Amen to what RT says. I know Noah doesn't like to resort to "supply and demand" as an explanation, but this reads to me like an explanation of why supply and demand works even where goods are not completely fungible. That should surprise no educated person. The problem is that a lot of educated people have such a deep antipathy to capitalism that they deny the basic laws of economics.
Trying to explain supply and demand to a "progressive" (I used your air quotes) is like trying to teach a pig to read. It wastes your time, and annoys the pig.
Yes, I feel so much of the anti market rate supply is just people who have a selective hate of capitalism and think we can easily replace it with better supply systems if we just squash greedy people.
I'd prefer if people just look at results and use our democratic power to incentivize good results.
Best cities, best economies are mixed, a mix of well-regulated private markets and public services.
Also, it’s easy to be leftist if you’re ignorant of economics, and a lot of “educated people” just want to be leftists (whether to make themselves feel better, to fit in with their tribe…)
My feeling too. More supply = lower price. It's not like there are different markets for "regular" and "affordable" housing. (Actually, in many municipalities there essentially are 2 markets, which is a big part of the problem.)
Exactly!!!!! Building "low-income" units does not lower the cost for upper middle class families who don't qualify for those units but still can't find a decent home in their price range. My town recently built over 5 THOUSAND homes!!!! Almost all have been purchased and it leaves the rest available.
Yes, sadly, there are many leftist housing advocates - and also many rich otherwise leftist NIMBYists - who don’t believe this. Or at least claim that it’s not true…
Noah, your reference to the Singapore model reminds me of the old NY State Mitchell-Lama housing program in which co-ops were sold on an income-restricted basis with a mandatory 20-year “hold” prior to building “privatization” (which, of course, even where expressly authorized by the statute became a series of political footballs). There has been some local buzz about reviving the program (the statute mostly provided for tax-advantaged rental units built and managed by private developers, with the same 20-year hold, but the co-op model generally has been more successful). Have you ever written about this? And how about that NYC meet-up?
I worked in housing affordability for years and the one thing I wish people understood is that there is no such thing as "affordable housing" affordability is the conflux of the unique properties of the home, the income of the purchaser and the urban land market. So many people think there are "luxury" homes made for rich people and "affordable" homes for regular people. But house prices haven't risen because developers suddenly started building exclusively rich people housing for no reason. Land prices are the key to making housing affordable for regular people again, and that means upzoning and a lot of building.
Isn't a developer focus on "luxury" homes a product of restricted construction, which means that developers have to focus on margin rather than volume?
It's comparable to how the Plaza Accords (which restricted US imports of Japanese cars) prompted the big 3 Japanese carmakers to introduce new luxury brands: Lexus for Toyota, Infiniti for Nissan, and Acura for Honda.
Yes, that is an effect of land restrictions, but most of the affordability problem is that land is too expensive per dwelling unit, due to building restrictions.
To an extent, but the cost of construction prohibits the development of actually affordable units, at least out here on the West Coast. We need to import a metric fuckton of temporary foreign laborers, house them in barracks and pay them minimum wage, to build the infrastructure we need, since apparently we can’t do it anymore. We should also scrap the Buy American laws
Noah does a good job of setting the terms of the debate, and demolishes one side of it with theory supported with evidence. Hopefully this piece serves as something quick to link to in the future when the topic arises. I appreciate what Noah is doing here, as it’s easy to just not post yet another time about housing, but it’s basically always worth doing. Housing is so important, so the marginal housing blog post is still pretty important relative to a blog post about other issues.
However, there is some soul missing from this piece. Given that Noah’s argument is so obvious, it’s worth explaining why someone like Cook would think the opposite. Cook, like most people, likely has an anti-market bias. This bias makes people more likely to believe unconventional theories about economics, especially the economics of housing.
I submit that, since Noah’s argument was so strong, it would have been worth cutting down a bit and spending large portion of the essay delving into anti-market bias and why it features so heavily in these discussions. That is, I believe, the metaphorical Oz hiding behind the curtain in these conversations.
It's desperation. People are really deep into whatever coping/avoidance/denial/anger/cognitive-dissonance temporary relief they have found, as they were forced year after year to witness cycles of economic crises triggered by markets (nooo!) and greed (aarrggh!) and irresponsibility, and then bailouts, and ... and ... and. (And there's the compounding factor of perception, rise of social media, the political focus on costs - healthcare/education, etc.)
