One fundamental problem with housing affordability is that it’s a really hard problem to address in a high homeownership society, even moreso when the folks who are overrepresented in government (older folks), are more likely to be homeowners.
We’ve created a society where 65% of the population is homeowners, who have an irresponsible portion of their net worth tied up in their house, and as such are deeply opposed to seeing the cost of housing go down, and support exclusionary local policies to ensure that it doesn’t.
matt says that no jurisdiction in america can just take away vacation homes which is true but don't some places restrict how many units can be given to, say, foreign investors, and how many maybe need to be primary residences? not saying this is good policy but isn't it something people try to do sometimes? didn't new york do or think about doing this? i remember some sort of campaign insinuating that high rental costs were due to foreign billionaires buying third and fourth homes in skyscrapers and celebrities and other rich folks wanting homes they never stayed in in manhattan. i say fine but let builders build and it is exactly these investors and vacation homers who will see the value of their capital decrease as the supply goes up (and apparently in manhattan and san francisco the effect would be quite big) and that sort of thing gets naturally disincentivized.
But doing so will make all the _IMBYs mad, apparently.
I think Matt controls the supply of rage tweets by flipping his articles between private or public. He calls it Open Twitter Rage Operations. Or Quasimodo Easing on his most prolific weeks.
I think the research on housing-first for homelessness is pretty sound. This could possibly be one of the thorniest electoral issues imaginable, and would only be more contentious in a market with housing supply scarcity.
A second-order problem that goes un-discussed: Managing the units occupied by the formerly homeless.
In this case, I am not talking about low-income families and individuals that have been pushed into homelessness due to affordability problems. For most landlords (including myself), they are fine tenants.
The bigger issue would be with the long-term homeless, where mental health and substance abuse is likely a problem. That is an entirely different kind of landlord than the kind who deals with low-income tenants. These landlords would need to be well paid (as a % on the revenue) and have pretty quick access to courts and other channels to deal with problem tenants. They would be extremely easy to demonize, even when they are doing the right thing. When you factor in the slow process of eviction in many blue, coastal states, you would find few people up for that job.
It's a shame because as awareness has grown, paradoxically, it seems as if capacity to deal with problems has gone down.
But in terms of problem tenants. If we have a housing first policy and a resident needs to be evicted, he or she needs to be institutionalized and not just put out on the street again.
Great article, and very much agreed. The way to get more people into houses is to make housing more affordable. And the way to get affordable housing (or anything else) is to have a lot of it.
When supply exceeds demand prices come down.
So if you care about homelessness, or families just starting out trying to get a house, you should support policies that increase the supply of housing.
IE, get rid of all the nonsense regulation that mainly serves to restrict the supply of housing
This is a well-argued rebuttal of left-NIMBYism that gives a good overview of the YIMBY/left-NIMBY debate for people who aren't already super into the housing issue. However, from observing how YIMBY Twitter characterizes the left-NIMBY position and the vacancy issue in particular, I think the gap between those two camps is larger than most YIMBYs realize.
The left-NIMBYs fundamentally refuse to recognize the fact that the housing market operates according to supply and demand. They take the high prices in large metro areas as an unchangeable fact of life. They espouse a theory of gentrification where building more housing raises rather than lowers rents.
A large part of this seems to me to stem from the idea that housing *shouldn't* be subject to supply and demand; that we should "decommodify" housing by I guess having the state own all of it.
I don't think YIMBYs quite realize this. For example, I've seen knowledgeable YIMBY Twitter folks question why left-NIMBYs want homelessness to be higher than vacancy. They'll say, given that some amount vacancy is natural, isn't it better that there be fewer homeless rather than more?
But that misses the real homeless/vacancy point, which is, given that building more won't lower rents, the fact that the are numerically enough vacant units to match each homeless person means we should not build more. They think not having sufficient housing is not the problem.
YIMBYs, because they believe in supply-and-demand, seemingly can't even comprehend this line of reasoning. Obviously rents are high because there is demand to move to the area and if you gave all the vacant units to the homeless that would solve the homeless issue but exacerbate the housing cost issue.
Left-NIMBYs use the same vacancy to counter calls to upzone as well. There's enough housing for everyone, so why upzone? Of course it doesn't make sense to say, there's enough housing as is, so it's fine to build single-family homes but not apartments. It's just a leverage point that's "free" for them to use because they don't believe more supply will alleviate housing costs (it'll all become vacant luxury investments or something). According to their thinking, any benefit only accrues to developers.
