The other day there was a comment thread in which City of Trees asked the SB crowd about issues on which they’ve done a “180,” and I would have to say that “affordable housing” is probably mine. It’s the kind of thing where, how could you be against this? It’s right there in the name! You’d have to be some kind of reactionary idiot! But then peel back the “affordable” layer, and…
I think that people who don’t want to build housing for a bunch of educated yuppies should understand that one of the frustrations with dems is that San Francisco and manhattan are not even affordable for educated relatively affluent yuppies. This is not a dumb demographic to build housing for.
This has been written here before but it bears repeating. That graphic is also exclusively good for your tax base and they use very minimal city services
"I hate this demographic, so I've engineered a situation where I'm more directly competing with them for housing and forcing them to live closer to me."
I think I always had a good instinct on this one, because my high school econ class taught me rent control as the archetypal example of a well intentioned policy that never works because it interferes with reaching the supply and demand equilibrium. IZ works on a similar principle, as Matt explains here.
I went from this is either really bad policy or slightly bad housing policy and you should just do public housing if you want public housing to this is either a slightly bad policy to acceptable if everyone understands that it has tradeoffs and it helps move zoning in the correct direction and isn't trying to put down extreme affordability requirements.
That is only true because of the specifics of this case. If you are moving from a state of "not automatically allowed" -> "automatically allowed with conditions" you are still loosening the regulatory burden. But going the other way, and enacting affordable housing requirements were none or looser existed would be a tightening.
Going from taxing development to subsidize housing to taking economic activity generally is not a 180. Such a person is changing direction on one axis but not the other.
If you were moving up along the Y axis, and then turn around and start moving down along the Y axis, you have made a 180 degree turn! You are on X=0 all along.
Lot of the desire for IZ policies and their ilk seems to be a way to politically square progressive voters' deeply and sincerely held desire for zero urban development and zero net population change (really zero change of any kind) with their ideological commitments to poverty reduction and the working poor. Doesn't matter if it works, it lets everyone Do The Right Thing (engage in purely expressive politics).
I think Manville and Monkkonnen's classic paper, "Unwanted Housing," is a good description of what's going on in places like California and BC. City governments have to deal with major social problems (like poverty) at the local level, they don't want to raise property taxes, and they see heavy taxes on new housing (whether cash or in-kind) as an opportunity to pay for those needs. https://morehousing.ca/unwanted-housing
I've listened to a number of city council discussions in Metro Vancouver on the appropriate amount of below-market housing, when they're deciding whether to approve or reject an individual rezoning. It's like they're trying to divide up a pie ("land lift"), assuming that the pie must be growing because rents have been increasing, without realizing that the pie is actually *shrinking* because of higher interest rates and cap rates, higher construction costs, and higher single-family house prices.
It's commonly believed at the municipal level that adding costs doesn't affect prices, because prices are set by the market - a project will sell or rent for whatever it can get, they're not going to lower their prices or rents just because their costs are lower. I've tried explaining that costs act as a floor on prices and rents; when costs exceed prices, homebuilding stops. By increasing costs, municipal governments are ratcheting up the floor. A presentation I did last week to the Metro Vancouver Regional District finance committee, with some pushback: https://metrovancouver.org/boards/meeting/3214
The danger with inclusionary housing requirements is that by increasing costs for new market housing (which has to cross-subsidize the below-market apartments), you're pushing market rents further out of reach for more and more people, creating housing need faster than you can fill it.
IDK how the property tax regime works in BC, but given how it works in CA, really any new 'luxury' housing will dump tax revenue into city coffers. If its all expensive market rate 1-bedroom/studios, its even better because those residents consume essentially no urban services (schools, police, fire, etc). It makes no sense to pile on an additional tax when you're already taxing something into perpetuity!
Unfortunately in Canada (and New Zealand), unlike the US, the standard practice is to lower the property-tax rate (“mill rate”) as total property value increases. So building a lot more new housing doesn’t increase total property-tax revenue at all. One obvious idea for reform would be, don’t do this!
Eleanor West and Marko Garlick: “Unlike local governments in the US, Denmark, and Australia, which tax a fixed percentage of a property’s value, New Zealand councils tax via a rating system. Councils determine the total amount of revenue to collect each year, and then each homeowner pays in proportion to their share of total property value. In other countries, more housing automatically brings in more revenue; in New Zealand, new housing only slightly reduces the burden on existing properties.”
I see this as better system than fixed property tax rates since a new apartment building going up lowers everyone else’s tax providing a financial incentive to allow new development.
Fixed property rates create stealth tax increases as elected representatives can say they did not vote to raise taxes and gleefully spend the money. It also creates an association with property taxes going up because of new development. The new development isn’t causing property taxes to rise but is correlated with things that are causing property taxes increases, so people get confused.
"I see this as better system than fixed property tax rates since a new apartment building going up lowers everyone else’s tax providing a financial incentive to allow new development."
Almost nobody in Vancouver understands how the mill-rate system works.
Interesting! I'm not in CA, so not totally sure how their system works (besides Prop 13 disfunction), but in my state 50% of the property tax revenue is available to taxing jurisdictions, and the other 50% goes to lower the mill rate. City councils can also vote to increase their mill rate by no more than 4%, or voters can agree to exceed the levy limit further via referendum. Maybe thats an easier compromise than a total overhaul of existing systems. I do wish that the 50/50 split only existed for non-residential commercial development, though.
City Councils, and NIMBY homeowners, are so resistant to this: "It's commonly believed at the municipal level that adding costs doesn't affect prices, because prices are set by the market - a project will sell or rent for whatever it can get, they're not going to lower their prices or rents just because their costs are lower. I've tried explaining that costs act as a floor on prices and rents; when costs exceed prices, homebuilding stops."
And then homeowners complain that all new housing is the most expensive kind of housing. Yes it is, because you've made it impossible for cheaper, quicker, smaller kinds of housing to be built.
I’m not sure I agree with the first consideration, but the second consideration has sufficient explanatory power on its own. Blue cities are governed by people with sincere, strongly-held (and frankly admirable) convictions that public policy should serve the needs of the poor. But because land use rules are so perverse, and NIMBYs in general are so hostile to reform, you’re get a lot of these non-solutions by well-intentioned if misguided legislators (I would put strong eviction protections in this same policy bucket)
Maybe I'm just jaded from living in West Coast cities, but the degrowth environmental streak is real and runs very deep here. Some version of the idea that "There are too many people and too many buildings" is pervasive even amongst disengaged people. I really do think the views of politicians and civic leaders out here mostly accurately reflect voters' preferences, notwithstanding a few good ones like Scott Wiener.
We see this in Colorado too. I think much of the problem is simply that a lot of issues around the environment are basically counter-intuitive: dense tall buildings help preserve the environment, people use very little water relative to agriculture, congestion and high housing costs are poor ways to limit use of natural beauty.
Yep. Deep convictions in play with this stuff, people just will not/cannot believe building more can help anything on net. That said, I've been in Portland the last couple years and the anti-growth environmental sentiment is so intense here, there's been a (very modest) swing in favor density in the old urban cores as a way to avoid any further greenfield development. It's not much, but might be the best we can hope for out here.
It's rare to meet an environmentalist who cares about the environment primarily because of abstract CO2 levels in the ionosphere. Most of them just like being around trees and animals more than the average person, and then a lot of policy positions are second order reasoned out from there. That doesn't mean a lot of them aren't right, but the idea that big old homes on half acre lots with lots of trees in the yard are worse for the environment than large, loud apartments without any wildlife nearby is hard to internalize.
I know the people you're talking about, but I'd be more inclined to label them left-conservative than progressive: symbolically pro-environment, pro-LGBT, anti-corporate; but as you say, their most closely-held belief is that their neighborhood/city shouldn't change and everything would be fine if people would just move somewhere else and/or stop having kids.
At the last public zoning meeting I went to, I remember one lady asking a very patient city planner why we had to have so much "chaos" (in one of Seattle's slowest-changing neighborhoods), and another arguing that nothing should be built unless it retained and treated 100% of stormwater onsite, to protect the salmon. When another attendee asked her if she also wanted to reduce car usage because of recent research showing that the particles coming off car tires are also bad for the salmon, the salmon were suddenly not so important anymore.
Yeah fair, our politics doesn't really have an axis that these ideas neatly sort on. There is no way to operationally tell these people apart from any other very progressive voter, they vote for higher taxes, show up at anti-ICE protests, the whole deal. Not sure there's any real way to navigate it.
The change-nothing crowd seem to be mostly older and/or own a business, at least going off of who shows up to public meetings in Seattle. I don't think the under-50 crowd is as anti-change as the older folks, so to the extent they're for IZ, I would expect it's for other reasons.
Edit to add: I suspect what unites all left-NIMBYs is negative polarization against Reagan, even to this day. Opposing him poisoned the well for supply-side economics on the left for generations.
What is quite annoying is equating "affordable" with "subsidized." Things can be affordable by just being less costly to build.
"then use general tax revenue to pay for the construction of subsidized units."
Why not vouchers? Why are housing subsidies usually given in kind, the municipal agency contracts with the provider and the beneficiary just gets the use of the property. If the beneficiary were just given a voucher, wouldn't both they and the provider be better off? You'd get less clustering of subsidized residents and normal resident-provider behavior?
There is a parallel issue between housing and healthcare, in where it is most optimal to put the obligation in the first instance of bearing the cost of providing essential goods/services at sub-market rates to people who can't afford to pay market rate -- on providers through mandated charity that gets internalized into the market price to everyone else, or on the general public with subsidies to providers. This article talks about the downside of the mandated charity approach.
The downside of subsidies is that the constant infusion of outside subsidy money into the market it can after a while make it almost impossible to even figure out what the market prices would be in the absence of the subsidy. That's essentially where a lot healthcare is now, because of the open-ended spigot of federal healthcare subsidies.
I agree, but I would reword "The downside of subsidies..." to "*A* downside of subsidies...." There are other downsides as well, viz. the complex mandates that inevitably come with the subsidies, the difficulty of dealing with them, the ecosystem of rentiers the subsidies generate and their polluting/corrupting effects on policy, the ultimate favoritism toward large providers who are most capable of navigating and gaming the mandates. (Those are a few downsides that come to mind; I'm sure there are many others.)
while true in a vacuum, the political problem for housing reform is often that people hate young childless professionals and *really* hate that those young childless professionals are the primary beneficiaries of an increase in housing supply. as a result you generally need to attach something to a reform project to mollify these people, which is where the inclusionary zoning comes from in the first place. i actually don't think vouchers would work for this because the people in question have been primed to be very skeptical of voucher programs, but it's worth a shot.
the second point i'd make is precisely because the price elasticity of demand is low, a lot of the financial relief from vouchers will actually raise demand for other, non-housing goods & services rather than for the housing itself (though ofc there will still be some effect)
It's really striking how many people really dislike tech workers. There was a rise in assaults in Seattle's gayborhood near bars around closing time in like 2015 and on of the local alt weeklies (which later deleted a large part of their archive because they'd used images without getting permission from the copyright owners so you can tell they practice careful journalism) presented the hypothesis that it was tech workers beating up people for being gay as a serious and plausible hypothesis. Instead of say drunk people getting into fights or criminals trying to steal expensive phones from drunk people.
At the time, people who lived near the part of the neighborhood where the assaults were happening were constantly complaining about disorder and crime around bars and nightclubs around closing time, so drunk people making bad decisions really was a more likely explanation. But techbros are bad so the real answer must be that they're beatign people up for being gay.
Idk, at least in Seattle, we’ve built a metric fuckton of housing for young childless professional - not that it’s brought nominal rents down, but it’s probably kept them from rising as fast as the counterfactual - but there’s no equivalent family apartment housing. Shit, my BIL just moved here from South Korea, where he lived in a 4 bedroom condo apartment in a high rise (his wife got it in the divorce). We don’t have 4 bedroom apartments in high rises here.
What do you mean the price elasticity of demand is low? If suddenly a bunch of low income renters who used to only be able to afford $700 a month rents get a $400 rent subsidy voucher, and the market rate for low end rent in the neighborhood was $1000, we're expecting the floor price of rent to go up in this location.
The initial claim was re resistance to increasing housing supply. Gentrification is almost the opposite; it is the result of insufficient housing supply in neighborhoods where the gentrifiers would ordinarily live.
>because the price elasticity of demand is low, a lot of the financial relief from vouchers will actually raise demand for other, non-housing goods
I don't understand what you mean. Yes, if I am currently paying $1000 for rent, and I get a $500 subsidy, I will have more money to spend on other things. But if elasticity is low, the increase in rent will be a relatively large pct of the subsidy, not a relatively low pct.
That would be true if the vouchers were universal benefits, but because they are targeted benefits and the ability to pay of the majority of renters doesn't move, the main price impact comes only from the increase in demand from low-income renters. But precisely because the demand is price inelastic, their demand doesn't increase that much when the vouchers reduce the effective price.
I agree with the first half, but re the second, my graphing calculator indicates that a shift in demand leads to a larger increase in price if demand is price inelastic.
But, to clarify, by "their" do you mean the individual or the aggregate demand of all who get the vouchers? And I am unclear what you mean by"their demand" -- do you mean quantity demanded? Because demand = the entire demand curve, and a $500 voucher shifts the demand curve the same, regardless of its elasticity, doesn't it?
“Affordable housing” has precisely the same feature. Because low income people now have the state subsidy to buy housing in a nice new building, rents on the other units in that building go up. Now it doesn’t look like the low income people in that building are paying the high price, but the effect is precisely the same as it would be if they were paying that high price, with a subsidy from the government, that is just clawed back as a tax the government imposes on the owner of the building.