What people are missing is that the process of urbanization is ongoing for hundreds of years, there are still about 45 million people living in rural areas, and even if just a few percent of them moves to cities that's a very serious chunk of demand. Not to mention that the US is probably in the unique situation of having a rich and growing population and brutal internal differences between states (pros and cons of globalization and technological shifts) *and* free movement of people.
There's no holding back the gold rush (of the Internet era).
... and if people want affordable homes they need to do the math. It's not just land, it's the relative lack of productivity increase in face of drastically increased baseline. (Sure we have better handheld tools now, but it still requires months of time to construct even a SFH. Without serious mass-produced/industrialized construction it'll continue to be blood-curlingly expensive to get a crew on site, get materials, and have them make a one-off building.)
I suspect not much. I base my supposition on the fact that the majority of the MSM reporters are Blue, as well as the majority of bureaucrats working for Federal agencies tasked with enforcing legal hiring practices. They would be unable to contain their glee at finding such crimes in red-states, so i also suspect they’re putting said states under greater scrutiny.
that would also require MSM reporters to venture out of their safe zone (twitter) and so some actual investigative reporting (working instead of tweeting)
And the cost of construction is half or less, due to nonunion trades and fewer regulations in flyover country. Also, permitting costs tend to be cheaper.
It's happening in Minnesota's too. The land where government feels compelled to keep everyone safe from themselves by overregulating... well EVERYTHING! The good thing for me as a construction professional is that all the government red tape keeps the competition low (except for the use high risk of using illegals) as the business is overly complicated and pushes a lot of liability to construction companies who of course need charge enough to mitigate that risk which means the home owners keep paying more for less.... on top of high interest rates and inflation.
Start with slashing our state government and state and local tax rates by providing less services. Politicians and bureaucrats seem to have a hard time understanding that the cost of government puts a price burden on everything! EVERY program they enact is a luxury priced and inefficient solution. Police, courts, managing property ownership, utility regulation, managing public land and parks, and some base level of temporary emergency services... of course there is more but you get the idea.
Changing residential building codes to a different level of reasonableness by having contractors and some elected officials be a part of the sausage making. There needs to be a better cost benefit analysis. Bureaucrats and leftist politicians make the argument that "we must act because what are a proposing will save lives!!" but while maybe technically correct... at what cost? Lowering the speed limit to 20 miles an hour will save lots of lives as will making swimming in lakes illegal.
Reduce what city, state and local government can regulate in terms of space use and fees charged (why should a development in one part of town be subject to development fees and surcharges to pay for the costs of roads and parks in areas outside of their local community. Local politicians need to have some legal restraints on what they can dictate to keep their favorite developers happy.
Minneapolis and St. Paul and other cities have made a more to allow for higher density by being to build secondary homes in the back yard of existing homes with larger lots but their process to get this done is incredibly slow and takes many extra staff hours (contractor and government) to get projects approved by the builder. Just 7-8 years ago they would let people add a mother-in-law apartment to their home but this is providing some relief albeit not a significant amount.
On the low engagement levels (the guy showing up at an "anti gentrification" protest on a lazy Saturday afternoon, let's say), yeah it's desperation and the very human impulse to put a face on the impersonal forces affecting you.
But on an high engagement level (let's say, NGO workers), it's malice and a rationalization for extortion. Those guys know very well that the more red tape there is, the more the tape cutters can demand. So every developer now has to commission them a sustainability study, donate to their cause, give their friends jobs, build (on renters' dime) tons of unrelated stuff if they want to build anything. They are the troll demanding a toll on the bridge, obviously they'll fiercely oppose any proposal to make bridge crossing easier!
"I submit that, since Noah’s argument was so strong, it would have been worth cutting down a bit and spending large portion of the essay delving into anti-market bias and why it features so heavily in these discussions. That is, I believe, the metaphorical Oz hiding behind the curtain in these conversations."