A lot of this stuff makes more sense when you fully grasp the consequences of left-NIMBYs really, truly not believing in supply and demand.
They seriously don't. There's a proposed law in California that would allow a homeowner to split a lot in a single family area into two lots. (Once only.) And left NIMBYs say, each of the two new houses you could build on the two lots would cost more than the (bigger) one house you could build on the lot if you didn't split it. Each of the little houses would cost more than the big house, they say. And I'm like, how could that possibly be true?
Question - how much of Germany and Japan's ability to build housing is due to a loser pays legal system? IIRC if you want to sue to prevent an apartment complex going up next to you in Frankfurt or Tokyo you can. But if you lose then you are not only paying your lawyer your also paying the developers legal fees. I'm sure that stops a lot of opposition.
"The unhoused are often suffering from a variety of problems in life and it can be tempting to get trapped by a “root causes” mentality that wants to focus on addiction, mental health, or employment services rather than housing. "
If you want to ensure the NIMBYs win then that should be your plan. It's vital that the drug addicted and mentally ill are required to be in treatment and if they become a burden on the community then they need to be sent to a locked supervised facility. When this doesn't happen, housing the formerly homeless in your community becomes a tremendous burden on that community.
I can't find the article right now but the LA Times did some great reporting on their housing first program and the burden it put on neighbors and the community was immense.
You said in an earlier post that you would rather all housing in the USA be owned by a half dozen mega-corporations rather than the current state of affairs wherein most housing is owner-occupied, because this creates large political incentives to constrain the supply of housing.
I think this public-choice insight of yours has far, far more broad implications for how we manage our entire economic system and how economists think about the economy.
Economists view perfectly competitive markets as the ideal because they maximize utility ex hypothesi. But if markets were perfectly competitive and ownership of firms were widely distributed enough to keep said market perfectly competitive, that could also create the very same political dysfunction that our housing market creates, a market which along many dimensions is in fact one of the most competitive, least monopolistic markets in America.
I think your assumption that "competitive" means more players is not accurate. Smaller businesses tend to be less efficient and so more competitive markets tend to lead to agglomeration. To me it's strange that you characterize the housing market as one of the "least monopolistic" markets in America when in most neighborhood it is literally illegal to "enter the market" as a new supplier of housing.
I live in Seattle where the homeless population is large and growing even though city goevernent is spending a lot of money trying to get people into housing. The Pandemic has hit the city hard, turning a vibrant downtown into boarded up storefronts, sidewalks unnavigable because of the tents and trash and empty office buildings. Apartment buildings are offering three months free rent and reducing lease pricing significantly. The cost of housing in the suburbs and even further out are skyrocketing. A decent three bedroom house in North Bend, about 30-45 minutes outside the city center can cost nearly a million dollars! And they sell fast with multiple offers. I hope office workers like those working at Amazon and Google will come back to the office towers to work but I suspect they may not return to the high rise apartment buildings. Maybe some of those buildings can be converted to low cost and subsidized buildings. I also think some of the office towers could be turned into low cost housing.
The pandemic and the rapid shift to work-from-home for tech employees here has really done some wild things to our housing costs here. North Bend doesn't shock me (it's beautiful and has been a bedroom community for MSFT employees for decades), but the price jumps in other areas outside of Seattle proper are mind-boggling, especially when you get just east of the mountains and find that you'd be paying close to two-years-ago Seattle prices for a fixer in Roslyn that would have gone for $125k in 2014.
I suspect you're right about many tech workers not returning to those newly-built luxury Downtown/SLU/Cap Hill apartments. I'm in tech, and right now, no one I know is expecting to go back to five days a week in the office in the foreseeable future, and commuting to SLU by bus or car (be it from Ballard, North Bend, or apparently now Roslyn or Cle Elum) is a lot less of a problem if you only have to do it once or twice a week. What that does long-term to the housing market--and housing planning--here post-pandemic, I've no clue.
Do you think it's more likely that the offices will refill while the apartments remain empty? My impression is that it's more likely the apartments will refill while the offices remain empty (and hopefully some of those offices can be converted to apartments).
