the failure to expand housing supply in step with rising demand has preserved its aesthetic character. But that stasis has driven change along another axis. With so few homes coming on the market, the wealthy have increasingly outbid the less wealthy—gradually, but unmistakably, altering the neighborhood’s socioeconomic makeup.
The question, then, is which matters more. Should Windsor Terrace look much as it did a generation ago, with the same rowhouses and small apartment buildings—now renovated to a high sheen? Or should it continue to serve a similar purpose as before: an affordable haven for growing middle-class families—today more likely Dominican and Bangladeshi than Irish and Italian?
To many New Yorkers, the answer is clearly the second. The rising abundance movement is built on the belief that neighborhoods like Windsor Terrace must reject the politics of scarcity and embrace growth and change, even at some personal cost. But while their goals are noble, the challenges they face in places like Windsor Terrace reveal the limits of the project. A politics of “abundance” can never get by on class warfare. If YIMBYs want to succeed, they’ll need to stand behind profit-seeking real-estate developers—the true vanguard of neighborhood change.
Consider the massive gap between the number of existing housing units in New York City and the number needed to make housing truly abundant and affordable. My colleague Eric Kober estimates that the city would need 500,000 new units over the next decade to reach that goal—roughly twice the rate of housing production that City Hall projects over that interval. Keep that number in mind as we look to what’s actually happening on the ground.
Last week, the New York City Council approved a revised rezoning plan for Windsor Terrace. It will allow construction to go forward on a new multifamily residential building on a site that had long been the home of Arrow Linen, an industrial laundry business. This ambitious undertaking will include 250 housing units, 40 percent of which are designated as below-market affordable housing. Originally, the project was slated to be significantly larger, though with fewer below-market units. But a collection of neighborhood activists successfully persuaded local officials to scale it back.
These activists showed the new face of left-NIMBYism. They were clear that they did not oppose development per se. Rather, they were opposed to luxury development; to high-rises out of scale with their low-rise neighborhood; and, of course, to greedy developers, who care more about maximizing profit than building just and sustainable communities for all.
Development is fine, the new NIMBYs argue—as long as it’s architecturally distinguished, eco-friendly, priced well below cost, and morally immaculate. And because they lack a critique of the underlying moral framework—because they often agree that capitalist acts between consenting adults are suspect—many YIMBYs struggle to argue back. By moving from an explicitly anti-development stance to a demand that new units be offered at below-market rents, NIMBYs gain in moral prestige, while delivering the same anti-development punch.
While it might sound appealing to require “affordable housing”—that is, deed-restricted, below-market units made available through a housing lottery, not simply housing that’s affordable because supply is plentiful—these mandates ultimately worsen the city’s supply shortage. Pricing a larger share of units below market rent means the remaining market-rate units must be priced high enough to subsidize the affordable ones and still generate enough profit to justify construction. In practice, that drives up average rents.
Moreover, the lucky few who receive the below-market units tend to stay in place for longer than they otherwise might prefer, lest they forfeit a valuable benefit. That makes the housing market less liquid and less dynamic, keeping newcomers out for the benefit of incumbents. New York City’s “Mandatory Inclusionary Housing” requirement—developments on rezoned parcels set aside between 25 percent to 30 percent of new units as permanently below market—has the same effect. These mandates directly undercut housing abundance.
Nevertheless, New York’s political leaders continue to develop new ways to drive down a project’s prospective profit and divide what little remains for their allies. For example, if you want to qualify for a tax abatement that makes a 100-unit rental building viable in the five boroughs, you’ll have to agree to pay workers on the project “prevailing”—or union-level—wages. With labor costs equalized, the path of least resistance then becomes union labor. If that added cost makes the project unprofitable, those underused lots will remain as they are—even in the midst of a severe housing shortage.
The implicit premise is that making a profit on rental housing is somehow wrong. Developers should be grateful to be allowed to make any profit at all. The moral logic—profit is bad—becomes a political strategy for NIMBYs and local rentiers alike.
Harass him enough, and Atlas eventually shrugs. Housing development is always voluntary: if the returns don’t justify the risk and effort involved, developers won’t bother. Instead, they will move on to a more hospitable locale, like West Palm Beach, Florida, which has become a mecca for real-estate developers fleeing onerous blue-state land-use regulations, or they will choose a different line of work entirely.
The problem isn’t restricted to New York. To the extent we’ve seen concrete efforts to liberalize zoning restrictions in blue jurisdictions, they’ve usually been paired with a plethora of new mandates, almost as though abundance-curious policymakers feel the need to pay penance for accepting that market-rate developers have a role to play in addressing the housing crisis. Writing in City Journal, Chris Elmendorf has given a fitting name to this phenomenon: the “housing treadmill.” Liberalize zoning restrictions, add new mandates, and end up with the same stagnant growth in housing supply.
Some YIMBYs, like Elmendorf, have called this behavior out. But too many left-leaning abundance advocates hesitate to counter this moral blackmail with the obvious reply: profit isn’t a dirty word, and building is a noble pursuit. The people who grow rich by risking their capital and their sanity to build homes aren’t the enemy—they’re exemplars, whose success should inspire others to strive just as hard. Public policy should reward that effort, not punish it.
YIMBYs and abundance advocates agree that more is good. The corollary is obvious: profit-seeking is good, too. Until they admit that, they will be subject to the same nonsense strategy that is winning the day in Windsor Terrace—and making New York all the poorer in the process.
Photo By Epics/ Hulton Archive via Getty Images
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