I think of it as zero-sum thinking being intuitively persuasive, especially to low-trust voters and elected officials. "If someone's making millions of dollars, it's because they're ripping people off." If you have zero-sum assumptions, it's intuitive that the more developers are making, the worse off everyone else becomes. They're strip-mining or clear-cutting the neighborhood by turning cheap housing into expensive housing, just like a mining or logging baron. https://morehousing.ca/zero-sum
I try to head off this line of argument by starting with: "People want to live and work here, and other people want to build housing for them." For low-trust voters, I also point out that the city of Vancouver doesn't just regulate new housing like a nuclear power plant, it also taxes new housing like a gold mine. From 2011 to 2020, the city extracted $2.5 billion (Canadian) in supposedly voluntary "Community Amenity Contributions." https://morehousing.ca/cac-explainer
>it’s worth explaining why someone like Cook would think the opposite. Cook, like most people, likely has an anti-market bias.<
I don't know anything at all about the personal circumstances of Cook. Or Welch. But in my experience a suspiciously high percentage of the most prominent NIMBYists are incumbent property owners, or perhaps have a rent-controlled apartment. Thus they *personally* feel they don't need housing abundance, and may well possess a financial incentive (as well as a political incentive) to oppose it.
It's easy to talk like a Red Guard when one's *own* life won't be negatively impacted by Marxist economics.
I suspect that this is the case on the broader debate people are clearly self-motivated. But cook is presenting an almost intellectual argument against private houses. That to me seems like there is at least a shadow of a serious reason for his position.
I might make an argument by citing that markets are better which I would call a market-bias. If someone presents an intellectual argument against that position, then I would guess that there is an opposing bias at play aside from just self-interest.
I don’t think these people are actually anti market when you get down to it. They like having a choice of cereal at the grocery store and use coupons. They still look for a deal when buying/renting. And so on.
I'm not sure how you're really supposed to build "affordable" below market rate housing anyways. Crappy appliances and materials? Those can easily be replaced. Lower square footage? Just discourages families.
It usually means either subsidies from some level of government, or else IZ, which adds affordable units to a building and raises the rent on the other units to pay for it.
IZ has obvious problems if overapplied because you'll run out of anyone to pay for the above market units. Cities like this problem because it means they can ban housing but make it sound like they want to do something.
Unlimited FAR and automatic approval even on land zoned for SFH, as long as the units will be available for rent for less than 20% of median city income.
This you can get the true market price (without onerous regulations), while undercutting the activist crowd.
I really liked the Lamborghini/Honda example, but perhaps another analogy to really drive home the point, if a bit inexact, is the one that Bryan Caplan uses re: immigration; if you have a room full of tall people and a bunch of short people enter the room, the average height in the room will go down, but nobody in the room is made shorter.
You mean the logic that labor markets follow the rules of supply and demand? More labor supply can have an induced demand effect but it's unlikely to apply unfiormly at the lower wage levels when high numbers of low skill labor immigrates to a country. Which means more competition for labor which can have a depressing effect on wages. Do you have anything empircal to add?
There is definitely a depressing effect on wages. Many basic IT jobs pay terribly because so many Indians have immigrated to the US and driven wages down to nothing for skilled jobs. Similarly, Trump's anti-immigrant policies probably raised wages for low-skilled workers (no research about this yet). Yet, the US has absorbed an insane number of immigrants for centuries, and our wages are still decent. The best wage growth did occur when we had a hard 250k cap on immigration, but we could probably take in one to two million skilled immigrants a year without issue. Furthermore, with such low birthrates, we really NEED the labor, especially in regions where Americans refuse to live in sufficient numbers. Of course, ending public housing and housing subsidies in large cities could fix this (offer housing spots to those in public housing in NYC, Boston, San Fran, LA,...., only in areas with tight labor markets), but this will never happen. It is a shame, because it would be very good for the people living in public housing.
