Surprised that you don't mention immigration as an important variable in this policy issue. You are enthusiastic about encouraging more immigration, but it's well-known that this quickly drives up housing demand. Asking for both high immigration and a rapid rush to build creates a very destabilizing situation: I can't blame people who live in nice, established single-family neighborhoods for pushing back.
People invest their life savings into a home precisely for the stability, safety, and specific environment of that neighborhood. It isn't just 'NIMBYism' to object when a sudden rush to build threatens to completely transform the locale of your biggest financial and personal investment. Advocates for high immigration and aggressive YIMBYism seem to be in cognitive dissonance here - they ignore the immediate demand shock of immigration, while expecting homeowners to just accept a massive, unpredictable disruption to the communities they bought into.
This article has an odd mix of (a) pragmatic, detail-oriented, evidence-based discussion of what works and (b) broad ideological statements. The “socialism” solutions to housing are about financing, but they would increase supply. The mixed economy isn’t just “capitalism + welfare state,” it includes public schools and the postal service and the VA and public ownership of toll bridges, and municipal electric utilities, which can all operate alongside privately-provided versions of the same in the market. Each one of these markets has to be considered in detail. The observation that markets are great at certain things doesn’t tell you much about who should own the capital. What we need is the correct amount of capitalism for each situation, not ideology.
Thanks Dan, but I think we should be more hopeful. It seems to me that well-located NIMBYs must be conflicted, must have some sense of how valuable their properties become when permitted to replace a house with 10 or 20 apartments. Those value multipliers can fuel an end run around the politics but what these NIMBYs also need is a new kind of property listing, one that solves their coordination problem when they try to assemble land on the scale that is required to make cities affordable. My solution is here (crowdlands.substack.com…). It can be seen as crowdsourcing applied to land.
The land argument can be solved with socialism (Vienna-style housing built/financed by the government that owns the land in perpetuity and keeps it affordable) and it can be solved with capitalism (building way more housing via deregulation, zoning reform). We should do both.
But I also want a third version: Either pull land permanently off the market and put it in a land trust (residents own the building, but rent the land beneath it from themselves as in Bournville, Letchworth, and all the Scottish Islands that bought themselves). Or let cities install land value taxes (residents are taxed on the land they own, but not the building, taxes are recycled back into affordability, classic Georgism.)
Deregulation alone will never be enough because there are already enough homes; there just aren't enough homes *close to work.* And everything close to work is more expensive because it's close to work, which pushes that land up in value (making space tight and real estate unaffordable).
There is only one path to housing abundance, and that is to remove the obstacles to a functioning capital market. Unfortunately, some Democrats think the path is via public ownership of housing, rent control, and subsidized mortgages. They lack an understanding of economic history.
I don't know how Matt missed the obvious answer: collectivize all housing and make it a lottery. This whole "socialism isn't the answer take" is clearly not the right one for this audience.
I am confused by the idea that the US has some sort of singularly bad housing market when it literally has the lowest median home to median income ration of basically every nation in the world??? And certainly as compared to all other "first world" nations? There is literally nowhere on the globe that you can buy more house for cheaper, relative to local incomes.
Why not just accept that there was a several-decade freakish circumstance that will never be repeated, where almost every man in a generation served in the military and this accessed GI benefits that include not needing a down payment, combined with the fact that auto loans and 30-yr mortgages had just barely been invented and thus massive new demand opened up for suburbs? Well, now they're all built. That's over. We have three times as many people and not more city centers. Trying to handwavey this away seems crazy to me.
Every animal on earth seeks out a prime territory for itself and then defends it to the death from encroachers. Trying to get people to change their mind about wanting lots of new strangers and change in their territory is not just working against deep human instincts you're working against primal instincts that goes back to fish and dinosaurs. Personally I have never in my life met an actual single family homeowner who intended to stay in their house long-term or forever who was NOT basically a NIMBY, and politics and left and right and abstract ideas like "capitalism" had nothing to do with it. My city (which is actually suburbs) is almost perfectly 50/50 red and blue by vote registration. Each year the mayor sends out a survey on community goals and priorities and every year more than 90% of residents say they do NOT want dense housing built, do not want open space built on, want more parks and trails, and are only okay with additional development in the existing commerical corridors. YIMBYs are fighting a serious uphill battle against every primal instinct.