Although that's not all bad, because if demand goes up, then that puts pressure on supply to go up. It might cause a few marginal projects to pencil out.
That’s part of it, but there’s more than that. Sometimes moderates play a mental game where they imagine liberals/progressives are completely irrational but everyone else will respond rationally to market incentives. Most people don’t respond especially rationally
There are builders in Los Angeles now building projects specifically for people with housing vouchers. This may be a problem with the new federal budget.
Then legalize construction of apartments, and build a mountain of them. Then landlords can’t hope to fill their buildings without renting to section 8 renters.
It’s easy to discriminate when landlords can choose without penalty. If the choice is section 8 renters or nothing, then landlords can’t afford to deny.
Should landlords have to know that tenants have vouchers? Why not have a system where the voucher money is directly transferred to people? Landlords are still free to check creditworthiness etc. If we did this with vouchers and food stamps then we'd be shifting to direct cash transfers which is probably good but may not be politically viable.
I initially thought, this is just government programs not trusting poor people to not use benefits for drugs, etc. but it could have to do with creditworthiness. If you need a voucher, you’re unlikely to pass a credit check
Quality housing in rich cities will never be affordable, without subsidies, to lower wage workers. Better paid workers will always push the price of in demand units beyond the means of 25th percentile workers.
Manhattan has fewer people now than 100 years ago. We can have many more people living in desirable areas even within our current ability to build skyscrapers if we accept much higher density, like SROs.
Depends how little living space people are willing to live with to be close to amenities. Poor people in Tokyo live in as little as 100 sq feet. But, we don't allow that here in the US, so if you can't afford the minimum unit size, you can't afford to live in a particular area at all.
It seems to me that the integration of the affluent and the poor is a significant part of the point though. Like just based on Facebook posts this is the kind of utopian desire I read about. Rich folks should have to live In the same neighborhood and face the same aggregate level of crime as anybody else and poor people shouldn’t be concentrated in some towers which turn into hell because no one has any social capital. It’s oddly Victorian but the people who I see who are really fired up about it aren’t saying there should be some affordable housing it’s that everybody should live in the same neighborhood avoiding concentration of poverty and gated community effects of the rich.
This is very common in arguments in Britain about what we call social housing, and I think there is *some* merit - essentially services for the poor become poor services. And the alternative that we don't want is French-style banlieues where the poor (and especially minorities) are essentially warehoused out of sight, with terrible outcomes as a result. There's definitely tradeoffs involved, but it is one factor worth considering
It would be interesting to find out if people in the NYC Housing Authority housing that have accidentally ended up in super neighborhoods have better outcomes. I am specifically thinking of the housing projects in the middle of Chelsea / Meatpacking in Manhattan, but I imagine there may well be NYCHA housing in places like DUMBO and Williamsburg that were down at their heels up to a few decades ago. Do they do better than people in say, East Harlem?
Yeah i've always been fascinated by that project in Chelsea, which I used to pass frequently when I lived in NYC. The NYCHA residents there really lucked out.
The negative, impersonal connotation is why social critics of urban housing party created the phrase "warehousing the poor". I'm pretty sure Oliver knows that poor people are people, not goods.
Same with the term “import” which I find incredibly dehumanizing yet people seem to commonly use it. These terms should only be used in contexts where the purpose is to draw attention to dehumanization (“warehousing people in a prison” “importing slaves” etc.). For all the talk of left-wingers being better at controlling language and culture it’s kind of surprising that this is how people still talk.
I don't particularly. I wouldn't really bat an eye if someone said "importing workers". It's just a descriptive phrase and reading something demeaning into it feels oversensitive.
I grew up in an integrated neighborhood like the one you describe in some EU city. I've never lived in a neighborhood like this in the US, and I don't like thinking that my potential future kids might go to a school with only kids of affluent professionals, if they go to school here.
Having said that, when I finished my PhD here in the US, I looked at jobs both in the US and back in the EU, and I realized that if I wanted to move back to the EU, I'd need to be okay with a pay cut of at least 50-60% (more than that if I went to my specific home country). The mechanism that achieved my integrated childhood neighborhood was the narrowing of income gaps, which means that most of the smartest people I met in undergrad now also live in the US (or Switzerland). I think that this is catastrophic for our long-term financial trajectory as an EU. So, maybe there's a monkey's paw here.
You could probably find the types of neighborhoods you're looking for most easily in inner-ring suburbs. They tend to have more multi-family structures interspersed with single family houses, and the single family housing can be of a wider mix of ages designs and sometimes disrepair.
I've also heard that smaller college towns tend to be more integrated.
NYC is always incentivizing sub-market housing, and yet most areas of Manhattan (the most expensive borough) are still natural examples of the utopia you describe. There are a halfway house and a "welfare hotel" within a block of the Upper West Side building I live in, and my building consists entirely of 3- and 4-bedroom apartments (2- and 3-bedroom apartments plus "maid's rooms") that all go for well over $1m (probably mostly over $2m).
There’s several layers to it but the answer is avoiding concentration of negative traits.
Then when the only people violating norms are kind of psychos and not alienated from the community in general there’s no problem harshly enforcing the law because they don’t have some sort of story of mistreatment.
Someone should write down the list of negative traits and then forbid more than N% units from being owned by people who have those negative traits. Has anyone ever tried this before? We could call it Dejure Housing (dejure is French for "fancy color" but you can make it any color you want).
I feel like a lot of the discriminatory problems are essentially concentrated disorder problems and people would accept strict rule enforcement that seemed fair to begin with.
I don’t think so. Most people commit minor infractions occasionally and want enforcement to be flexible enough to let them off. People have pejorative terms for strict rule enforcement (Karen etc.). They want police to look the other way when underage kids drink in their basement. There are even more extreme cases like remember the “affluenza” kid? A elected Republican judge in a rich part of Texas let him off.
The evidence is very clear that escaping to expensive suburbs is easier, which is why cities have not improved. There’s nothing that anyone can do about it. Forcing people to live in an area with high crime is the kind of low IQ thinking that makes progressives a small minority among US voters. Normal people don’t think like that.
What do you mean when you say “cities have not improved”? Crime rates are way down over the past 30 years, and even though there was a blip a couple years ago, they’re on track to be the lowest on record.
I'm not sure if looking at only national urban crime rates is the right way to look at whether or not cities have improved? There are a lot of other metrics one could look at it, including affordability, quality of education and visible drug abuse, homelessness and disorder.
On top of that there are vast regional differences, with marquee cities like NYC clearly getting better on most metrics (but not on middle class affordability) and "flyover" cities like St Louis or Memphis just as violent as ever and probably more so.
Personally I probably wouldn't say "cities have not improved”, but if you look at it from a raising a family perspective then I don't object to that framing.
Yeah, Memphis crime may be down slightly from 2023, when it had more homicides than NYC despite a population of 600k vs 8.5m, but that certainly isn’t the perception. I don’t begrudge folks moving to the suburbs there at all (though there are low-crime pockets in the city proper, you’d want to send your kids to private schools)
On overall metrics, middle class families with children prefer to live in the suburbs because of quality of life issues. Compared to Europe or richer Asian countries, US cities are definitely inferior.
That shows cities are not as good as they could be. That doesn’t mean they haven’t improved. They have absolutely improved, and seem to be continuing to do so.
And if the goal is to just expose rich folks to poor folks socially, you can do what elite colleges do and have 10-15% of the population from the bottom 50% of the income distribution and declare victory.
If you imagine the reverse form of this where you sprinkle a few rich people into a poor neighborhood for representativeness, what you get is early-stage gentrification, which everyone loves to hate on.
This is making a lot of unmerited assumptions about "poor people" and crime. It's even making a lot of assumptions about the income levels of "affordable housing". I'm not sure that "poor people" is going to describe the inhabitants of a great many of them.
In California the typical limits are "Low Income" (80% of Area Median Income, which in my county of Santa Clara for two people would be $127,650) and "Moderate Income" (120% of AMI, $187,400 for a household of two). That's not poor people.
Does this actually work though? Most people don’t actually want to live somewhere where everyone is richer than them because it makes them feel bad. There’s white flight from Asian neighborhoods too.
Most of the “affordable” units in these developments are probably going to go to non-representative groups of poor people like students.
Do you have any evidence of this? It is true that people of one ethnicity may desert an area when it becomes predominantly occupied by people of another ethnicity, but that is probably not related to not wanting to live near richer people.
My prior is that poor people would *love* to live in a gentrified area, as long as they don't feel ethnically excluded.
Edit: In NYC a few years ago, there was a scandal about the "poor door": basically, people who lived in sub-market apartments in luxury buildings had to use a separate entrance. This made a lot of people angry, but there was still no problem renting those sub-market units.
If white families are fleeing areas that have more new Asian immigrants, but aren't fleeing areas with similar income and housing price mix that don't have so many Asians, that contradicts your point that they're leaving because others are richer than they are.
You might re-read my post, which said that I think that people are *not* leaving because others are richer, but because of feelings about changes in ethnicity of an area:
"It is true that people of one ethnicity may desert an area when it becomes predominantly occupied by people of another ethnicity, but that is probably not related to not wanting to live near richer people."
Sort of an aside but this gets to the “everything is peer effects” theory of education. My (not Jewish) grandmother emigrated in the ‘50s (GI bride and very poor). She intentionally moved her family to Roger’s Park - a middle class Jewish neighborhood in Chicago - because it was the best public education on a budget. All of her children were very successful.
One wonders if you don’t have a similar thing going on in, like, Edison, NJ today.
My initial support for the idea of IZ was directly because of the Raj Chetty's 'Moving to Opportunity' work that found that moving to an affluent area does seem to have a positive causal impact on children.
I've soured on IZ specifically for all the reasons Matt laid out here, but I still think there is a case to made for using public dollars to encourage lower cost housing options in affluent areas. I'm not totally sure what the 'optimal' policy would be, but I still support the goal.
I’m in favor of both but there’s a pretty big difference between literally requiring government permission to move somewhere versus policies that might indirectly raise the price of housing as an unintended effect which might make it harder to afford moving there.
'Go back to Ohio' and 'Go back to Mexico', the exact same sentiment, one totally acceptable and normal to say for a certain type of liberal, the other completely immoral and awful
Affluent professionals are to housing politics what rich egoists and grain hoarders were to the French Revolution. They become the scapegoats for scarcity — not because they caused it directly, but because the real constraint is structural and seems less tractable. Just as 18th-century mobs blamed elite hoarders for famine in a demographic system where subsistence was mathematically guaranteed, today we blame landlords, developers, and investors for housing prices in cities where new construction is systematically throttled. But unlike the ancien régime, we now live in an era where modern workers — equipped with power tools and factory construction techniques that didn’t exist during the last great housing boom — could end scarcity, if left to ply their trade freely. Instead, we enforce political constraints on housing supply, then squabble over who must live at the edge of homelessness — not because scarcity is inevitable, but because we’ve come to accept it as the natural condition.
It’s kind of insane the many governments expect private property owners to subsidize housing rather than the government’s themselves subsidizing rents for a set of income constrained residents on these projects.
"Don't make taxes go up on *me*, the righteous home owner who moved in when things in this town were perfect! Make taxes go up on the *newcomers* who are responsible for all the bad increased in traffic, noise, and overcrowding!!!!"
I maintain that Colorado might be the best place to try state-level upzoning. We have a bunch of small mountain cities with astronomical housing costs and non-resident homeowners.
Subsidizing rent increases demand, which increases rents. Subsidizing rents almost always comes with burdensome admin and an inability to evict tenants who are making life miserable for the other tenants.
Not building housing decreases supply, which also increases rents.
At least increasing rents through subsidies might encourage developers to build more (and if you're subsidizing rents rather than preventing them from building, they might be able to build)
I think you are underestimating the regulatory burdens that come with subsidized rent, which is why so many landlords would rather leave a unit empty than accept it.
They have to be given multiple chances to correct the issue, and the process can take several months. By the time you get permission to evict, the neighbors have been through hell.
That just sounds like a normal eviction to me. Why do you think this is different for any other landlord?
Contra your assertions here, my understanding is that a lot of landlords prefer section 8 tenants because they have been vetted and the rent is always on time.
With a normal eviction, you gather your evidence and get a court date (that can still be difficult in some states), but with S8, you have layers and layers of bureaucracy to satisfy before you can even go to court. Some landlords do specialize in S8, and they have the administrative burden built in to their operation. 'Vetted' is laughable, unfortunately., which is among the reasons many large-scale landlords won't do it.
I sometimes wonder how much this "we don't want to explicitly raise taxes so we pass unfunded mandates" skews societies.
The one I always think about is anti-money laundering where the government has effectively deputised tens of thousands of bankers rather than hire tens of thousands of FBI agents who have transparent access to your banking data without warrants or anything.
I wonder if the public's appetite for anti money laundering would vanish it had to be directly funded in a way that made it a visible line item in the annual budget from Congress.
EMTALA where hospitals are required to provide free medical care to everyone is another one.
Oh, it definitely skews societies. But it's reality too. People just hate having their taxes raised directly but their reaction tends to be more muted when unfunded mandates are used to equivalently raise their taxes.
If we want government to be more efficient, then we need a better class of citizens. Until then, we need to work with what we have.
A developer, whose project isn’t pencilling out, recently wrote to the Cambridge city council seeking an exception from the 20% affordable rule for their Mass Ave project:
“Ironically, if one were opposed to the creation of new market-rate multifamily housing with inclusionary units in Cambridge, supporting the current 20% rule would be a very effective way to block new such housing.”
It’s ironic too because Cambridge is really good at building committed affordable housing through the CHA without IZ policies.