My primary point was to say that immigration does more than simply crowd the labor market. Immigrants really do start more businesses and their children are more ambitious. I can agree that limiting unskilled immigration would probably be a great idea, but there is no interest in doing that. Furthermore, even if we changed the rules, plenty of rich people are obsessed with keeping our border to the South open (such as Jeff Bezos' ex-wife). We could fix most of our problems legalizing drugs, banning loitering in downtown areas with physical punishments (whipping, banishment, forced detox back in the place of their birth,...), and sealing our southern border with strict rules allowing only skilled immigrants in, but there are too many interests who are against this. There is too much money in drugs. Too many people seem like homelessness (always rich people, never anyone who has actually been homeless before), and there are all these people who would rather make it ever more difficult for university graduates to migrate here, but love large numbers of unskilled workers coming in to depress the wages of the poor. So-called "liberal" companies such as Amazon and Starbucks ruthlessly fighting unions is a perfect example of this. The relentless destructions of public education (destroying math education, eliminating proven methods for high-paid snake oil, making schools as unpleasant for young minority men as humanly possible,...) is part of a huge plan by rich white ladies to destroy this country. Yes, Chinese and Russian intelligence are promoting this, but actual Americans are doing their bidding.
In my opinion, out best option is to outsource our government and rule-making to Singapore. We can easily pay them a small fortune to manage our domestic affairs. We clearly cannot do it anymore.
I recently saw that illegal immigrants are 32% service work, 15% construction and only like 4% farm/crop work. Not really sure there's political will to expand immigration for areas of labor need while significantly cutting down illegal immigration beyond a lot of talk.
The point about more immigration creating a demand curve shift for more labor would fall under Noah's point about building housing creating a demand inducement, although I suspect the effect is much greater for immigration's effect on labor demand than for new housing built effect on housing demand. Mexicans are really into creating new businesses.
Personally the education policy I favor is a track system where kids who are falling behind learn some skills that will help them economically and stop wasting their time on academics that won't do them much good. Germany has such a system.
Yes, Germany's system has much to admire. The entire idea that everyone should go to university is foolish and cruel. The US also does a terrible job nurturing its best and brightest.
As for creating new businesses, from the stat's I have seen, Asian immigrants are the most prone to entrepreneurship. Where I live in Chicago, there are Asian businesses everywhere doing everything (so many food items that were imported when I was a child are now manufactured locally, from noodles to traditional clothing).
Thanks for doing such a thorough job of explaining this issue. Now instead of explaining it over and over, I'll just start linking this piece. You did a good job breaking this concept down so most people should be able to understand unless their genuinely don't want to understand it. Not much you can do about those people.
I checked Google Maps this past week, and I see that western Geary Blvd remains undeveloped starting in Japantown.
I think YIMBYs should quit complaining about zoning in Pacific Heights — clearly that comes from class anger — and focus on solutions to the problem that will make EVERYONE happier.
I think they should direct all of their effort to upzoning Geary. Make it all six stories high, with shops on the first floor — including Japantown.
I suspect this would generate 50,000 new units in San Francisco.
With a dedicated express bus lane, residents could get downtown from Ocean Beach in twenty minutes.
Once this has been demonstrated, other boulevards can be targeted and improved.
On another note, SF needs Oakland to stop being a basket case.
Oakland is a 15-minute BART ride away. Lake Merritt and the Oakland Hills are delightful. The weather is better in Oakland than SF. The views of SF at sunset make East Bay residents fall in love every night.
Oakland needs functional police, 100,000 more apartments, and job training programs for those struggling there.
The Bay Area needs thousands of electricians to transition to all-electric appliances and vehicles, for example — not to mention carpenters to build all the needed homes. There should be opportunities to turn people’s lives around.
Many of Oakland's problems with homelessness are due to SF kicking out many of its homeless people in the last ten years (Prop Q), many of whom ended up in Oakland. It is too poor a city to manage the homeless population in the way neighboring cities do so the issue persists. Same with crime- there's not enough money to support an effective police force. Oakland has been royally screwed by SF's inability to build enough housing resulting in huge increases in property prices which has further fed the homelessness issue. Also Oakland is also one of the few cities in the Bay Area that has met its state-mandated quotas for market rate housing, so while I wouldn't complain about 100,000 more apartment, cast your blame at other local cities for that one. There is a lot of criticism that can be deservedly directed at the city of Oakland, but somehow blaming it for SF's problems make no sense. SF can take a long look in the mirror for that one.
I’m not blaming Oakland for SF’s problems. I’m criticizing it, because it should be overflowing with new residents.
While it is technically a separate city, it is super close to SF and right in the center of the Bay Area, making it a vital part of the metropolitan community. Everyone needs Oakland to be doing better.
I’m glad to hear it is building lots of new units. But that should be generating lots of money for the city to pay for police and homeless services.
