Earlier this year, researchers Paavo Monkkonen and Michael Manville at the University of California Los Angeles (UCLA) conducted a survey of 1,300 residents of Los Angeles County to understand the motives behind NIMBYism. As part of the study, they presented respondents with three common anti-development arguments, including the risk of traffic congestion, changes to neighborhood character, and the strain on public services that new developments may bring. But according to their findings, the single most powerful argument motivating opposition to new development was the idea that a developer would make a profit off of the project.
At first blush, this finding might seem kind of obvious. People really don’t like developers. As Mark Hogan observed last year on Citylab, classic films from “It’s a Wonderful Life” to “The Goonies” depict developers as money-grubbing villains.
But, when you think about it, it’s pretty weird that this is the case. In what other contexts do we actively dislike people who provide essential services, even if they happen to turn a profit? I don’t begrudge the owner of the corner grocery every time I buy a loaf of bread or a gallon of milk, and I hope you don’t either. In fact, most of us are probably happy that folks like doctors and dentists earn a lot for what they do. So why are developers, who provide shelter, any different?
One possibility is that developers are often, for lack of a better term, assholes. This is surely the case with at least some developers. Our president is arguably America’s most famous developer, even if he isn’t exactly the master builder he played on television. And President Trump’s defining characteristic in his “Celebrity Apprentice” role—and evidently in real life—is that he is a bit of an asshole.
But it isn’t just him. Most cities have a Trump-like major player in the real estate market: the kind of guy whose business model is built on over-the-top marketing and conspicuous displays of wealth. They thrive by calling attention to themselves, and in so doing, attract the imprudent investors and impressionable customers that make deals work. Meanwhile, they’re drowning out the large majority of vanilla developers who are earning an honest living building up their communities, coloring how we view developers for the worse. But entrepreneurs in many fields can be assholes. Why do we especially dislike developers?
A second possibility is that many people, especially homeowners, cynically see developers as unscrupulous competitors. Consider that for most Americans, their house is their single biggest investment. If they know anything about supply and demand, they probably have a sense that more housing mean lower housing prices. Even absent a rudimentary theory of housing markets, homeowners may see developers as threatening the things that give their house its value: the neighborhood’s character, the great schools, what have you. And if someone’s threatening your nest egg, that’s a pretty good reason to dislike them.
This is a kind of expanded version of the homevoter hypothesis, developed by the economist William Fischel, which postulates that much of the political behavior of homeowners can be understood as an effort to preserve home values. It’s not a big step to say that this type of desire could bleed into cultural attitudes as well. You don’t need to be Joseph Campbell to know that people like a good David and Goliath story. Thus, development narratives often take the form of ‘humble homeowner saving for retirement versus the wealthy developer maximizing for profit’ (note that this closely parallels narratives about local stores competing with chains). You hear this narrative even in the tony suburbs of places like Boston and the Bay Area, where in many cases homeowners are likely wealthier than the average developer. It’s a compelling hypothesis, but it doesn’t do anything to explain why a renter might dislike developers. To do that, we need a broader theory.
One final possibility is that the the way we regulate development tends to reward the worst kind developer. As unpacked by Anna Fahey of the Sightline Institute in her recent post, the current system of heavy land-use regulation favors developers with deep pockets and an aggressive approach. When virtually every large-scale development—or in a place like San Francisco, every development—requires a rezoning and multiple variances, the developers who thrive are those who are able to extract permits from local governments, rather than those who provide a quality product at a decent price.
To some extent, this is how developers like Trump succeed: they aren’t particularly adept at financing or building buildings so much as they are at lobbying lawmakers to give them what they want. From zoning permits to eminent domain to tax abatement, urban development as it exists today is a complicated and ugly process unintentionally designed to benefit developers with the fewest qualms about greasing palms and buying off opposition. This isn’t to say that there’s anything wrong with applying for rezonings or variances—far from it. Virtually all developers have to apply for them. But they serve as a massive barrier to small-scale, squeaky-clean developers, and, even when used for honest purposes, they can look a lot like cronyism to the untrained eye. This could explain why even renters often hold negative opinions of developers.
Under this final hypothesis, the harder we make it for honest developers to turn a buck, the more we end up with shady developers. This could have even larger downstream effects. This could produce a vicious cycle, as the more that developers are cast as unsavory characters—and housing development as an inherently corrupt profession—the fewer decent people will go into the field. Thus comes Monkkonen and Manville’s ironic conclusion: if people don’t like the developers they have, they should make it easy for more public-spirited developers to come in and steal their business. That is to say, cities should make building housing as open and competitive as starting a grocery or selling t-shirts. In an open housing market, the comparative advantage of the asshole developer disappears. Of course, one or two movies with an honest developer as the protagonist also couldn’t hurt. I’m thinking “The Goonies 2”?