I was going to mention this project too! The developer actually sent the city council a really helpful spreadsheet, showing among other things that the IZ mandate translated to a $17 million developer subsidy. The building’s revenue at market rate totaled $107m, so the IZ mandate was equivalent to a 16% tax. Do we want to tax new construction at 16%? Spreadsheet link here (I think it’s fair to share this?) https://docs.google.com/spreadsheets/d/1I_zQTpHHTcXC7AMWMqleKMjwGGUHSMnU8A1oP9ajKUM/edit?usp=drivesdk
There is one, yes - as Matt mentions in the article, you can do 6 stories instead of 4 stories if you're IZ-compliant and the lot is large enough.
As is, the council is debating options to deal with the problem with IZ not penciling. I think they are mostly committed progressives who are actually trying to grapple with the reality of the developer math, but also facing pressure from constituents who see IZ as serving affordability. It's also probably awkward to pass a major housing bill with an explicit IZ requirement only to roll it back 5 months later, so it's a delicate balancing act.
You can do six stories, but do you have to still satisfy the IZ requirements for all six stories? Because if so, allowing the developer to build a bigger building that loses even more money is hardly an advantage.
One question about that spreadsheet. It has the equity required at around $30 million, and then the payments for the equity required at $16 million. That seems very high. Does that $16 million also include the interest on the loan?
That spreadsheet is incredibly valuable. I'm particularly interested in the construction cost. Cost for housing is often expressed as cost per saleable square foot. In this case the cost to build per saleable residential sq ft is $1099, and the cost to build one unit is about $1.3 million—and as the spreadsheet points out, that's pre-tariff.
These numbers are high, but they look right to me. That's how much construction costs in expensive areas.
The developer is losing money on the required retail space too.
An interesting test for the new zoning regulations in Cambridge will be the new building on the site of the soon to be demolished Riverview condominiums. Common sense, and market demand, suggests that a structure of equal or greater scale is built there. I predict a bitter and protracted struggle between the owners of the site, the neighbors, and the city that probably results in less housing than what the site can handle.
I'm really curious about how that works, legally. What does owning a condo mean when the unit is physically destroyed? Are you still a member of the condo association? Do you now just own a percentage of the land?
I had always assumed that in order for condos to be demolished, the owners had to agree to sell. Do the Riverview owners still retain ownership? How does this work?
I've been wondering how condo buildings that are old and really ought to be replaced get to be replaced, given how hard it is to get all the owners to agree. I guess the answer is, the building has to be so bad it's about to fall down.
To add another layer onto it, it may well become a big proxy battle over Neighborhood Conservation Districts (Riverview is in the Half Crown Marsh NCD)
I agree with this critique of inclusionary zoning. But so long as cities are going to do it, I think it would be preferable for the spots to be reserved for city employees or something. At least the benefit would accrue indirectly to the local government rather than just being raffled off. And it would continue to be a cudgel against NIMBY objections to new construction.
It would also blunt the disincentive to increase one’s earnings that usually comes with an income-restricted apartment. If you’re a city teacher or social worker, your income rises on a more or less preset course; you are less likely to reduce your labor supply to keep your rent low.
My wife works in affordable housing in the Bay Area (not specifically in Daly City, she was not involved in that project), and the building housing for teachers thing makes her so mad.
She's like, "awesome, let's definitely use our limited resources building subsidized housing for the middle class instead of the poor."
I get her point, but the counterfactual is raising teacher pay significantly which also consumes resources. I am aware that funding is usually not fungible, but there is probably significant overlap between funding for teacher's salaries and funding for below-market-rate housing for teachers.
My recommendation to your wife would be to work on getting the cost of subsidized units down. The outrageous cost of building "affordable housing" in California both limits the amount of units you can build and is a huge political headwind. SF spending over $1.1 million per studio is a much bigger problem than subsidizing middle class government employees (https://www.cato.org/blog/can-million-dollar-apartments-solve-californias-housing-crisis; not endorsing Cato but this was the first link I found for the project I had in mind). When you have costs like that, it's really hard to ask voters for more funding. At that price point, having the government pay rent for market-rate housing makes a lot more sense.
If I was doing "affordable housing" in the Bay, I would try to build the largest projects possible and use "luxury housing" (ie 1-2 bedroom apartments with residents who pay a lot of taxes but consume minimal services) to cross-subsidize the other units and to cover nicer community amenities.
You're right. I modelled it out with data from RSMeans and https://www.nber.org/papers/w33958 and the gap between the financed construction cost and rents isn't as big as I thought, although there is still $500+/month in profit per one-bedroom unit with the current market-rate rents and the upper bound estimates from RSMeans for a 650 square foot flat.
It's very "assume a can opener", but if you could add marginal units without parking at that price point, you could probably cover the entire build cost of a subsidized unit with five or six market-rates, although rents would go down quickly if the Bay actually built singificant amounts of housing.
As I understand it, RMSmeans is for estimating hard costs. But if that's all you're using, you're missing the other costs, particularly the cost of money, but also things like design costs, impact fees and development fees, and land costs of course.
The counterfactual isn't raising teacher pay. There's no real sign that we're in some kind of binding constraint for teachers. This is just a giveaway to a politically powerful group.
The cost per unit of affordable housing is definitely absurd! My understanding is that this is mostly a result of... more giveaways to politically connected groups. Like, requirements to use union construction is a big one, then a whole bunch of "green" requirements about energy efficiency and adding solar panels to things. I'm not sure what your implicit model is for the costs of affordable housing units, but if you imagine that it's just some kind of featherbedding by affordable housing developers per se I think you're wrong.
We are definitely in a binding constraint for teachers in my part of the SF Bay Area. Not only do we lose teachers because of housing costs, we lose doctors because of housing costs.
I mean, clearly Bay Area cost of living bites almost everyone -- including, as you say, the objectively quite wealthy. I work in tech, have some family money, and still was in my mid 40s and like a 1-2%er before I had a house where I felt like I was at sort of an A- overall grade for my physical residence.
And that's going to be the case until either demand dramatically drops in a way that will be disastrous for the area (but good for housing prices) or supply rises due to decades of sustained building at much higher levels than is presently the case. And I assume that basically everyone here agrees with that.
But I don't see any sign that, given that background situation, there is any particular reason to think that teachers are uniquely poorly off or uniquely constrained, nor that housing provision for teachers is a good form of teacher comp (like: it is very uneven in which teachers it benefits. Why?)
The other big cost for affordable housing in the Bay Area is time, and time is money. If the developer can't or won't use SB 35, approvals take forever and the city demands expensive concessions. And then, since affordable projects need six or more sources of funding, it can take a long time to get the funding, and each funder has their own requirements which might seem simple alone but in combination with all the other funders' requirements add considerable hassle, which is cost.
The news articles about the project quote the district saying that the project is intended to reduce teacher turnover due to high housing prices. I don't have any insight into the operations of the district, but I find it believable that it is hard to retain staff in the area if a market-rate one-bedroom is already $2800/month.
My mental model of the costs is not "featherbedding by affordable housing developers" in the sense that the developers are stealing it all or something. I find the "non-profit industrial complex" to be super overblown and mostly bad faith argumentation from people who are opposed to provisioning popular public services that want to label it as waste and fraud instead (see also DOGE). My mental model is similar to the findings of the Transit Cost Project for NYC's subway system: there are lots of unnecessary, wasteful, and/or overpriced expenditures that combine to reach an outrageous amount of money and time to accomplish something.
I don't think the affordable housing developers and advocates are the root cause of the costs, but my prior is that they would accomplish more by focusing on getting the costs down. To go back to the NYC subway example, a lot of advocacy groups blame "underinvestment" for the lack of expansion and not expansions coming in at over 10x the price of tunneling in Paris. I'm not an expert on the Bay Area, but I've seen a lot of the same rhetoric from groups trying to building subsidized housing or provide housing for "housing first" addiction recovery models. If it takes a decade and $1.1 million a unit to build subsidized studios, your impact is going to be really limited. California has generally done a worse job with "housing first" than Texas, and I don't think that is because California voters are less symptathetic to people in recovery from opioid addiction than Texans.
If you told me a building was 10% Section 8 or 20% low-income restricted, I would probably be significantly less interested in renting a market rate unit there.
If you told me a building was 20% reserved/discounted for teachers and cops, I’d think that sounded nice. I’d probably be slightly more interested in living there.
Developers likely know that people have preferences like mine, so they could be more amenable to pursuing a project with the latter restriction. I don’t think it’s a 1:1 use of resources; not all non-market units are created equal.
I do not think you have properly understood my comment if you believe I was proposing these set asides for the purpose of being an amenity for market rate renters.
You wrote that you wouldn't rent at an apartment complex that has undesirables in it. I think that lots of people would, and we don't need to care much that you wouldn't, because supply/demand is currently so unbalanced. If you want it in economics talk, I don't think that the (real) negative effects on the rent that are imposed by having a small portion of the apartment complex be rented to low income people is going to cause a major depression to the rents you can charge to market-rate units.
And if that supply/demand imbalance gets fixed such that "20% low income restricted" substantially depresses the rents you can charge for market-rate apartments, we will also be at a point where it's even more ridiculous to build subsidized housing for decently-paid teachers.
To pick on a specific example, this one-bedroom unit (https://www.zillow.com/homedetails/88-Hoff-St-APT-108-San-Francisco-CA-94110/53153433_zpid/) is selling for $419,223 and the household income for a couple buying it is capped at $119,900. Even if the buyers somehow have a $80k downpayment and earn exactly the maximum household income to remain eligible, the monthly payment with taxes and HOA is over half their monthly paycheck before health insurance or anything else. From my understanding of house financing rules they wouldn't be able to get a mortgage. I'm not sure who can buy these units other than downwardly mobile people whose parents pitch in for the downpayment and mortgage, which seems like the last group who should get subsidies.
This is normal, and assuming the couple can find the down payment in the couch cushions, they can afford the home. The housing cost would be about 30% of their income, which is the standard. That's how the prices are set, at ~30% of the gross income.
Finding $84k in your couch cushions would involve a very different lifestyle than I'm used to. Do people buying these units get help with PMI or do you need to actually bring a 20% down payment to the table? It seems crazy to me that there would be both such a narrow band of income for qualifying and that you need to have that kind of money for the down payment.
I actually work on this issue at the state level (California). Can you DM me? I fervently believe that education workforce housing is an effective solution for school districts losing teachers to high housing costs, but am humble enough to know there I may have blind spots and would appreciate discussing other perspectives with informed people. We may both learn something.
Glad to see this. Such a no-brainer IMHO when you've got (1) a critical need for workers who don't make a lot of money, and (2)you're in an expensive area.
Wouldn’t the no brainer be “pay these people for whom you have a ‘critical need’ more, given that by dint of being in an expensive area you can afford to do so by hypothesis?”
Among other things, provisioning the housing this way is more tax efficient than paying signficiantly higher salaries to cover outrageous housing costs. I also think schools have a vested interest in teachers living relatively close by. If teachers have really bad commutes, it's harder to ask them to stay for extracurricular activites and you have a higher risk of staff being late. Similar logic applies to fire fighters and police, with the later often being required to live in the jurisdiction they work in.
“Among other things, provisioning the housing this way is more tax efficient than paying signficiantly higher salaries to cover outrageous housing costs.”
Interesting argument - I guess because the housing subsidy isn’t a reportable source of income?
The latter arguments seem less convincing to me since they’re of the class “can be solved by paying salaries that clear the local housing market” although I’ll grant that there may be particular workers for whom the public benefit of them living closer is higher than for others.
Yeah, from my understanding the "subsidy" portion of the housing is not taxed as a benefit in this case. Teachers are still paying fairly high rents (IIRC $1600/month for a one-bedroom), but the counterfactual is paying people a sufficiently high wage to cover true market-rate housing ($3000+) in salary and therefore paying significantly more in social security and income taxes.
You also circumvent backlash against high salaries for public employees. The pay raises that would be required to afford the local housing market would be very large and the public has unreasonable expectations around salaries for government workers. Hiding the pay increase in housing is similar to the status quo of hiding government pay in benefits (eg much nicer health insurance than comparably paid jobs typically have).
I have econ brain so I am inclined to default to the “paying salaries that clear the local housing market” solution, but that doesn't guarantee that people will stay in the local housing market unless you mandate it like police departments often do. My prior is that raising salaries significantly for teachers in one jurisdiction is more likely to result in people from further out applying and commuting long distance than getting everyone to move to the area.
Getting the teachers to live nearby can’t be achieved by increasing their pay to be able to afford nearby housing. With that level of pay, they can choose from many neighborhoods, and only a fraction of them will choose the neighborhood by the school over neighborhoods with other amenities they find idiosyncratically appealing. Saying that they get the subsidy only if they live close to the school as a way to ensure the secondary benefit to the school community.
It's completely wild that you in one comment decry (correctly!) the extremely high cost of building affordable housing and in a second comment claim that building affordable housing for people with incomes in the 80%-140% AMI range is efficient.
Efficient relative to paying the difference between 60% and 100% of the market-rate price in loaded wages.
The most efficient to do for the Bay is to address the massive divergence between construction costs and home prices (as documented in https://www.nber.org/papers/w33958). It's the trillion dollar bill on the sidewalk and frustrating how hard it is to make progress on.
No one wants to live by a building of people making 0-30% AMI for obvious reasons, but a building of teachers, cops, firefighters, and other city employees will probably raise the value of the neighborhood!
>Wouldn’t the no brainer be “pay these people for whom you have a ‘critical need’ more<
I strongly doubt it. Public sector workers in the Bay Area are already some of the most expensive in the world. My guess is building housing (which, after all, can last many years) would be a net win for taxpayers and workers.
A single affordable housing unit costs north of a million dollars. If the counterfactual is paying a teacher $20,000 more per year, it's 50 years before the housing unit pays for itself (actually, more, due to the time value of money).