I went out to dinner and drinks a year ago in Downtown Oakland, and it was just nigh of a war zone, with streets blocked off and cops parked everywhere with their lights going and overhead street lamps out. Everyone was carousing and scuttling about in the dark. It seemed occupied. It was frightening, not welcoming.
To be fair, there are (rare, but widely publicised) instances of developers here in Australia knocking down existing apartment blocks to replace with apartment blocks that contain fewer, but more luxurious apartments.
I don’t think this is common enough to be a substantive problem, but it is in some cases a PR problem for YIMBYism.
IIRC, California has "no net loss" rules which make it illegal to demolish deed-restricted / covenant-affordable units without replacing them with equivalent units in the new building. (And I think there's also a right of first refusal where the previous occupants of the demolished units, if they had been there a certain length of time, get a shot at renting the new units.)
I know that it is standard for Land Readjustment projects that replace a low rise neighborhood with luxury high rises to offer pre-existing residents heavily discounted units in the new development, but I was under the impression this was done out of a combination of needing popular buy in to go through with the LR process, and reducing the scandal risk.
I expect that the new apartments would have to be EXTREMELY expensive in that case (or the old apartment block in a truly dilapidated state), as it's the only way the developer would be able to eat the cost of the torn-down apartment block and still come out with a profit at the end of it.
I've said this once on Twitter too: IMO, the activist class hates market rate housing in part because they don't want Yuppies who don't share their worldview and tastes in their cities.
They want themselves and their friends to be the 'trendsetters' of their cities and fear displacement from other yuppies.
I think the “market” calls to the minds of Leftists things like laissez-faire capitalism, pre-unionized labor markets, unregulated environmental pollution, etc.
If you want to help bring them around, explore these associations and separate them from your intention.
How about laissez-faire capitalism and more unionized labor? It worked very well in the 1950's and 1960's. Remember the national interest? We need more old fashioned nationalism, but that is not cool. We need more housing, more unions, and more trust. I fear we will only be able to pick one. The saddest thing is, Florida is booming and it is sweaty, hurricane-prone and not very sophisticated. Think of what California could be if people would just get out of the way.
Thank you for writing this. I’ve been saying this on Twitter and NY Times comments sections for years. The fact that developers love building luxury dwellings is one of the main arguments liberals used against building more.
No I didn’t like threads when I first got on there, but twitter became exhausting with the sheer number of altright bozos. It was just bad for my mental wellbeing, feeling so much freer now.
I'm surprised that anyone needs this explained to them, but thanks for doing so.
Amen to what RT says. I know Noah doesn't like to resort to "supply and demand" as an explanation, but this reads to me like an explanation of why supply and demand works even where goods are not completely fungible. That should surprise no educated person. The problem is that a lot of educated people have such a deep antipathy to capitalism that they deny the basic laws of economics.
Yep, exactly. This is just me talking through a model of supply and demand in a segmented market.
Trying to explain supply and demand to a "progressive" (I used your air quotes) is like trying to teach a pig to read. It wastes your time, and annoys the pig.
Yes, I feel so much of the anti market rate supply is just people who have a selective hate of capitalism and think we can easily replace it with better supply systems if we just squash greedy people.
I'd prefer if people just look at results and use our democratic power to incentivize good results.
Best cities, best economies are mixed, a mix of well-regulated private markets and public services.
Also, it’s easy to be leftist if you’re ignorant of economics, and a lot of “educated people” just want to be leftists (whether to make themselves feel better, to fit in with their tribe…)
My feeling too. More supply = lower price. It's not like there are different markets for "regular" and "affordable" housing. (Actually, in many municipalities there essentially are 2 markets, which is a big part of the problem.)
Exactly!!!!! Building "low-income" units does not lower the cost for upper middle class families who don't qualify for those units but still can't find a decent home in their price range. My town recently built over 5 THOUSAND homes!!!! Almost all have been purchased and it leaves the rest available.
Right? If demand is X and supply is X, prices will be stable. If supply is X+1, prices will fall. Are there housing activists who dont believe this?
I suppose a counter argument is that people will move in from other cities.