Obviously this argument is made to some extent in bad faith but clearly unhoused people are not the only ones who indicate excess demand for housing and would like to live in vacant units if they were commandeered. 43,000 people are supercommuting from Stockton and Modesto to the Bay Area every day. Additionally, hundreds of thousands of people are being priced out of the Bay Area and moving to places like Boise and Austin--many of them would surely stay if housing were more abundant. There are also many young people who are still in roommate situations or living with their parents but would like a place of their own. Everyone agrees that these are major problems in other contexts, but in the "unhoused > vacancies" point they are all completely whitewashed as indications that demand > supply.
The odd thing is that if you've ever spent time in the equities trading industry, you would know that a small float + tons of demand is always going to result in massive price spikes... every time. The whole vacancy leads to homelessness argument is so bad that I have a hard time believing it's not bad faith on it's face.
Thanks for this post. I think your last few paragraphs towards the end finally helped something "click" for me as to why local zoning that allows residents to stall or veto any new development is the root cause of housing supply issues. I had thought it was just one issue among many, but you make a compelling case that any housing policies which don't address this will be less effective and more expensive.
Does anyone have a good article/post that explains what a reformed, more YIMBY-friendly set of zoning and development rules would look like? I live in Minneapolis and I know we're sometimes held up as a model because we allow tri- and quad-plexes across the city now, but the problem is I have yet to see any of these actually under construction, and we still seem just as housing constrained as every other city.
I'm a big fan of allowing plexes in single family neighborhoods, but most people don't move, and most houses don't come on the market to be replaced by plexes. Whatever changes you make in the zoning of single family neighborhoods (allow more dense forms! get rid of parking minimums! charge for parking on the street!), their effect will be slow.
If you're really hardcore, the answer is to just have no maximums for height/density/FAR or minimums for parking/setbacks anywhere. You'd still of course have limits on where you're allowed to put rendering plants or whatever.
On a practical note, vacancy rates in office, retail and warehouse markets are all higher than in residential markets. Like you said, some vacancy is a good part of a functioning market.
One fundamental problem with housing affordability is that it’s a really hard problem to address in a high homeownership society, even moreso when the folks who are overrepresented in government (older folks), are more likely to be homeowners.
We’ve created a society where 65% of the population is homeowners, who have an irresponsible portion of their net worth tied up in their house, and as such are deeply opposed to seeing the cost of housing go down, and support exclusionary local policies to ensure that it doesn’t.
matt says that no jurisdiction in america can just take away vacation homes which is true but don't some places restrict how many units can be given to, say, foreign investors, and how many maybe need to be primary residences? not saying this is good policy but isn't it something people try to do sometimes? didn't new york do or think about doing this? i remember some sort of campaign insinuating that high rental costs were due to foreign billionaires buying third and fourth homes in skyscrapers and celebrities and other rich folks wanting homes they never stayed in in manhattan. i say fine but let builders build and it is exactly these investors and vacation homers who will see the value of their capital decrease as the supply goes up (and apparently in manhattan and san francisco the effect would be quite big) and that sort of thing gets naturally disincentivized.
You might really consider making this post public.
Came here to say this.
But doing so will make all the _IMBYs mad, apparently.
I think Matt controls the supply of rage tweets by flipping his articles between private or public. He calls it Open Twitter Rage Operations. Or Quasimodo Easing on his most prolific weeks.
https://www.inquirer.com/real-estate/housing/roxborough-development-apartment-house-growth-philadelphia-20210324.html
Didn't know there was a YIMBY utopia was in Philly.
I think the research on housing-first for homelessness is pretty sound. This could possibly be one of the thorniest electoral issues imaginable, and would only be more contentious in a market with housing supply scarcity.
A second-order problem that goes un-discussed: Managing the units occupied by the formerly homeless.
In this case, I am not talking about low-income families and individuals that have been pushed into homelessness due to affordability problems. For most landlords (including myself), they are fine tenants.
The bigger issue would be with the long-term homeless, where mental health and substance abuse is likely a problem. That is an entirely different kind of landlord than the kind who deals with low-income tenants. These landlords would need to be well paid (as a % on the revenue) and have pretty quick access to courts and other channels to deal with problem tenants. They would be extremely easy to demonize, even when they are doing the right thing. When you factor in the slow process of eviction in many blue, coastal states, you would find few people up for that job.
It's a shame because as awareness has grown, paradoxically, it seems as if capacity to deal with problems has gone down.