Isn’t the school district collecting rent from the teachers? That has to be figured in.
And, presumably the district is building on land it already owns, which one would think reduces the cost. The report here says costs for market rate multifamily housing in the SF Bay area is about $400/Sq ft exclusive of land, so $480000 for a 1200 Sq ft apt. https://www.rand.org/pubs/research_reports/RRA3743-1.html
So I literally work on this issue and want to add some context:
1) Yes, building housing in California costs much more than it should; much of the blame is with the state government and their requirements. The recent CEQA reforms should help but while that's a 40-yard gain, there are still 60 yards of reform they could undertake.
2) Your counterfactual isn't an option in the real world because a) the state largely controls the amount going to education, so individual districts can't pay each teacher $20K more unless the state gives them a huge infusion of cash. Perhaps more importantly, b) the logic of labor union is so Treat All Members The Same, so they wouldn't let you pay just teachers who are housing-stressed $20K more - you'd have to pay EVERY teacher $20K more, which is a budget buster.
The logic of housing for educators is that you are targeting a valuable, non-taxed benefit (i.e., below market rate housing) to those who need it most: early-career teachers and lower-paid classified staff. This reduces turnover, which saves the district money.
The housing will typically be "paid off" over 30 years: the district borrows money (through bonds or otherwise) to pay for construction, and then pays that back through rents recovered. Theoretically those rents could constitute a revenue stream after the 30-year payoff period, but I believe that the maintenance needs on a 30-year-old building often eat up any profit, so it's still breakeven after that. But you still have the benefit of keeping classified staff and early-career teachers in your district and in the community, and reducing their stress (from housing costs and commuting) significantly which, in theory, makes them better at their jobs and thus makes local government more effective.
I’m not sure if that would be the case for workforce housing in the same way it is for “permanent supportive housing” for the homeless. We need to drive down the cost of building both, of course.
The government also owns a fair amount of land so the costs are constrained to regulatory/legal barriers and actual construction spending. You could even subsidize the units by adding a bunch of market-rate one-bedrooms to the project.
For all its vaunted propensity to innovate, I find the United States at times is remarkably resistant to the kind of common sense solutions long used abroad. It reminds me of an article I read in WaPo recently: apparently some jurisdictions in the US are starting to pressure the likes of Amazon and Door Dash to use smaller vehicles, due to congestion. I feel like saying: "Asia from seventeen years ago on line one." lol.
One of my cranky vaguely conservative views is that we need less special low cost housing for artists and a lot more for nursing home CNAs etc. An artist can get a day job and do art part time. A CNA is working a job that's low paid when it's full time. And in the grand scheme, I place a lot more value on making sure that nursing home or hospital workers with jobs that paid close to the minimum wage have access to affordable housing near their jobs than that artists have access to housing that is cheap enough allows them to afford to pursue art full time. I like art and I even have an art hobby, but I know that I'd never make a decent living from it so I have a non-art job that pays well and allows me to do my art. It's the way of the world that there are a lot of people who want to do art and there is not enough demand to pay for all the art that people want to create.
Yeah, it angers me to no end how little CNAs make and the number of people who regard the job as some sort of punishment for slacking off or not working hard enough. Even worse are the people who believe that it's somehow wrong for CNAs to be paid well because they "don't deserve it because it doesn't take much skill". As if there's very little skill in making a dementia patient comfortable while you change their diaper.
What grinds my gears is how much home care agencies extract. At least when we did it for my grandmother, full-time elder sitters cost $25+/hour, but the people actually doing it were paid $9/hour without benefits. (I’m sure these rates have gone up with inflation, this was 13 years ago-ish) It’s a great way to get shady people you wouldn’t trust in your home doing home care. But that kind of overhead is predatory. We were lucky to be able to arbitrage the transaction and find a wonderful person to do it under the table, but you shouldn’t have to do that.
I think it’s the same way with nursing homes, private equity owners pushing staffing levels to the bone, 40 patient nurse loads, and grandma has bedsores now <shocked pikachu face>
Sounds like you have found an opportunity to make a lot of money, Helikitty. You should start a home care agency with lower overhead and take all the business away from those predatory businesses.
Plus, most people want to own their home; renting is rightfully considered something you do as a young adult and only until you can afford to buy. I wouldn’t oppose people vesting into ownership of their workforce housing unit over years like they do with pensions - work for 30 years, then you own your unit, but possibly can only sell to another teacher, idk how that would work, otherwise you’d have to keep building, but that’s ok too
Yes, it would be a benefit of employment like anything else. It’s not unheard of in the private sector. I just realized I’ve spent most of my adult life in housing that was tied to my (or my spouse’s) job.
Isn't this usually tied into jobs that are either a) very remote (like an oil field) b) where being ready to work at short notice is important (prison guard, military base) or c) where the job involves a level of commitment far beyond an ordinary job (grad student, priest)?
Linking it to an ordinary job seems bad for the same reasons that linking health insurance to jobs is bad, but more so.
It all depends on the reason for offering housing. The default reason for school districts in pricey CA areas to offer below-market housing is to keep employees in the district/reduce turnover, so of course if they separate from the district the benefit is gone. But most districts have a 7-year lease limit. The idea being that employees have seven years to build up savings to then buy or rent something in the open market once they have to leave their district-built unit.
As I mention below, I work in this area (education workforce housing) in California. I'd be curious for folks to weigh in on the two prevalent models here. One is for the district to borrow the money to pay for construction on their property, which allows them to restrict the units to only their employees (this is the Daly City model).
The other, which I'm more ambivalent about, is for the district to allow market-rate development on their property via a $1/year ground lease but then require the developer to provide 20% of the units to their low-income employees in exchange. This is often something mandated by the city government for new MFH developments anyway. What that looks like in San Diego Unified is this property, which interestingly means that low-income SD Unified employees (bus drivers, cafeteria workers, security guards, etc.) are living next door to very rich people and enjoying the same amenities (golf simulators, luxury pool, outdoor firepits, etc.):
The appeal of the latter route is that it gets the public sector out of the way, I think. I like the idea of giving a developer a clear ask (x% of units) and then it’s out of the government’s hands. If the government is just paying for construction on its own land, I expect they have a smorgasbord of additional asks that drive up costs. They also are more likely to be on the hook if things don’t go as planned.
It’s not ideal to have fancy amenities. Bad optics. Ideally if a local government had a few subsidized options for employees, they would adjust the rent. 20% of your income if you want the regular apartment building, 25% if you want the swanky place. You could even adjust the percentages over time based on level of interest from employees. Just some thoughts.
I mean, usually it will cost more at the swankier place, even with a “workforce” discount. We have a lot of these tax abatement buildings with set-asides of a percentage of units based on AMI, the better buildings will be for 80-90% AMI and the worse ones for 30-40% AMI, etc
A candidate for the most Yglesias-ian column Matt has ever written:
1. an excellent use of Econ 101
2. about housing markets in the places his readers live
3. which challenges a prior of older leftists
4. and is right about something important
5. while flying in the face of the need to assemble coalitions and manage normie expectations that he so often criticizes other policy entrepreneurs for
SF Bay Area pro-housing people are mostly in sway to "affordable" and "inclusionary" ideology. A big part of how the tiny SF cabal that rules CA (Shh! Don't tell!) has managed to squeeze some fundamentally unpopular pro-housing policies into law is by accepting those frames (and a "living" wage for the building and trades unions of well over $100k). Matt's right. But we're still stuck trying to assemble a coalition to do what's right. The most promising proposals I've encountered come from Sam Bowman:
identify the people who are actually harmed by a project and compensate them a sensible amount, we can turn them from opponents into active supporters who will fight to prevent it from getting blocked.
... [that's the second of these three proposals Bowman makes:]
* Spending the additional property tax produced by a new development in the local area, rather than transferring it to a regional or national pot — and even charging new arrivals higher rates for some period of time
* Allowing individual streets to vote permit medium-density townhouses (‘street votes’), or apartment blocks to vote to be replaced by taller apartments
* Upzoning a whole city while allowing individual streets to vote to opt out
Here in Texas, mandatory inclusionary zoning is illegal, so cities like Austin have turned to "voluntary" density bonus programs that essentially do the same thing, taxing density where density wants to go—and subjecting it to the fraught public review process.
One piece of context I think Matt is missing here is that in Massachusetts, the 1980 ballot proposition known as "Prop 2.5" severely limits residential property taxes. This forces cities like Cambridge to take costs and spending they would have done through property taxes, and to find other ways to impose those costs and to cause that spending to occur. Such as inclusionary zoning. Far from perfect, but an attempt to return to equilibrium in the face of an artificial policy constraint.
It’s still a bad idea if the result is less housing supply. In fact the only path to higher property tax revenue would seem to be maximizing housing units.
Similarly the softer barrier of politics to raising property taxes has put pressure on cities, at least here in Ontario, to raise development charges exorbitantly. Theoretically so growth pays for growth but in reality to also fund amenities that all citizens benefit from.
One solution that I haven’t seen discussed here yet is uploading certain municipal government outlays to a higher level government where it makes sense (social services, affordable housing measures, water and wastewater…).
The other day there was a comment thread in which City of Trees asked the SB crowd about issues on which they’ve done a “180,” and I would have to say that “affordable housing” is probably mine. It’s the kind of thing where, how could you be against this? It’s right there in the name! You’d have to be some kind of reactionary idiot! But then peel back the “affordable” layer, and…
I think that people who don’t want to build housing for a bunch of educated yuppies should understand that one of the frustrations with dems is that San Francisco and manhattan are not even affordable for educated relatively affluent yuppies. This is not a dumb demographic to build housing for.
This has been written here before but it bears repeating. That graphic is also exclusively good for your tax base and they use very minimal city services
"I hate this demographic, so I've engineered a situation where I'm more directly competing with them for housing and forcing them to live closer to me."
"And where the way they obtain housing is by outbidding lower-income families for it"
I think most of the advocates for this are actually in the target demographic, even if they are self-hating.
No, I’m not a yuppie. I’m special. The other people that are seemingly exactly like me are the yuppies!
And if Yuppies have inexpensive housing in places they want to live the less likely they are to start LARPing revolution.
Can we order revolution using Klarna?
The revolution will come in installments.
Delivered to your apartment
As a 30 year old PhD economist living in NYC, I would very much like an abundance agenda that tackles my cost of living problems
NYC is too disgusting for me to pay for the amenities
I think I always had a good instinct on this one, because my high school econ class taught me rent control as the archetypal example of a well intentioned policy that never works because it interferes with reaching the supply and demand equilibrium. IZ works on a similar principle, as Matt explains here.
I went from this is either really bad policy or slightly bad housing policy and you should just do public housing if you want public housing to this is either a slightly bad policy to acceptable if everyone understands that it has tradeoffs and it helps move zoning in the correct direction and isn't trying to put down extreme affordability requirements.
That is only true because of the specifics of this case. If you are moving from a state of "not automatically allowed" -> "automatically allowed with conditions" you are still loosening the regulatory burden. But going the other way, and enacting affordable housing requirements were none or looser existed would be a tightening.
I’m still very much in favor of affordable housing if that affordability comes about because of a tsunami of new supply.
Unfortunately “affordable housing” is now a technical term with a legalistic meaning - what you are in favor of is low cost housing.
As opposed to massive unemployment? catastrophic pandemic? zombie apocalypse????
Braaiins...
To be fair, that is somewhat standard for anything named with a signaling method. Just see the big beautiful bill.
Going from taxing development to subsidize housing to taking economic activity generally is not a 180. Such a person is changing direction on one axis but not the other.
If you were moving up along the Y axis, and then turn around and start moving down along the Y axis, you have made a 180 degree turn! You are on X=0 all along.
That’s only true if you have no desire to subsidize anything. One of the components is degree of subsidy the other is funding source.
Lot of the desire for IZ policies and their ilk seems to be a way to politically square progressive voters' deeply and sincerely held desire for zero urban development and zero net population change (really zero change of any kind) with their ideological commitments to poverty reduction and the working poor. Doesn't matter if it works, it lets everyone Do The Right Thing (engage in purely expressive politics).
I think Manville and Monkkonnen's classic paper, "Unwanted Housing," is a good description of what's going on in places like California and BC. City governments have to deal with major social problems (like poverty) at the local level, they don't want to raise property taxes, and they see heavy taxes on new housing (whether cash or in-kind) as an opportunity to pay for those needs. https://morehousing.ca/unwanted-housing
I've listened to a number of city council discussions in Metro Vancouver on the appropriate amount of below-market housing, when they're deciding whether to approve or reject an individual rezoning. It's like they're trying to divide up a pie ("land lift"), assuming that the pie must be growing because rents have been increasing, without realizing that the pie is actually *shrinking* because of higher interest rates and cap rates, higher construction costs, and higher single-family house prices.
It's commonly believed at the municipal level that adding costs doesn't affect prices, because prices are set by the market - a project will sell or rent for whatever it can get, they're not going to lower their prices or rents just because their costs are lower. I've tried explaining that costs act as a floor on prices and rents; when costs exceed prices, homebuilding stops. By increasing costs, municipal governments are ratcheting up the floor. A presentation I did last week to the Metro Vancouver Regional District finance committee, with some pushback: https://metrovancouver.org/boards/meeting/3214
The danger with inclusionary housing requirements is that by increasing costs for new market housing (which has to cross-subsidize the below-market apartments), you're pushing market rents further out of reach for more and more people, creating housing need faster than you can fill it.
Sightline's Dan Bertolet on funding inclusionary zoning with property tax waivers, instead being cross-subsidized by market rents: https://www.sightline.org/2024/10/28/to-fix-inclusionary-zoning-fund-it/
IDK how the property tax regime works in BC, but given how it works in CA, really any new 'luxury' housing will dump tax revenue into city coffers. If its all expensive market rate 1-bedroom/studios, its even better because those residents consume essentially no urban services (schools, police, fire, etc). It makes no sense to pile on an additional tax when you're already taxing something into perpetuity!