Yes, sadly, there are many leftist housing advocates - and also many rich otherwise leftist NIMBYists - who don’t believe this. Or at least claim that it’s not true…
I guess some people argue the earth is flat so people will argue anything
Noah, your reference to the Singapore model reminds me of the old NY State Mitchell-Lama housing program in which co-ops were sold on an income-restricted basis with a mandatory 20-year “hold” prior to building “privatization” (which, of course, even where expressly authorized by the statute became a series of political footballs). There has been some local buzz about reviving the program (the statute mostly provided for tax-advantaged rental units built and managed by private developers, with the same 20-year hold, but the co-op model generally has been more successful). Have you ever written about this? And how about that NYC meet-up?
I worked in housing affordability for years and the one thing I wish people understood is that there is no such thing as "affordable housing" affordability is the conflux of the unique properties of the home, the income of the purchaser and the urban land market. So many people think there are "luxury" homes made for rich people and "affordable" homes for regular people. But house prices haven't risen because developers suddenly started building exclusively rich people housing for no reason. Land prices are the key to making housing affordable for regular people again, and that means upzoning and a lot of building.
Isn't a developer focus on "luxury" homes a product of restricted construction, which means that developers have to focus on margin rather than volume?
It's comparable to how the Plaza Accords (which restricted US imports of Japanese cars) prompted the big 3 Japanese carmakers to introduce new luxury brands: Lexus for Toyota, Infiniti for Nissan, and Acura for Honda.
Yes, that is an effect of land restrictions, but most of the affordability problem is that land is too expensive per dwelling unit, due to building restrictions.
But that’s part of the same point!
To an extent, but the cost of construction prohibits the development of actually affordable units, at least out here on the West Coast. We need to import a metric fuckton of temporary foreign laborers, house them in barracks and pay them minimum wage, to build the infrastructure we need, since apparently we can’t do it anymore. We should also scrap the Buy American laws
Surely the big problem on the West Coast is land costs more than labor costs?
It’s both. You see it when they try to build on donated land
And labor costs eventually almost all trade down to high housing costs :(
Which is why we need to resort to temporary labor that doesn’t need regular housing or American wages
Imagine being a housing activist who doesn't want to build houses.
Noah does a good job of setting the terms of the debate, and demolishes one side of it with theory supported with evidence. Hopefully this piece serves as something quick to link to in the future when the topic arises. I appreciate what Noah is doing here, as it’s easy to just not post yet another time about housing, but it’s basically always worth doing. Housing is so important, so the marginal housing blog post is still pretty important relative to a blog post about other issues.
However, there is some soul missing from this piece. Given that Noah’s argument is so obvious, it’s worth explaining why someone like Cook would think the opposite. Cook, like most people, likely has an anti-market bias. This bias makes people more likely to believe unconventional theories about economics, especially the economics of housing.
I submit that, since Noah’s argument was so strong, it would have been worth cutting down a bit and spending large portion of the essay delving into anti-market bias and why it features so heavily in these discussions. That is, I believe, the metaphorical Oz hiding behind the curtain in these conversations.
It's desperation. People are really deep into whatever coping/avoidance/denial/anger/cognitive-dissonance temporary relief they have found, as they were forced year after year to witness cycles of economic crises triggered by markets (nooo!) and greed (aarrggh!) and irresponsibility, and then bailouts, and ... and ... and. (And there's the compounding factor of perception, rise of social media, the political focus on costs - healthcare/education, etc.)
What people are missing is that the process of urbanization is ongoing for hundreds of years, there are still about 45 million people living in rural areas, and even if just a few percent of them moves to cities that's a very serious chunk of demand. Not to mention that the US is probably in the unique situation of having a rich and growing population and brutal internal differences between states (pros and cons of globalization and technological shifts) *and* free movement of people.
There's no holding back the gold rush (of the Internet era).
... and if people want affordable homes they need to do the math. It's not just land, it's the relative lack of productivity increase in face of drastically increased baseline. (Sure we have better handheld tools now, but it still requires months of time to construct even a SFH. Without serious mass-produced/industrialized construction it'll continue to be blood-curlingly expensive to get a crew on site, get materials, and have them make a one-off building.)
The months to build isn’t even the extent of the problem.
Buildings in red states cost less because the land is so expensive in blue cities and because of all the NIMBY red tape in blue cities.