But in terms of problem tenants. If we have a housing first policy and a resident needs to be evicted, he or she needs to be institutionalized and not just put out on the street again.
Great article, and very much agreed. The way to get more people into houses is to make housing more affordable. And the way to get affordable housing (or anything else) is to have a lot of it.
When supply exceeds demand prices come down.
So if you care about homelessness, or families just starting out trying to get a house, you should support policies that increase the supply of housing.
IE, get rid of all the nonsense regulation that mainly serves to restrict the supply of housing
This is a well-argued rebuttal of left-NIMBYism that gives a good overview of the YIMBY/left-NIMBY debate for people who aren't already super into the housing issue. However, from observing how YIMBY Twitter characterizes the left-NIMBY position and the vacancy issue in particular, I think the gap between those two camps is larger than most YIMBYs realize.
The left-NIMBYs fundamentally refuse to recognize the fact that the housing market operates according to supply and demand. They take the high prices in large metro areas as an unchangeable fact of life. They espouse a theory of gentrification where building more housing raises rather than lowers rents.
A large part of this seems to me to stem from the idea that housing *shouldn't* be subject to supply and demand; that we should "decommodify" housing by I guess having the state own all of it.
I don't think YIMBYs quite realize this. For example, I've seen knowledgeable YIMBY Twitter folks question why left-NIMBYs want homelessness to be higher than vacancy. They'll say, given that some amount vacancy is natural, isn't it better that there be fewer homeless rather than more?
But that misses the real homeless/vacancy point, which is, given that building more won't lower rents, the fact that the are numerically enough vacant units to match each homeless person means we should not build more. They think not having sufficient housing is not the problem.
YIMBYs, because they believe in supply-and-demand, seemingly can't even comprehend this line of reasoning. Obviously rents are high because there is demand to move to the area and if you gave all the vacant units to the homeless that would solve the homeless issue but exacerbate the housing cost issue.
Left-NIMBYs use the same vacancy to counter calls to upzone as well. There's enough housing for everyone, so why upzone? Of course it doesn't make sense to say, there's enough housing as is, so it's fine to build single-family homes but not apartments. It's just a leverage point that's "free" for them to use because they don't believe more supply will alleviate housing costs (it'll all become vacant luxury investments or something). According to their thinking, any benefit only accrues to developers.
A lot of this stuff makes more sense when you fully grasp the consequences of left-NIMBYs really, truly not believing in supply and demand.
They seriously don't. There's a proposed law in California that would allow a homeowner to split a lot in a single family area into two lots. (Once only.) And left NIMBYs say, each of the two new houses you could build on the two lots would cost more than the (bigger) one house you could build on the lot if you didn't split it. Each of the little houses would cost more than the big house, they say. And I'm like, how could that possibly be true?
Question - how much of Germany and Japan's ability to build housing is due to a loser pays legal system? IIRC if you want to sue to prevent an apartment complex going up next to you in Frankfurt or Tokyo you can. But if you lose then you are not only paying your lawyer your also paying the developers legal fees. I'm sure that stops a lot of opposition.
"The unhoused are often suffering from a variety of problems in life and it can be tempting to get trapped by a “root causes” mentality that wants to focus on addiction, mental health, or employment services rather than housing. "
If you want to ensure the NIMBYs win then that should be your plan. It's vital that the drug addicted and mentally ill are required to be in treatment and if they become a burden on the community then they need to be sent to a locked supervised facility. When this doesn't happen, housing the formerly homeless in your community becomes a tremendous burden on that community.
I can't find the article right now but the LA Times did some great reporting on their housing first program and the burden it put on neighbors and the community was immense.
You said in an earlier post that you would rather all housing in the USA be owned by a half dozen mega-corporations rather than the current state of affairs wherein most housing is owner-occupied, because this creates large political incentives to constrain the supply of housing.
I think this public-choice insight of yours has far, far more broad implications for how we manage our entire economic system and how economists think about the economy.
Economists view perfectly competitive markets as the ideal because they maximize utility ex hypothesi. But if markets were perfectly competitive and ownership of firms were widely distributed enough to keep said market perfectly competitive, that could also create the very same political dysfunction that our housing market creates, a market which along many dimensions is in fact one of the most competitive, least monopolistic markets in America.