Unfortunately in Canada (and New Zealand), unlike the US, the standard practice is to lower the property-tax rate (“mill rate”) as total property value increases. So building a lot more new housing doesn’t increase total property-tax revenue at all. One obvious idea for reform would be, don’t do this!
Eleanor West and Marko Garlick: “Unlike local governments in the US, Denmark, and Australia, which tax a fixed percentage of a property’s value, New Zealand councils tax via a rating system. Councils determine the total amount of revenue to collect each year, and then each homeowner pays in proportion to their share of total property value. In other countries, more housing automatically brings in more revenue; in New Zealand, new housing only slightly reduces the burden on existing properties.”
I see this as better system than fixed property tax rates since a new apartment building going up lowers everyone else’s tax providing a financial incentive to allow new development.
Fixed property rates create stealth tax increases as elected representatives can say they did not vote to raise taxes and gleefully spend the money. It also creates an association with property taxes going up because of new development. The new development isn’t causing property taxes to rise but is correlated with things that are causing property taxes increases, so people get confused.
"I see this as better system than fixed property tax rates since a new apartment building going up lowers everyone else’s tax providing a financial incentive to allow new development."
Almost nobody in Vancouver understands how the mill-rate system works.
Interesting! I'm not in CA, so not totally sure how their system works (besides Prop 13 disfunction), but in my state 50% of the property tax revenue is available to taxing jurisdictions, and the other 50% goes to lower the mill rate. City councils can also vote to increase their mill rate by no more than 4%, or voters can agree to exceed the levy limit further via referendum. Maybe thats an easier compromise than a total overhaul of existing systems. I do wish that the 50/50 split only existed for non-residential commercial development, though.
City Councils, and NIMBY homeowners, are so resistant to this: "It's commonly believed at the municipal level that adding costs doesn't affect prices, because prices are set by the market - a project will sell or rent for whatever it can get, they're not going to lower their prices or rents just because their costs are lower. I've tried explaining that costs act as a floor on prices and rents; when costs exceed prices, homebuilding stops."
And then homeowners complain that all new housing is the most expensive kind of housing. Yes it is, because you've made it impossible for cheaper, quicker, smaller kinds of housing to be built.
I wish substack had a save feature because this is so clear and succinct I would want to revisit it.
Thanks! I think it's relatively easy to look at your Likes.
I’m not sure I agree with the first consideration, but the second consideration has sufficient explanatory power on its own. Blue cities are governed by people with sincere, strongly-held (and frankly admirable) convictions that public policy should serve the needs of the poor. But because land use rules are so perverse, and NIMBYs in general are so hostile to reform, you’re get a lot of these non-solutions by well-intentioned if misguided legislators (I would put strong eviction protections in this same policy bucket)
Maybe I'm just jaded from living in West Coast cities, but the degrowth environmental streak is real and runs very deep here. Some version of the idea that "There are too many people and too many buildings" is pervasive even amongst disengaged people. I really do think the views of politicians and civic leaders out here mostly accurately reflect voters' preferences, notwithstanding a few good ones like Scott Wiener.
We see this in Colorado too. I think much of the problem is simply that a lot of issues around the environment are basically counter-intuitive: dense tall buildings help preserve the environment, people use very little water relative to agriculture, congestion and high housing costs are poor ways to limit use of natural beauty.
Yep. Deep convictions in play with this stuff, people just will not/cannot believe building more can help anything on net. That said, I've been in Portland the last couple years and the anti-growth environmental sentiment is so intense here, there's been a (very modest) swing in favor density in the old urban cores as a way to avoid any further greenfield development. It's not much, but might be the best we can hope for out here.
It's rare to meet an environmentalist who cares about the environment primarily because of abstract CO2 levels in the ionosphere. Most of them just like being around trees and animals more than the average person, and then a lot of policy positions are second order reasoned out from there. That doesn't mean a lot of them aren't right, but the idea that big old homes on half acre lots with lots of trees in the yard are worse for the environment than large, loud apartments without any wildlife nearby is hard to internalize.
This isn’t even a straw man argument. It’s a fantasy.
I know the people you're talking about, but I'd be more inclined to label them left-conservative than progressive: symbolically pro-environment, pro-LGBT, anti-corporate; but as you say, their most closely-held belief is that their neighborhood/city shouldn't change and everything would be fine if people would just move somewhere else and/or stop having kids.
At the last public zoning meeting I went to, I remember one lady asking a very patient city planner why we had to have so much "chaos" (in one of Seattle's slowest-changing neighborhoods), and another arguing that nothing should be built unless it retained and treated 100% of stormwater onsite, to protect the salmon. When another attendee asked her if she also wanted to reduce car usage because of recent research showing that the particles coming off car tires are also bad for the salmon, the salmon were suddenly not so important anymore.
Yeah fair, our politics doesn't really have an axis that these ideas neatly sort on. There is no way to operationally tell these people apart from any other very progressive voter, they vote for higher taxes, show up at anti-ICE protests, the whole deal. Not sure there's any real way to navigate it.
The change-nothing crowd seem to be mostly older and/or own a business, at least going off of who shows up to public meetings in Seattle. I don't think the under-50 crowd is as anti-change as the older folks, so to the extent they're for IZ, I would expect it's for other reasons.
Edit to add: I suspect what unites all left-NIMBYs is negative polarization against Reagan, even to this day. Opposing him poisoned the well for supply-side economics on the left for generations.
If you get rid of poor people from your city, you get rid of income inequality.
*head tapping meme*
What is quite annoying is equating "affordable" with "subsidized." Things can be affordable by just being less costly to build.
"then use general tax revenue to pay for the construction of subsidized units."
Why not vouchers? Why are housing subsidies usually given in kind, the municipal agency contracts with the provider and the beneficiary just gets the use of the property. If the beneficiary were just given a voucher, wouldn't both they and the provider be better off? You'd get less clustering of subsidized residents and normal resident-provider behavior?
Well, FWIW vouchers increase demand (because part of demand is the ability to pay*) which will increase rents somewhat .
* https://www.khanacademy.org/economics-finance-domain/microeconomics/supply-demand-equilibrium/demand-curve-tutorial/a/law-of-demand
There is a parallel issue between housing and healthcare, in where it is most optimal to put the obligation in the first instance of bearing the cost of providing essential goods/services at sub-market rates to people who can't afford to pay market rate -- on providers through mandated charity that gets internalized into the market price to everyone else, or on the general public with subsidies to providers. This article talks about the downside of the mandated charity approach.
The downside of subsidies is that the constant infusion of outside subsidy money into the market it can after a while make it almost impossible to even figure out what the market prices would be in the absence of the subsidy. That's essentially where a lot healthcare is now, because of the open-ended spigot of federal healthcare subsidies.
I agree, but I would reword "The downside of subsidies..." to "*A* downside of subsidies...." There are other downsides as well, viz. the complex mandates that inevitably come with the subsidies, the difficulty of dealing with them, the ecosystem of rentiers the subsidies generate and their polluting/corrupting effects on policy, the ultimate favoritism toward large providers who are most capable of navigating and gaming the mandates. (Those are a few downsides that come to mind; I'm sure there are many others.)
This is also true for childcare.
And college education.
while true in a vacuum, the political problem for housing reform is often that people hate young childless professionals and *really* hate that those young childless professionals are the primary beneficiaries of an increase in housing supply. as a result you generally need to attach something to a reform project to mollify these people, which is where the inclusionary zoning comes from in the first place. i actually don't think vouchers would work for this because the people in question have been primed to be very skeptical of voucher programs, but it's worth a shot.
the second point i'd make is precisely because the price elasticity of demand is low, a lot of the financial relief from vouchers will actually raise demand for other, non-housing goods & services rather than for the housing itself (though ofc there will still be some effect)
It's really striking how many people really dislike tech workers. There was a rise in assaults in Seattle's gayborhood near bars around closing time in like 2015 and on of the local alt weeklies (which later deleted a large part of their archive because they'd used images without getting permission from the copyright owners so you can tell they practice careful journalism) presented the hypothesis that it was tech workers beating up people for being gay as a serious and plausible hypothesis. Instead of say drunk people getting into fights or criminals trying to steal expensive phones from drunk people.
At the time, people who lived near the part of the neighborhood where the assaults were happening were constantly complaining about disorder and crime around bars and nightclubs around closing time, so drunk people making bad decisions really was a more likely explanation. But techbros are bad so the real answer must be that they're beatign people up for being gay.
Idk, at least in Seattle, we’ve built a metric fuckton of housing for young childless professional - not that it’s brought nominal rents down, but it’s probably kept them from rising as fast as the counterfactual - but there’s no equivalent family apartment housing. Shit, my BIL just moved here from South Korea, where he lived in a 4 bedroom condo apartment in a high rise (his wife got it in the divorce). We don’t have 4 bedroom apartments in high rises here.
What do you mean the price elasticity of demand is low? If suddenly a bunch of low income renters who used to only be able to afford $700 a month rents get a $400 rent subsidy voucher, and the market rate for low end rent in the neighborhood was $1000, we're expecting the floor price of rent to go up in this location.
What I overhear in local (NW DC) zoning fights does not really sounds like dislike of young professionals.
It might have gone away somewhat, but at the height of the gentrification discourse, it was omnipresent.
The initial claim was re resistance to increasing housing supply. Gentrification is almost the opposite; it is the result of insufficient housing supply in neighborhoods where the gentrifiers would ordinarily live.
>because the price elasticity of demand is low, a lot of the financial relief from vouchers will actually raise demand for other, non-housing goods
I don't understand what you mean. Yes, if I am currently paying $1000 for rent, and I get a $500 subsidy, I will have more money to spend on other things. But if elasticity is low, the increase in rent will be a relatively large pct of the subsidy, not a relatively low pct.
That would be true if the vouchers were universal benefits, but because they are targeted benefits and the ability to pay of the majority of renters doesn't move, the main price impact comes only from the increase in demand from low-income renters. But precisely because the demand is price inelastic, their demand doesn't increase that much when the vouchers reduce the effective price.
I agree with the first half, but re the second, my graphing calculator indicates that a shift in demand leads to a larger increase in price if demand is price inelastic.
But, to clarify, by "their" do you mean the individual or the aggregate demand of all who get the vouchers? And I am unclear what you mean by"their demand" -- do you mean quantity demanded? Because demand = the entire demand curve, and a $500 voucher shifts the demand curve the same, regardless of its elasticity, doesn't it?
This would be OK if supply were allowed to respond. The additional voucher money would help drive investment in getting more units on the market.
Again, all parts of making housing work more like normal markets, in my fairytale land of optimal policy!
“Affordable housing” has precisely the same feature. Because low income people now have the state subsidy to buy housing in a nice new building, rents on the other units in that building go up. Now it doesn’t look like the low income people in that building are paying the high price, but the effect is precisely the same as it would be if they were paying that high price, with a subsidy from the government, that is just clawed back as a tax the government imposes on the owner of the building.
Although that's not all bad, because if demand goes up, then that puts pressure on supply to go up. It might cause a few marginal projects to pencil out.
I was addressing vouchers instead of an agency contracting for apartments. I agree neither addresses being able to build more.
Because it’s often easier to pass on the burden of paying costs to someone else.
Landlords often work to avoid tenants with vouchers.
Because of the rules and regulations that come with taking Section 8.
That’s part of it, but there’s more than that. Sometimes moderates play a mental game where they imagine liberals/progressives are completely irrational but everyone else will respond rationally to market incentives. Most people don’t respond especially rationally
There are builders in Los Angeles now building projects specifically for people with housing vouchers. This may be a problem with the new federal budget.
Then legalize construction of apartments, and build a mountain of them. Then landlords can’t hope to fill their buildings without renting to section 8 renters.
It’s easy to discriminate when landlords can choose without penalty. If the choice is section 8 renters or nothing, then landlords can’t afford to deny.
Which should encourage tenants with voucher to signal they will be good tenants.
Should landlords have to know that tenants have vouchers? Why not have a system where the voucher money is directly transferred to people? Landlords are still free to check creditworthiness etc. If we did this with vouchers and food stamps then we'd be shifting to direct cash transfers which is probably good but may not be politically viable.
How do you ensure the voucher money - i.e., cash - is used for the intended purpose?
I initially thought, this is just government programs not trusting poor people to not use benefits for drugs, etc. but it could have to do with creditworthiness. If you need a voucher, you’re unlikely to pass a credit check
Quality housing in rich cities will never be affordable, without subsidies, to lower wage workers. Better paid workers will always push the price of in demand units beyond the means of 25th percentile workers.
Not if the supply of that housing is large enough.
Geometry is a bitch.
It's not geometry that restricts housing. It's zoning.
Manhattan has fewer people now than 100 years ago. We can have many more people living in desirable areas even within our current ability to build skyscrapers if we accept much higher density, like SROs.
What does that mean?
only a finite number of units will be proximate to the best jobs and amenities and these will always have significantly above average prices.
1. Finite is not the same as insufficiently numerous to be unaffordable to someone at the 25th percentile of income.
2. Significantly above average does not necessarily mean unaffordable to someone at the 25th percentile.
If Santa Monica to Redondo Beach had the density of Manhattan, housing there would be affordable to a vastly larger percentage of the population .
Depends how little living space people are willing to live with to be close to amenities. Poor people in Tokyo live in as little as 100 sq feet. But, we don't allow that here in the US, so if you can't afford the minimum unit size, you can't afford to live in a particular area at all.
“The best jobs and amenities” are different for different people.