It costs hundreds of thousands of dollars just to navigate San Francisco’s bureaucracy.
http://www.wsj.com/articles/building-permit-delays-choke-u-s-housing-supply-study-shows-1468661402
This is one of the problems we have that could be fixed by government, if the voters voted for it
How much of a role does illegal immigrant labor play in low red-state construction costs?
I suspect not much. I base my supposition on the fact that the majority of the MSM reporters are Blue, as well as the majority of bureaucrats working for Federal agencies tasked with enforcing legal hiring practices. They would be unable to contain their glee at finding such crimes in red-states, so i also suspect they’re putting said states under greater scrutiny.
that would also require MSM reporters to venture out of their safe zone (twitter) and so some actual investigative reporting (working instead of tweeting)
I know LA has tried to unionize construction, but I suspect there is still a lot of work for the undocumented here.
And the cost of construction is half or less, due to nonunion trades and fewer regulations in flyover country. Also, permitting costs tend to be cheaper.
https://www.cbsnews.com/sanfrancisco/news/state-report-slams-san-francisco-glacial-expensive-housing-permitting-process/
It's happening in Minnesota's too. The land where government feels compelled to keep everyone safe from themselves by overregulating... well EVERYTHING! The good thing for me as a construction professional is that all the government red tape keeps the competition low (except for the use high risk of using illegals) as the business is overly complicated and pushes a lot of liability to construction companies who of course need charge enough to mitigate that risk which means the home owners keep paying more for less.... on top of high interest rates and inflation.
What are your suggestions for improving it, so homes become cheaper?
Start with slashing our state government and state and local tax rates by providing less services. Politicians and bureaucrats seem to have a hard time understanding that the cost of government puts a price burden on everything! EVERY program they enact is a luxury priced and inefficient solution. Police, courts, managing property ownership, utility regulation, managing public land and parks, and some base level of temporary emergency services... of course there is more but you get the idea.
Changing residential building codes to a different level of reasonableness by having contractors and some elected officials be a part of the sausage making. There needs to be a better cost benefit analysis. Bureaucrats and leftist politicians make the argument that "we must act because what are a proposing will save lives!!" but while maybe technically correct... at what cost? Lowering the speed limit to 20 miles an hour will save lots of lives as will making swimming in lakes illegal.
Reduce what city, state and local government can regulate in terms of space use and fees charged (why should a development in one part of town be subject to development fees and surcharges to pay for the costs of roads and parks in areas outside of their local community. Local politicians need to have some legal restraints on what they can dictate to keep their favorite developers happy.
Minneapolis and St. Paul and other cities have made a more to allow for higher density by being to build secondary homes in the back yard of existing homes with larger lots but their process to get this done is incredibly slow and takes many extra staff hours (contractor and government) to get projects approved by the builder. Just 7-8 years ago they would let people add a mother-in-law apartment to their home but this is providing some relief albeit not a significant amount.
Your last paragraph lost me a bit with some typos. It seems like Minneapolis is doing a better job building than the rest of the country: https://www.pewtrusts.org/en/research-and-analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-blueprint-for-housing-affordability
On the low engagement levels (the guy showing up at an "anti gentrification" protest on a lazy Saturday afternoon, let's say), yeah it's desperation and the very human impulse to put a face on the impersonal forces affecting you.
But on an high engagement level (let's say, NGO workers), it's malice and a rationalization for extortion. Those guys know very well that the more red tape there is, the more the tape cutters can demand. So every developer now has to commission them a sustainability study, donate to their cause, give their friends jobs, build (on renters' dime) tons of unrelated stuff if they want to build anything. They are the troll demanding a toll on the bridge, obviously they'll fiercely oppose any proposal to make bridge crossing easier!
"I submit that, since Noah’s argument was so strong, it would have been worth cutting down a bit and spending large portion of the essay delving into anti-market bias and why it features so heavily in these discussions. That is, I believe, the metaphorical Oz hiding behind the curtain in these conversations."