At least if population actually goes down, this problem will be resolved (though that's not scheduled to happen for several decades), but it was always inevitable with population growth. Would prefer if people stopped denying these obvious realities. All wars are over land, ultimately.
"As a political pragmatist, I don’t really blame Suozzi for blasting efforts to foist zoning reform on his constituents on Long Island a few years ago since his district is a wretched hive of NIMBYism. "
I do! He could have chilled out about ADUs and said nothing, but he actively made it a wedge issue and helped kill it. It was an incredibly incremental proposal.
Massachusetts will provide some money to towns for low-income housing. In fact, there is pressure on towns to build low income housing. The town where we live has recently approved a mixed use apartment complex to be built where a large car dealership used to be. It will have paths for walking, important small stores and restaurants. The train to Boston is nearby. Low income can mean a combination of both young and older people. This piece of property is near an “artery” highway so there will be a few garages. IMO This is a great place for these new homes.
I appreciate the need for a narrative device to turn this article toward housing, but just a plug not to dismiss health care as important to young people’s view of capitalism! My experience paying for health care for the first 20 years of my career was paying a high health insurance premium that seemed totally out of whack with my low risk, just so that older adults wouldn’t need to pay the astronomically higher premium that aligned with their level of risk. Again, the remedy might be more capitalism rather than less (less protectionism for doctors, less constraint on insurers), but it’s not unimportant to the young just because they don’t consume it—they pay for it.
I really like how you list the actual (or at least, stated) concerns of both sides, and take them seriously.
Surprised that you don't mention immigration as an important variable in this policy issue. You are enthusiastic about encouraging more immigration, but it's well-known that this quickly drives up housing demand. Asking for both high immigration and a rapid rush to build creates a very destabilizing situation: I can't blame people who live in nice, established single-family neighborhoods for pushing back.
People invest their life savings into a home precisely for the stability, safety, and specific environment of that neighborhood. It isn't just 'NIMBYism' to object when a sudden rush to build threatens to completely transform the locale of your biggest financial and personal investment. Advocates for high immigration and aggressive YIMBYism seem to be in cognitive dissonance here - they ignore the immediate demand shock of immigration, while expecting homeowners to just accept a massive, unpredictable disruption to the communities they bought into.
Great essay - a big macro swing which is also true and yet simultaneously not talked about enough!
This article has an odd mix of (a) pragmatic, detail-oriented, evidence-based discussion of what works and (b) broad ideological statements. The “socialism” solutions to housing are about financing, but they would increase supply. The mixed economy isn’t just “capitalism + welfare state,” it includes public schools and the postal service and the VA and public ownership of toll bridges, and municipal electric utilities, which can all operate alongside privately-provided versions of the same in the market. Each one of these markets has to be considered in detail. The observation that markets are great at certain things doesn’t tell you much about who should own the capital. What we need is the correct amount of capitalism for each situation, not ideology.
Thanks Dan, but I think we should be more hopeful. It seems to me that well-located NIMBYs must be conflicted, must have some sense of how valuable their properties become when permitted to replace a house with 10 or 20 apartments. Those value multipliers can fuel an end run around the politics but what these NIMBYs also need is a new kind of property listing, one that solves their coordination problem when they try to assemble land on the scale that is required to make cities affordable. My solution is here (crowdlands.substack.com…). It can be seen as crowdsourcing applied to land.
The land argument can be solved with socialism (Vienna-style housing built/financed by the government that owns the land in perpetuity and keeps it affordable) and it can be solved with capitalism (building way more housing via deregulation, zoning reform). We should do both.