So invest "housing" subsidies in better transit.
It seems to me that the integration of the affluent and the poor is a significant part of the point though. Like just based on Facebook posts this is the kind of utopian desire I read about. Rich folks should have to live In the same neighborhood and face the same aggregate level of crime as anybody else and poor people shouldn’t be concentrated in some towers which turn into hell because no one has any social capital. It’s oddly Victorian but the people who I see who are really fired up about it aren’t saying there should be some affordable housing it’s that everybody should live in the same neighborhood avoiding concentration of poverty and gated community effects of the rich.
This is very common in arguments in Britain about what we call social housing, and I think there is *some* merit - essentially services for the poor become poor services. And the alternative that we don't want is French-style banlieues where the poor (and especially minorities) are essentially warehoused out of sight, with terrible outcomes as a result. There's definitely tradeoffs involved, but it is one factor worth considering
The current UK policy of warehousing the poor but in the most expensive areas of central London, combines the worst of all policies.
It would be interesting to find out if people in the NYC Housing Authority housing that have accidentally ended up in super neighborhoods have better outcomes. I am specifically thinking of the housing projects in the middle of Chelsea / Meatpacking in Manhattan, but I imagine there may well be NYCHA housing in places like DUMBO and Williamsburg that were down at their heels up to a few decades ago. Do they do better than people in say, East Harlem?
Yeah i've always been fascinated by that project in Chelsea, which I used to pass frequently when I lived in NYC. The NYCHA residents there really lucked out.
housing people in central London, near amenities and jobs, is the very opposite of the 'warehousing' concept!
Majority of these people aren't in employment, strongly selection for the economically inactive.
The negative, impersonal connotation is why social critics of urban housing party created the phrase "warehousing the poor". I'm pretty sure Oliver knows that poor people are people, not goods.
Same with the term “import” which I find incredibly dehumanizing yet people seem to commonly use it. These terms should only be used in contexts where the purpose is to draw attention to dehumanization (“warehousing people in a prison” “importing slaves” etc.). For all the talk of left-wingers being better at controlling language and culture it’s kind of surprising that this is how people still talk.
Yes. This is the point. Warehousing refers to shipping people off to forgotten and ignorable suburbs/estates. It's explicitly a negative connotation
" which I find incredibly dehumanizing"
I don't particularly. I wouldn't really bat an eye if someone said "importing workers". It's just a descriptive phrase and reading something demeaning into it feels oversensitive.
“Now no one is saying the Chatsworth Estate is the Garden of Eden, but…”
I grew up in an integrated neighborhood like the one you describe in some EU city. I've never lived in a neighborhood like this in the US, and I don't like thinking that my potential future kids might go to a school with only kids of affluent professionals, if they go to school here.
Having said that, when I finished my PhD here in the US, I looked at jobs both in the US and back in the EU, and I realized that if I wanted to move back to the EU, I'd need to be okay with a pay cut of at least 50-60% (more than that if I went to my specific home country). The mechanism that achieved my integrated childhood neighborhood was the narrowing of income gaps, which means that most of the smartest people I met in undergrad now also live in the US (or Switzerland). I think that this is catastrophic for our long-term financial trajectory as an EU. So, maybe there's a monkey's paw here.
You could probably find the types of neighborhoods you're looking for most easily in inner-ring suburbs. They tend to have more multi-family structures interspersed with single family houses, and the single family housing can be of a wider mix of ages designs and sometimes disrepair.
I've also heard that smaller college towns tend to be more integrated.
NYC is always incentivizing sub-market housing, and yet most areas of Manhattan (the most expensive borough) are still natural examples of the utopia you describe. There are a halfway house and a "welfare hotel" within a block of the Upper West Side building I live in, and my building consists entirely of 3- and 4-bedroom apartments (2- and 3-bedroom apartments plus "maid's rooms") that all go for well over $1m (probably mostly over $2m).
>same aggregate level of crime ... avoiding concentration of poverty
Surely part of the argument is that avoiding concentration of poverty would result in a lower crime rate.
Well yes but rich people would have to suffer whatever the poor do so they’d be incentivized to fix it Instead of escape.
I’ve often wondered what is meant by “fix” in this context. It’s the same argument made in the schools context.
There’s several layers to it but the answer is avoiding concentration of negative traits.
Then when the only people violating norms are kind of psychos and not alienated from the community in general there’s no problem harshly enforcing the law because they don’t have some sort of story of mistreatment.
What if the number of psychos is much larger than expected?
Someone should write down the list of negative traits and then forbid more than N% units from being owned by people who have those negative traits. Has anyone ever tried this before? We could call it Dejure Housing (dejure is French for "fancy color" but you can make it any color you want).
Yeah what are the options for fixing things here?
1) Have strict enforcement of rules? But people don’t want that for their own kids.
2) Have discriminatory enforcement of rules? That’s probably what would actually happen.
I feel like a lot of the discriminatory problems are essentially concentrated disorder problems and people would accept strict rule enforcement that seemed fair to begin with.
I don’t think so. Most people commit minor infractions occasionally and want enforcement to be flexible enough to let them off. People have pejorative terms for strict rule enforcement (Karen etc.). They want police to look the other way when underage kids drink in their basement. There are even more extreme cases like remember the “affluenza” kid? A elected Republican judge in a rich part of Texas let him off.
The evidence is very clear that escaping to expensive suburbs is easier, which is why cities have not improved. There’s nothing that anyone can do about it. Forcing people to live in an area with high crime is the kind of low IQ thinking that makes progressives a small minority among US voters. Normal people don’t think like that.
What do you mean when you say “cities have not improved”? Crime rates are way down over the past 30 years, and even though there was a blip a couple years ago, they’re on track to be the lowest on record.
I'm not sure if looking at only national urban crime rates is the right way to look at whether or not cities have improved? There are a lot of other metrics one could look at it, including affordability, quality of education and visible drug abuse, homelessness and disorder.
On top of that there are vast regional differences, with marquee cities like NYC clearly getting better on most metrics (but not on middle class affordability) and "flyover" cities like St Louis or Memphis just as violent as ever and probably more so.
Personally I probably wouldn't say "cities have not improved”, but if you look at it from a raising a family perspective then I don't object to that framing.
Yeah, Memphis crime may be down slightly from 2023, when it had more homicides than NYC despite a population of 600k vs 8.5m, but that certainly isn’t the perception. I don’t begrudge folks moving to the suburbs there at all (though there are low-crime pockets in the city proper, you’d want to send your kids to private schools)
On overall metrics, middle class families with children prefer to live in the suburbs because of quality of life issues. Compared to Europe or richer Asian countries, US cities are definitely inferior.
That shows cities are not as good as they could be. That doesn’t mean they haven’t improved. They have absolutely improved, and seem to be continuing to do so.
Build more trains
And if the goal is to just expose rich folks to poor folks socially, you can do what elite colleges do and have 10-15% of the population from the bottom 50% of the income distribution and declare victory.
If you imagine the reverse form of this where you sprinkle a few rich people into a poor neighborhood for representativeness, what you get is early-stage gentrification, which everyone loves to hate on.
This is making a lot of unmerited assumptions about "poor people" and crime. It's even making a lot of assumptions about the income levels of "affordable housing". I'm not sure that "poor people" is going to describe the inhabitants of a great many of them.
In California the typical limits are "Low Income" (80% of Area Median Income, which in my county of Santa Clara for two people would be $127,650) and "Moderate Income" (120% of AMI, $187,400 for a household of two). That's not poor people.
Exactly.
Does this actually work though? Most people don’t actually want to live somewhere where everyone is richer than them because it makes them feel bad. There’s white flight from Asian neighborhoods too.
Most of the “affordable” units in these developments are probably going to go to non-representative groups of poor people like students.
Do you have any evidence of this? It is true that people of one ethnicity may desert an area when it becomes predominantly occupied by people of another ethnicity, but that is probably not related to not wanting to live near richer people.
My prior is that poor people would *love* to live in a gentrified area, as long as they don't feel ethnically excluded.
Edit: In NYC a few years ago, there was a scandal about the "poor door": basically, people who lived in sub-market apartments in luxury buildings had to use a separate entrance. This made a lot of people angry, but there was still no problem renting those sub-market units.
Haven't there been several articles in the about white flight from hyper competitive Asian school areas?
https://www.nber.org/papers/w31434
I don't think this contradicts my point at all.
If white families are fleeing areas that have more new Asian immigrants, but aren't fleeing areas with similar income and housing price mix that don't have so many Asians, that contradicts your point that they're leaving because others are richer than they are.
You might re-read my post, which said that I think that people are *not* leaving because others are richer, but because of feelings about changes in ethnicity of an area:
"It is true that people of one ethnicity may desert an area when it becomes predominantly occupied by people of another ethnicity, but that is probably not related to not wanting to live near richer people."
Yeah, Boston feels economically diverse at first glance, but that's just because all of the poor people are students.
Sort of an aside but this gets to the “everything is peer effects” theory of education. My (not Jewish) grandmother emigrated in the ‘50s (GI bride and very poor). She intentionally moved her family to Roger’s Park - a middle class Jewish neighborhood in Chicago - because it was the best public education on a budget. All of her children were very successful.
One wonders if you don’t have a similar thing going on in, like, Edison, NJ today.
I don’t think white flight from Asian neighborhoods is about finances. It’s more about schools.
My initial support for the idea of IZ was directly because of the Raj Chetty's 'Moving to Opportunity' work that found that moving to an affluent area does seem to have a positive causal impact on children.
I've soured on IZ specifically for all the reasons Matt laid out here, but I still think there is a case to made for using public dollars to encourage lower cost housing options in affluent areas. I'm not totally sure what the 'optimal' policy would be, but I still support the goal.
If the pro-IZ crowd got their way they'd ban internal migration as well
Yeah there isn't a whole lot of consistency on the progressive left when you compare the issues of immigration and gentrification.
Gentrification is one of those discourses that depended a lot on not having to answer follow-up questions.
Internal migration is banned for citizens but legal for non-citizens.
I’m in favor of both but there’s a pretty big difference between literally requiring government permission to move somewhere versus policies that might indirectly raise the price of housing as an unintended effect which might make it harder to afford moving there.
yes on a policy standpoint I agree, but from first principles, the progressive left generally believes:
1. Immigrants moving into America cities is good (I agree, fwiw)
2. Affluent people moving into certain parts of American cities is bad (I disagree)
'Go back to Ohio' and 'Go back to Mexico', the exact same sentiment, one totally acceptable and normal to say for a certain type of liberal, the other completely immoral and awful
it is completely immoral and awful. Imagine damning someone to have to live in Ohio
(I kid, I kid I actually love Ohio go Bengals)
That choice in fanbase damn sure beats the alternative in Ohio...
I love pointing out this hypocrisy all the time.
Or or or maybe the pro-IZ crowd is in favor of murdering rich families and giving their homes to poor people.
Or maybe they're just pro-IZ.
Affluent professionals are to housing politics what rich egoists and grain hoarders were to the French Revolution. They become the scapegoats for scarcity — not because they caused it directly, but because the real constraint is structural and seems less tractable. Just as 18th-century mobs blamed elite hoarders for famine in a demographic system where subsistence was mathematically guaranteed, today we blame landlords, developers, and investors for housing prices in cities where new construction is systematically throttled. But unlike the ancien régime, we now live in an era where modern workers — equipped with power tools and factory construction techniques that didn’t exist during the last great housing boom — could end scarcity, if left to ply their trade freely. Instead, we enforce political constraints on housing supply, then squabble over who must live at the edge of homelessness — not because scarcity is inevitable, but because we’ve come to accept it as the natural condition.
It’s kind of insane the many governments expect private property owners to subsidize housing rather than the government’s themselves subsidizing rents for a set of income constrained residents on these projects.
"Don't make taxes go up on *me*, the righteous home owner who moved in when things in this town were perfect! Make taxes go up on the *newcomers* who are responsible for all the bad increased in traffic, noise, and overcrowding!!!!"
This is ever boomer who owns a house in Boulder, Colorado.
Boulder is just a perfect storm for that thought. Similar to Berkeley a few decades ago.
I maintain that Colorado might be the best place to try state-level upzoning. We have a bunch of small mountain cities with astronomical housing costs and non-resident homeowners.
Subsidizing rent increases demand, which increases rents. Subsidizing rents almost always comes with burdensome admin and an inability to evict tenants who are making life miserable for the other tenants.
Not building housing decreases supply, which also increases rents.
At least increasing rents through subsidies might encourage developers to build more (and if you're subsidizing rents rather than preventing them from building, they might be able to build)
I think you are underestimating the regulatory burdens that come with subsidized rent, which is why so many landlords would rather leave a unit empty than accept it.
There don't have to be those.
Make it a simple voucher, or just give them cash
There have to be some regulatory burdens. Otherwise, landlords will just raise prices the amount of the voucher.
Not if there is adequate housing. Landlords that raise their prices too much will have units that sit empty, or have high turnover.
My families apartments have always been rented below market rate by choice to prevent exactly that problem. People get in and stay long term.
To be fair, MY argued for subsidizing construction of non-market housing, not subsidizing rent:
"so we need to deliberately subsidize the construction of non-market housing."
> an inability to evict tenants who are making life miserable for the other tenants.
why would this be?
They have to be given multiple chances to correct the issue, and the process can take several months. By the time you get permission to evict, the neighbors have been through hell.
That just sounds like a normal eviction to me. Why do you think this is different for any other landlord?
Contra your assertions here, my understanding is that a lot of landlords prefer section 8 tenants because they have been vetted and the rent is always on time.