I think your assumption that "competitive" means more players is not accurate. Smaller businesses tend to be less efficient and so more competitive markets tend to lead to agglomeration. To me it's strange that you characterize the housing market as one of the "least monopolistic" markets in America when in most neighborhood it is literally illegal to "enter the market" as a new supplier of housing.
I live in Seattle where the homeless population is large and growing even though city goevernent is spending a lot of money trying to get people into housing. The Pandemic has hit the city hard, turning a vibrant downtown into boarded up storefronts, sidewalks unnavigable because of the tents and trash and empty office buildings. Apartment buildings are offering three months free rent and reducing lease pricing significantly. The cost of housing in the suburbs and even further out are skyrocketing. A decent three bedroom house in North Bend, about 30-45 minutes outside the city center can cost nearly a million dollars! And they sell fast with multiple offers. I hope office workers like those working at Amazon and Google will come back to the office towers to work but I suspect they may not return to the high rise apartment buildings. Maybe some of those buildings can be converted to low cost and subsidized buildings. I also think some of the office towers could be turned into low cost housing.
The pandemic and the rapid shift to work-from-home for tech employees here has really done some wild things to our housing costs here. North Bend doesn't shock me (it's beautiful and has been a bedroom community for MSFT employees for decades), but the price jumps in other areas outside of Seattle proper are mind-boggling, especially when you get just east of the mountains and find that you'd be paying close to two-years-ago Seattle prices for a fixer in Roslyn that would have gone for $125k in 2014.
I suspect you're right about many tech workers not returning to those newly-built luxury Downtown/SLU/Cap Hill apartments. I'm in tech, and right now, no one I know is expecting to go back to five days a week in the office in the foreseeable future, and commuting to SLU by bus or car (be it from Ballard, North Bend, or apparently now Roslyn or Cle Elum) is a lot less of a problem if you only have to do it once or twice a week. What that does long-term to the housing market--and housing planning--here post-pandemic, I've no clue.
Do you think it's more likely that the offices will refill while the apartments remain empty? My impression is that it's more likely the apartments will refill while the offices remain empty (and hopefully some of those offices can be converted to apartments).
Obviously this argument is made to some extent in bad faith but clearly unhoused people are not the only ones who indicate excess demand for housing and would like to live in vacant units if they were commandeered. 43,000 people are supercommuting from Stockton and Modesto to the Bay Area every day. Additionally, hundreds of thousands of people are being priced out of the Bay Area and moving to places like Boise and Austin--many of them would surely stay if housing were more abundant. There are also many young people who are still in roommate situations or living with their parents but would like a place of their own. Everyone agrees that these are major problems in other contexts, but in the "unhoused > vacancies" point they are all completely whitewashed as indications that demand > supply.
The odd thing is that if you've ever spent time in the equities trading industry, you would know that a small float + tons of demand is always going to result in massive price spikes... every time. The whole vacancy leads to homelessness argument is so bad that I have a hard time believing it's not bad faith on it's face.
What if this conversation started with a graph of homelessness vs temperate climate/distance to ocean?
Then the correlation would be pretty good! https://medium.com/age-of-awareness/homelessness-in-americas-metros-18cf6aecf35b
Thanks for this post. I think your last few paragraphs towards the end finally helped something "click" for me as to why local zoning that allows residents to stall or veto any new development is the root cause of housing supply issues. I had thought it was just one issue among many, but you make a compelling case that any housing policies which don't address this will be less effective and more expensive.
Does anyone have a good article/post that explains what a reformed, more YIMBY-friendly set of zoning and development rules would look like? I live in Minneapolis and I know we're sometimes held up as a model because we allow tri- and quad-plexes across the city now, but the problem is I have yet to see any of these actually under construction, and we still seem just as housing constrained as every other city.
I'm a big fan of allowing plexes in single family neighborhoods, but most people don't move, and most houses don't come on the market to be replaced by plexes. Whatever changes you make in the zoning of single family neighborhoods (allow more dense forms! get rid of parking minimums! charge for parking on the street!), their effect will be slow.
A lot of YIMBYs are big fans of Japan's approach to zoning law, which you can read about here: https://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
If you're really hardcore, the answer is to just have no maximums for height/density/FAR or minimums for parking/setbacks anywhere. You'd still of course have limits on where you're allowed to put rendering plants or whatever.
On a practical note, vacancy rates in office, retail and warehouse markets are all higher than in residential markets. Like you said, some vacancy is a good part of a functioning market.