But I also want a third version: Either pull land permanently off the market and put it in a land trust (residents own the building, but rent the land beneath it from themselves as in Bournville, Letchworth, and all the Scottish Islands that bought themselves). Or let cities install land value taxes (residents are taxed on the land they own, but not the building, taxes are recycled back into affordability, classic Georgism.)
Deregulation alone will never be enough because there are already enough homes; there just aren't enough homes *close to work.* And everything close to work is more expensive because it's close to work, which pushes that land up in value (making space tight and real estate unaffordable).
My series on this topic: https://www.elysian.press/p/let-cities-build-utopia
Proposed title: Make Housing Capitalist Again
There is only one path to housing abundance, and that is to remove the obstacles to a functioning capital market. Unfortunately, some Democrats think the path is via public ownership of housing, rent control, and subsidized mortgages. They lack an understanding of economic history.
Do you think that building new apartment is capitalist or socialist?
Americans genuinely argue both sides!
I don't know how Matt missed the obvious answer: collectivize all housing and make it a lottery. This whole "socialism isn't the answer take" is clearly not the right one for this audience.
I am confused by the idea that the US has some sort of singularly bad housing market when it literally has the lowest median home to median income ration of basically every nation in the world??? And certainly as compared to all other "first world" nations? There is literally nowhere on the globe that you can buy more house for cheaper, relative to local incomes.
Why not just accept that there was a several-decade freakish circumstance that will never be repeated, where almost every man in a generation served in the military and this accessed GI benefits that include not needing a down payment, combined with the fact that auto loans and 30-yr mortgages had just barely been invented and thus massive new demand opened up for suburbs? Well, now they're all built. That's over. We have three times as many people and not more city centers. Trying to handwavey this away seems crazy to me.
Every animal on earth seeks out a prime territory for itself and then defends it to the death from encroachers. Trying to get people to change their mind about wanting lots of new strangers and change in their territory is not just working against deep human instincts you're working against primal instincts that goes back to fish and dinosaurs. Personally I have never in my life met an actual single family homeowner who intended to stay in their house long-term or forever who was NOT basically a NIMBY, and politics and left and right and abstract ideas like "capitalism" had nothing to do with it. My city (which is actually suburbs) is almost perfectly 50/50 red and blue by vote registration. Each year the mayor sends out a survey on community goals and priorities and every year more than 90% of residents say they do NOT want dense housing built, do not want open space built on, want more parks and trails, and are only okay with additional development in the existing commerical corridors. YIMBYs are fighting a serious uphill battle against every primal instinct.
At least if population actually goes down, this problem will be resolved (though that's not scheduled to happen for several decades), but it was always inevitable with population growth. Would prefer if people stopped denying these obvious realities. All wars are over land, ultimately.
"As a political pragmatist, I don’t really blame Suozzi for blasting efforts to foist zoning reform on his constituents on Long Island a few years ago since his district is a wretched hive of NIMBYism. "
I do! He could have chilled out about ADUs and said nothing, but he actively made it a wedge issue and helped kill it. It was an incredibly incremental proposal.
Bipartisan rampant dystopianism untethered from global and historical realities
Under 10 mkts in the country that this is remotely relevant.
Massachusetts will provide some money to towns for low-income housing. In fact, there is pressure on towns to build low income housing. The town where we live has recently approved a mixed use apartment complex to be built where a large car dealership used to be. It will have paths for walking, important small stores and restaurants. The train to Boston is nearby. Low income can mean a combination of both young and older people. This piece of property is near an “artery” highway so there will be a few garages. IMO This is a great place for these new homes.
I appreciate the need for a narrative device to turn this article toward housing, but just a plug not to dismiss health care as important to young people’s view of capitalism! My experience paying for health care for the first 20 years of my career was paying a high health insurance premium that seemed totally out of whack with my low risk, just so that older adults wouldn’t need to pay the astronomically higher premium that aligned with their level of risk. Again, the remedy might be more capitalism rather than less (less protectionism for doctors, less constraint on insurers), but it’s not unimportant to the young just because they don’t consume it—they pay for it.
Very much liked the actual article.