With a normal eviction, you gather your evidence and get a court date (that can still be difficult in some states), but with S8, you have layers and layers of bureaucracy to satisfy before you can even go to court. Some landlords do specialize in S8, and they have the administrative burden built in to their operation. 'Vetted' is laughable, unfortunately., which is among the reasons many large-scale landlords won't do it.
I sometimes wonder how much this "we don't want to explicitly raise taxes so we pass unfunded mandates" skews societies.
The one I always think about is anti-money laundering where the government has effectively deputised tens of thousands of bankers rather than hire tens of thousands of FBI agents who have transparent access to your banking data without warrants or anything.
I wonder if the public's appetite for anti money laundering would vanish it had to be directly funded in a way that made it a visible line item in the annual budget from Congress.
EMTALA where hospitals are required to provide free medical care to everyone is another one.
Oh, it definitely skews societies. But it's reality too. People just hate having their taxes raised directly but their reaction tends to be more muted when unfunded mandates are used to equivalently raise their taxes.
If we want government to be more efficient, then we need a better class of citizens. Until then, we need to work with what we have.
Anti money laundering enforcement would pay for itself by increasing tax receipts.
CAFE Standards and the California mandate to manufacturers regarding EV sales are other ones.
A developer, whose project isn’t pencilling out, recently wrote to the Cambridge city council seeking an exception from the 20% affordable rule for their Mass Ave project:
“Ironically, if one were opposed to the creation of new market-rate multifamily housing with inclusionary units in Cambridge, supporting the current 20% rule would be a very effective way to block new such housing.”
It’s ironic too because Cambridge is really good at building committed affordable housing through the CHA without IZ policies.
I was going to mention this project too! The developer actually sent the city council a really helpful spreadsheet, showing among other things that the IZ mandate translated to a $17 million developer subsidy. The building’s revenue at market rate totaled $107m, so the IZ mandate was equivalent to a 16% tax. Do we want to tax new construction at 16%? Spreadsheet link here (I think it’s fair to share this?) https://docs.google.com/spreadsheets/d/1I_zQTpHHTcXC7AMWMqleKMjwGGUHSMnU8A1oP9ajKUM/edit?usp=drivesdk
Very helpful spreadsheet. Is there no density bonus for Cambridge that would help offset the extortionate inclusionary demand?
There is one, yes - as Matt mentions in the article, you can do 6 stories instead of 4 stories if you're IZ-compliant and the lot is large enough.
As is, the council is debating options to deal with the problem with IZ not penciling. I think they are mostly committed progressives who are actually trying to grapple with the reality of the developer math, but also facing pressure from constituents who see IZ as serving affordability. It's also probably awkward to pass a major housing bill with an explicit IZ requirement only to roll it back 5 months later, so it's a delicate balancing act.
You can do six stories, but do you have to still satisfy the IZ requirements for all six stories? Because if so, allowing the developer to build a bigger building that loses even more money is hardly an advantage.
One question about that spreadsheet. It has the equity required at around $30 million, and then the payments for the equity required at $16 million. That seems very high. Does that $16 million also include the interest on the loan?
That spreadsheet is incredibly valuable. I'm particularly interested in the construction cost. Cost for housing is often expressed as cost per saleable square foot. In this case the cost to build per saleable residential sq ft is $1099, and the cost to build one unit is about $1.3 million—and as the spreadsheet points out, that's pre-tariff.
These numbers are high, but they look right to me. That's how much construction costs in expensive areas.
The developer is losing money on the required retail space too.
An interesting test for the new zoning regulations in Cambridge will be the new building on the site of the soon to be demolished Riverview condominiums. Common sense, and market demand, suggests that a structure of equal or greater scale is built there. I predict a bitter and protracted struggle between the owners of the site, the neighbors, and the city that probably results in less housing than what the site can handle.
I'm really curious about how that works, legally. What does owning a condo mean when the unit is physically destroyed? Are you still a member of the condo association? Do you now just own a percentage of the land?
I had always assumed that in order for condos to be demolished, the owners had to agree to sell. Do the Riverview owners still retain ownership? How does this work?
The building was evacuated and residents forced to move out. (I don't see "condemned" in the article but that's what it sounds like to me.)
https://www.cambridgeday.com/2025/05/15/evacuated-cambridge-condos-to-be-demolished-following-discovery-of-major-structural-issues/
I've been wondering how condo buildings that are old and really ought to be replaced get to be replaced, given how hard it is to get all the owners to agree. I guess the answer is, the building has to be so bad it's about to fall down.
To add another layer onto it, it may well become a big proxy battle over Neighborhood Conservation Districts (Riverview is in the Half Crown Marsh NCD)
Banger today and love the local angle
I agree with this critique of inclusionary zoning. But so long as cities are going to do it, I think it would be preferable for the spots to be reserved for city employees or something. At least the benefit would accrue indirectly to the local government rather than just being raffled off. And it would continue to be a cudgel against NIMBY objections to new construction.
It would also blunt the disincentive to increase one’s earnings that usually comes with an income-restricted apartment. If you’re a city teacher or social worker, your income rises on a more or less preset course; you are less likely to reduce your labor supply to keep your rent low.
This is becoming a thing in the Bay Area. For example, Daly City built a complex for teachers (https://www.nbcbayarea.com/news/local/making-it-in-the-bay/daly-city-school-district-affordable-housing/3616509).
It’s great to see my comment already making an impact. Posting is praxis
My wife works in affordable housing in the Bay Area (not specifically in Daly City, she was not involved in that project), and the building housing for teachers thing makes her so mad.
She's like, "awesome, let's definitely use our limited resources building subsidized housing for the middle class instead of the poor."
I get her point, but the counterfactual is raising teacher pay significantly which also consumes resources. I am aware that funding is usually not fungible, but there is probably significant overlap between funding for teacher's salaries and funding for below-market-rate housing for teachers.
My recommendation to your wife would be to work on getting the cost of subsidized units down. The outrageous cost of building "affordable housing" in California both limits the amount of units you can build and is a huge political headwind. SF spending over $1.1 million per studio is a much bigger problem than subsidizing middle class government employees (https://www.cato.org/blog/can-million-dollar-apartments-solve-californias-housing-crisis; not endorsing Cato but this was the first link I found for the project I had in mind). When you have costs like that, it's really hard to ask voters for more funding. At that price point, having the government pay rent for market-rate housing makes a lot more sense.
If I was doing "affordable housing" in the Bay, I would try to build the largest projects possible and use "luxury housing" (ie 1-2 bedroom apartments with residents who pay a lot of taxes but consume minimal services) to cross-subsidize the other units and to cover nicer community amenities.
The profit on building housing isn't that big. You won't be able to cross-subsidize very many units.
You're right. I modelled it out with data from RSMeans and https://www.nber.org/papers/w33958 and the gap between the financed construction cost and rents isn't as big as I thought, although there is still $500+/month in profit per one-bedroom unit with the current market-rate rents and the upper bound estimates from RSMeans for a 650 square foot flat.
It's very "assume a can opener", but if you could add marginal units without parking at that price point, you could probably cover the entire build cost of a subsidized unit with five or six market-rates, although rents would go down quickly if the Bay actually built singificant amounts of housing.
What are you assuming for operating costs, for design fees, for impact fees, for payment to the developer (not profit, just the pay)?
As I understand it, RMSmeans is for estimating hard costs. But if that's all you're using, you're missing the other costs, particularly the cost of money, but also things like design costs, impact fees and development fees, and land costs of course.
The counterfactual isn't raising teacher pay. There's no real sign that we're in some kind of binding constraint for teachers. This is just a giveaway to a politically powerful group.
The cost per unit of affordable housing is definitely absurd! My understanding is that this is mostly a result of... more giveaways to politically connected groups. Like, requirements to use union construction is a big one, then a whole bunch of "green" requirements about energy efficiency and adding solar panels to things. I'm not sure what your implicit model is for the costs of affordable housing units, but if you imagine that it's just some kind of featherbedding by affordable housing developers per se I think you're wrong.
We are definitely in a binding constraint for teachers in my part of the SF Bay Area. Not only do we lose teachers because of housing costs, we lose doctors because of housing costs.
I mean, clearly Bay Area cost of living bites almost everyone -- including, as you say, the objectively quite wealthy. I work in tech, have some family money, and still was in my mid 40s and like a 1-2%er before I had a house where I felt like I was at sort of an A- overall grade for my physical residence.
And that's going to be the case until either demand dramatically drops in a way that will be disastrous for the area (but good for housing prices) or supply rises due to decades of sustained building at much higher levels than is presently the case. And I assume that basically everyone here agrees with that.
But I don't see any sign that, given that background situation, there is any particular reason to think that teachers are uniquely poorly off or uniquely constrained, nor that housing provision for teachers is a good form of teacher comp (like: it is very uneven in which teachers it benefits. Why?)
The other big cost for affordable housing in the Bay Area is time, and time is money. If the developer can't or won't use SB 35, approvals take forever and the city demands expensive concessions. And then, since affordable projects need six or more sources of funding, it can take a long time to get the funding, and each funder has their own requirements which might seem simple alone but in combination with all the other funders' requirements add considerable hassle, which is cost.
The news articles about the project quote the district saying that the project is intended to reduce teacher turnover due to high housing prices. I don't have any insight into the operations of the district, but I find it believable that it is hard to retain staff in the area if a market-rate one-bedroom is already $2800/month.
My mental model of the costs is not "featherbedding by affordable housing developers" in the sense that the developers are stealing it all or something. I find the "non-profit industrial complex" to be super overblown and mostly bad faith argumentation from people who are opposed to provisioning popular public services that want to label it as waste and fraud instead (see also DOGE). My mental model is similar to the findings of the Transit Cost Project for NYC's subway system: there are lots of unnecessary, wasteful, and/or overpriced expenditures that combine to reach an outrageous amount of money and time to accomplish something.
I don't think the affordable housing developers and advocates are the root cause of the costs, but my prior is that they would accomplish more by focusing on getting the costs down. To go back to the NYC subway example, a lot of advocacy groups blame "underinvestment" for the lack of expansion and not expansions coming in at over 10x the price of tunneling in Paris. I'm not an expert on the Bay Area, but I've seen a lot of the same rhetoric from groups trying to building subsidized housing or provide housing for "housing first" addiction recovery models. If it takes a decade and $1.1 million a unit to build subsidized studios, your impact is going to be really limited. California has generally done a worse job with "housing first" than Texas, and I don't think that is because California voters are less symptathetic to people in recovery from opioid addiction than Texans.
If you told me a building was 10% Section 8 or 20% low-income restricted, I would probably be significantly less interested in renting a market rate unit there.
If you told me a building was 20% reserved/discounted for teachers and cops, I’d think that sounded nice. I’d probably be slightly more interested in living there.
Developers likely know that people have preferences like mine, so they could be more amenable to pursuing a project with the latter restriction. I don’t think it’s a 1:1 use of resources; not all non-market units are created equal.
There is plenty of demand for housing in the Bay Area, we don't need to think up complex schemes to make new units attractive to renters.
I do not think you have properly understood my comment if you believe I was proposing these set asides for the purpose of being an amenity for market rate renters.
You wrote that you wouldn't rent at an apartment complex that has undesirables in it. I think that lots of people would, and we don't need to care much that you wouldn't, because supply/demand is currently so unbalanced. If you want it in economics talk, I don't think that the (real) negative effects on the rent that are imposed by having a small portion of the apartment complex be rented to low income people is going to cause a major depression to the rents you can charge to market-rate units.
And if that supply/demand imbalance gets fixed such that "20% low income restricted" substantially depresses the rents you can charge for market-rate apartments, we will also be at a point where it's even more ridiculous to build subsidized housing for decently-paid teachers.
most of the “low-income” restrictions in private apartment buildings are set aside for fully middle class incomes.
Very true.
Most people don't like living around poor people, because of the extra crime
Building "inclusionary housing" for people at 120% of the area median income is nuts. It happens all over the Bay Area.
To pick on a specific example, this one-bedroom unit (https://www.zillow.com/homedetails/88-Hoff-St-APT-108-San-Francisco-CA-94110/53153433_zpid/) is selling for $419,223 and the household income for a couple buying it is capped at $119,900. Even if the buyers somehow have a $80k downpayment and earn exactly the maximum household income to remain eligible, the monthly payment with taxes and HOA is over half their monthly paycheck before health insurance or anything else. From my understanding of house financing rules they wouldn't be able to get a mortgage. I'm not sure who can buy these units other than downwardly mobile people whose parents pitch in for the downpayment and mortgage, which seems like the last group who should get subsidies.
This is normal, and assuming the couple can find the down payment in the couch cushions, they can afford the home. The housing cost would be about 30% of their income, which is the standard. That's how the prices are set, at ~30% of the gross income.
Finding $84k in your couch cushions would involve a very different lifestyle than I'm used to. Do people buying these units get help with PMI or do you need to actually bring a 20% down payment to the table? It seems crazy to me that there would be both such a narrow band of income for qualifying and that you need to have that kind of money for the down payment.
I actually work on this issue at the state level (California). Can you DM me? I fervently believe that education workforce housing is an effective solution for school districts losing teachers to high housing costs, but am humble enough to know there I may have blind spots and would appreciate discussing other perspectives with informed people. We may both learn something.
People care more about the middle class than the poor, though. It’s good politics
McCall, a resort town north of Boise that struggles to get year round residents, tried to pitch this as a bond, but it failed.
https://boisedev.com/news/2024/03/26/mccall-donnelly-school-district-bond/
Glad to see this. Such a no-brainer IMHO when you've got (1) a critical need for workers who don't make a lot of money, and (2)you're in an expensive area.
Wouldn’t the no brainer be “pay these people for whom you have a ‘critical need’ more, given that by dint of being in an expensive area you can afford to do so by hypothesis?”
Among other things, provisioning the housing this way is more tax efficient than paying signficiantly higher salaries to cover outrageous housing costs. I also think schools have a vested interest in teachers living relatively close by. If teachers have really bad commutes, it's harder to ask them to stay for extracurricular activites and you have a higher risk of staff being late. Similar logic applies to fire fighters and police, with the later often being required to live in the jurisdiction they work in.
“Among other things, provisioning the housing this way is more tax efficient than paying signficiantly higher salaries to cover outrageous housing costs.”
Interesting argument - I guess because the housing subsidy isn’t a reportable source of income?
The latter arguments seem less convincing to me since they’re of the class “can be solved by paying salaries that clear the local housing market” although I’ll grant that there may be particular workers for whom the public benefit of them living closer is higher than for others.
Yeah, from my understanding the "subsidy" portion of the housing is not taxed as a benefit in this case. Teachers are still paying fairly high rents (IIRC $1600/month for a one-bedroom), but the counterfactual is paying people a sufficiently high wage to cover true market-rate housing ($3000+) in salary and therefore paying significantly more in social security and income taxes.
You also circumvent backlash against high salaries for public employees. The pay raises that would be required to afford the local housing market would be very large and the public has unreasonable expectations around salaries for government workers. Hiding the pay increase in housing is similar to the status quo of hiding government pay in benefits (eg much nicer health insurance than comparably paid jobs typically have).
I have econ brain so I am inclined to default to the “paying salaries that clear the local housing market” solution, but that doesn't guarantee that people will stay in the local housing market unless you mandate it like police departments often do. My prior is that raising salaries significantly for teachers in one jurisdiction is more likely to result in people from further out applying and commuting long distance than getting everyone to move to the area.
Getting the teachers to live nearby can’t be achieved by increasing their pay to be able to afford nearby housing. With that level of pay, they can choose from many neighborhoods, and only a fraction of them will choose the neighborhood by the school over neighborhoods with other amenities they find idiosyncratically appealing. Saying that they get the subsidy only if they live close to the school as a way to ensure the secondary benefit to the school community.
It's completely wild that you in one comment decry (correctly!) the extremely high cost of building affordable housing and in a second comment claim that building affordable housing for people with incomes in the 80%-140% AMI range is efficient.
Efficient relative to paying the difference between 60% and 100% of the market-rate price in loaded wages.
The most efficient to do for the Bay is to address the massive divergence between construction costs and home prices (as documented in https://www.nber.org/papers/w33958). It's the trillion dollar bill on the sidewalk and frustrating how hard it is to make progress on.
No one wants to live by a building of people making 0-30% AMI for obvious reasons, but a building of teachers, cops, firefighters, and other city employees will probably raise the value of the neighborhood!
>Wouldn’t the no brainer be “pay these people for whom you have a ‘critical need’ more<
I strongly doubt it. Public sector workers in the Bay Area are already some of the most expensive in the world. My guess is building housing (which, after all, can last many years) would be a net win for taxpayers and workers.
A single affordable housing unit costs north of a million dollars. If the counterfactual is paying a teacher $20,000 more per year, it's 50 years before the housing unit pays for itself (actually, more, due to the time value of money).
Isn’t the school district collecting rent from the teachers? That has to be figured in.
And, presumably the district is building on land it already owns, which one would think reduces the cost. The report here says costs for market rate multifamily housing in the SF Bay area is about $400/Sq ft exclusive of land, so $480000 for a 1200 Sq ft apt. https://www.rand.org/pubs/research_reports/RRA3743-1.html
So I literally work on this issue and want to add some context:
1) Yes, building housing in California costs much more than it should; much of the blame is with the state government and their requirements. The recent CEQA reforms should help but while that's a 40-yard gain, there are still 60 yards of reform they could undertake.
2) Your counterfactual isn't an option in the real world because a) the state largely controls the amount going to education, so individual districts can't pay each teacher $20K more unless the state gives them a huge infusion of cash. Perhaps more importantly, b) the logic of labor union is so Treat All Members The Same, so they wouldn't let you pay just teachers who are housing-stressed $20K more - you'd have to pay EVERY teacher $20K more, which is a budget buster.
The logic of housing for educators is that you are targeting a valuable, non-taxed benefit (i.e., below market rate housing) to those who need it most: early-career teachers and lower-paid classified staff. This reduces turnover, which saves the district money.
The housing will typically be "paid off" over 30 years: the district borrows money (through bonds or otherwise) to pay for construction, and then pays that back through rents recovered. Theoretically those rents could constitute a revenue stream after the 30-year payoff period, but I believe that the maintenance needs on a 30-year-old building often eat up any profit, so it's still breakeven after that. But you still have the benefit of keeping classified staff and early-career teachers in your district and in the community, and reducing their stress (from housing costs and commuting) significantly which, in theory, makes them better at their jobs and thus makes local government more effective.
I’m not sure if that would be the case for workforce housing in the same way it is for “permanent supportive housing” for the homeless. We need to drive down the cost of building both, of course.
Color me maximally skeptical even in SF Bay it’s impossible to build a studio for fix figures if no land has to be purchased.
(And yes, that does mean I believe worker housing should be basic.)
The government also owns a fair amount of land so the costs are constrained to regulatory/legal barriers and actual construction spending. You could even subsidize the units by adding a bunch of market-rate one-bedrooms to the project.
>The government also owns a fair amount of land<
Exactly.
For all its vaunted propensity to innovate, I find the United States at times is remarkably resistant to the kind of common sense solutions long used abroad. It reminds me of an article I read in WaPo recently: apparently some jurisdictions in the US are starting to pressure the likes of Amazon and Door Dash to use smaller vehicles, due to congestion. I feel like saying: "Asia from seventeen years ago on line one." lol.
One of my cranky vaguely conservative views is that we need less special low cost housing for artists and a lot more for nursing home CNAs etc. An artist can get a day job and do art part time. A CNA is working a job that's low paid when it's full time. And in the grand scheme, I place a lot more value on making sure that nursing home or hospital workers with jobs that paid close to the minimum wage have access to affordable housing near their jobs than that artists have access to housing that is cheap enough allows them to afford to pursue art full time. I like art and I even have an art hobby, but I know that I'd never make a decent living from it so I have a non-art job that pays well and allows me to do my art. It's the way of the world that there are a lot of people who want to do art and there is not enough demand to pay for all the art that people want to create.
Fuck yes. It’s criminal how little the people who wipe asses for a living make. We need more of these people, too.
Yeah, it angers me to no end how little CNAs make and the number of people who regard the job as some sort of punishment for slacking off or not working hard enough. Even worse are the people who believe that it's somehow wrong for CNAs to be paid well because they "don't deserve it because it doesn't take much skill". As if there's very little skill in making a dementia patient comfortable while you change their diaper.
Not only that but it encourages the bottom of the barrel to do that job which leads to elder abuse
What grinds my gears is how much home care agencies extract. At least when we did it for my grandmother, full-time elder sitters cost $25+/hour, but the people actually doing it were paid $9/hour without benefits. (I’m sure these rates have gone up with inflation, this was 13 years ago-ish) It’s a great way to get shady people you wouldn’t trust in your home doing home care. But that kind of overhead is predatory. We were lucky to be able to arbitrage the transaction and find a wonderful person to do it under the table, but you shouldn’t have to do that.
I think it’s the same way with nursing homes, private equity owners pushing staffing levels to the bone, 40 patient nurse loads, and grandma has bedsores now <shocked pikachu face>
Sounds like you have found an opportunity to make a lot of money, Helikitty. You should start a home care agency with lower overhead and take all the business away from those predatory businesses.
Seems to me the problem is people trying to make large fortunes in the home care/nursing home industry in the first place
Do they have to leave if they change jobs?
That would have... interesting effects on the already overweening public sector unions in a lot of places.
Plus, most people want to own their home; renting is rightfully considered something you do as a young adult and only until you can afford to buy. I wouldn’t oppose people vesting into ownership of their workforce housing unit over years like they do with pensions - work for 30 years, then you own your unit, but possibly can only sell to another teacher, idk how that would work, otherwise you’d have to keep building, but that’s ok too
Yes, it would be a benefit of employment like anything else. It’s not unheard of in the private sector. I just realized I’ve spent most of my adult life in housing that was tied to my (or my spouse’s) job.
Isn't this usually tied into jobs that are either a) very remote (like an oil field) b) where being ready to work at short notice is important (prison guard, military base) or c) where the job involves a level of commitment far beyond an ordinary job (grad student, priest)?
Linking it to an ordinary job seems bad for the same reasons that linking health insurance to jobs is bad, but more so.
It all depends on the reason for offering housing. The default reason for school districts in pricey CA areas to offer below-market housing is to keep employees in the district/reduce turnover, so of course if they separate from the district the benefit is gone. But most districts have a 7-year lease limit. The idea being that employees have seven years to build up savings to then buy or rent something in the open market once they have to leave their district-built unit.
As I mention below, I work in this area (education workforce housing) in California. I'd be curious for folks to weigh in on the two prevalent models here. One is for the district to borrow the money to pay for construction on their property, which allows them to restrict the units to only their employees (this is the Daly City model).
The other, which I'm more ambivalent about, is for the district to allow market-rate development on their property via a $1/year ground lease but then require the developer to provide 20% of the units to their low-income employees in exchange. This is often something mandated by the city government for new MFH developments anyway. What that looks like in San Diego Unified is this property, which interestingly means that low-income SD Unified employees (bus drivers, cafeteria workers, security guards, etc.) are living next door to very rich people and enjoying the same amenities (golf simulators, luxury pool, outdoor firepits, etc.):
https://www.sandiegounified.org/departments/real_estate_and_rentals/joint_occupancy/livia_at_scripps_mesa
https://www.essexapartmenthomes.com/apartments/san-diego/livia-at-scripps-ranch
Is this the best use of public land? I'm not sure and would love to hear what the commentariat thinks.
The appeal of the latter route is that it gets the public sector out of the way, I think. I like the idea of giving a developer a clear ask (x% of units) and then it’s out of the government’s hands. If the government is just paying for construction on its own land, I expect they have a smorgasbord of additional asks that drive up costs. They also are more likely to be on the hook if things don’t go as planned.
It’s not ideal to have fancy amenities. Bad optics. Ideally if a local government had a few subsidized options for employees, they would adjust the rent. 20% of your income if you want the regular apartment building, 25% if you want the swanky place. You could even adjust the percentages over time based on level of interest from employees. Just some thoughts.
I mean, usually it will cost more at the swankier place, even with a “workforce” discount. We have a lot of these tax abatement buildings with set-asides of a percentage of units based on AMI, the better buildings will be for 80-90% AMI and the worse ones for 30-40% AMI, etc
Thanks for the thoughtful response. These are good arguments to bring to our districts when they ask about models.
The few inclusionary units in my city that get built are reserved for city employees and teachers.
A candidate for the most Yglesias-ian column Matt has ever written:
1. an excellent use of Econ 101
2. about housing markets in the places his readers live
3. which challenges a prior of older leftists
4. and is right about something important
5. while flying in the face of the need to assemble coalitions and manage normie expectations that he so often criticizes other policy entrepreneurs for
SF Bay Area pro-housing people are mostly in sway to "affordable" and "inclusionary" ideology. A big part of how the tiny SF cabal that rules CA (Shh! Don't tell!) has managed to squeeze some fundamentally unpopular pro-housing policies into law is by accepting those frames (and a "living" wage for the building and trades unions of well over $100k). Matt's right. But we're still stuck trying to assemble a coalition to do what's right. The most promising proposals I've encountered come from Sam Bowman:
* https://80000hours.org/podcast/episodes/sam-bowman-overcoming-nimbys-housing-policy-proposals/
identify the people who are actually harmed by a project and compensate them a sensible amount, we can turn them from opponents into active supporters who will fight to prevent it from getting blocked.
... [that's the second of these three proposals Bowman makes:]
* Spending the additional property tax produced by a new development in the local area, rather than transferring it to a regional or national pot — and even charging new arrivals higher rates for some period of time
* Allowing individual streets to vote permit medium-density townhouses (‘street votes’), or apartment blocks to vote to be replaced by taller apartments
* Upzoning a whole city while allowing individual streets to vote to opt out
Here in Texas, mandatory inclusionary zoning is illegal, so cities like Austin have turned to "voluntary" density bonus programs that essentially do the same thing, taxing density where density wants to go—and subjecting it to the fraught public review process.
I wrote about Austin's experience here: https://www.ryanpuzycki.com/p/density-is-not-a-bonus
I confidently predict nine unit residential buildings are about to become a lot more common in Cambridge, Massachusetts.
One piece of context I think Matt is missing here is that in Massachusetts, the 1980 ballot proposition known as "Prop 2.5" severely limits residential property taxes. This forces cities like Cambridge to take costs and spending they would have done through property taxes, and to find other ways to impose those costs and to cause that spending to occur. Such as inclusionary zoning. Far from perfect, but an attempt to return to equilibrium in the face of an artificial policy constraint.
It’s still a bad idea if the result is less housing supply. In fact the only path to higher property tax revenue would seem to be maximizing housing units.
Similarly the softer barrier of politics to raising property taxes has put pressure on cities, at least here in Ontario, to raise development charges exorbitantly. Theoretically so growth pays for growth but in reality to also fund amenities that all citizens benefit from.
One solution that I haven’t seen discussed here yet is uploading certain municipal government outlays to a higher level government where it makes sense (social services, affordable housing measures, water and wastewater…).
Everything really should be federal, so long as there’s a permanent Democratic trifecta.
Great point, but the IZ dynamic described here also occurs in a lot of other places.
I’ve recommended his work here before, but Eric Kober of the Manhattan Institute has written a lot of interesting articles about MIH in NYC.