I think of it as zero-sum thinking being intuitively persuasive, especially to low-trust voters and elected officials. "If someone's making millions of dollars, it's because they're ripping people off." If you have zero-sum assumptions, it's intuitive that the more developers are making, the worse off everyone else becomes. They're strip-mining or clear-cutting the neighborhood by turning cheap housing into expensive housing, just like a mining or logging baron. https://morehousing.ca/zero-sum
I try to head off this line of argument by starting with: "People want to live and work here, and other people want to build housing for them." For low-trust voters, I also point out that the city of Vancouver doesn't just regulate new housing like a nuclear power plant, it also taxes new housing like a gold mine. From 2011 to 2020, the city extracted $2.5 billion (Canadian) in supposedly voluntary "Community Amenity Contributions." https://morehousing.ca/cac-explainer
At the local level, I think hyperlocal opposition to specific projects is primarily driven by fear of the unknown. https://morehousing.ca/conservatism https://morehousing.ca/cooperation
>it’s worth explaining why someone like Cook would think the opposite. Cook, like most people, likely has an anti-market bias.<
I don't know anything at all about the personal circumstances of Cook. Or Welch. But in my experience a suspiciously high percentage of the most prominent NIMBYists are incumbent property owners, or perhaps have a rent-controlled apartment. Thus they *personally* feel they don't need housing abundance, and may well possess a financial incentive (as well as a political incentive) to oppose it.
It's easy to talk like a Red Guard when one's *own* life won't be negatively impacted by Marxist economics.
I suspect that this is the case on the broader debate people are clearly self-motivated. But cook is presenting an almost intellectual argument against private houses. That to me seems like there is at least a shadow of a serious reason for his position.
I might make an argument by citing that markets are better which I would call a market-bias. If someone presents an intellectual argument against that position, then I would guess that there is an opposing bias at play aside from just self-interest.
I don’t think these people are actually anti market when you get down to it. They like having a choice of cereal at the grocery store and use coupons. They still look for a deal when buying/renting. And so on.
I'm not sure how you're really supposed to build "affordable" below market rate housing anyways. Crappy appliances and materials? Those can easily be replaced. Lower square footage? Just discourages families.
Build enough and it all gets more affordable.
Cut red tape:
http://www.wsj.com/articles/building-permit-delays-choke-u-s-housing-supply-study-shows-1468661402
It usually means either subsidies from some level of government, or else IZ, which adds affordable units to a building and raises the rent on the other units to pay for it.
IZ has obvious problems if overapplied because you'll run out of anyone to pay for the above market units. Cities like this problem because it means they can ban housing but make it sound like they want to do something.
NYC uses lotteries to give people the opportunity to move into new constructions for less. The units themselves aren’t crappier
Which in it's self is extremely corrupt!
Yeah, Seattle just has waiting lists
Unlimited FAR and automatic approval even on land zoned for SFH, as long as the units will be available for rent for less than 20% of median city income.
This you can get the true market price (without onerous regulations), while undercutting the activist crowd.
Basically a more radical version of this
https://calmatters.org/housing/2024/02/affordable-housing-los-angeles/
I really liked the Lamborghini/Honda example, but perhaps another analogy to really drive home the point, if a bit inexact, is the one that Bryan Caplan uses re: immigration; if you have a room full of tall people and a bunch of short people enter the room, the average height in the room will go down, but nobody in the room is made shorter.
Filtration immigration works in the opposite way in the job market though. You are being filtered out of your job by someone taking a lower wage...
By that logic all Americans would have been unemployed since some time in the 1880's.
You mean the logic that labor markets follow the rules of supply and demand? More labor supply can have an induced demand effect but it's unlikely to apply unfiormly at the lower wage levels when high numbers of low skill labor immigrates to a country. Which means more competition for labor which can have a depressing effect on wages. Do you have anything empircal to add?
There is definitely a depressing effect on wages. Many basic IT jobs pay terribly because so many Indians have immigrated to the US and driven wages down to nothing for skilled jobs. Similarly, Trump's anti-immigrant policies probably raised wages for low-skilled workers (no research about this yet). Yet, the US has absorbed an insane number of immigrants for centuries, and our wages are still decent. The best wage growth did occur when we had a hard 250k cap on immigration, but we could probably take in one to two million skilled immigrants a year without issue. Furthermore, with such low birthrates, we really NEED the labor, especially in regions where Americans refuse to live in sufficient numbers. Of course, ending public housing and housing subsidies in large cities could fix this (offer housing spots to those in public housing in NYC, Boston, San Fran, LA,...., only in areas with tight labor markets), but this will never happen. It is a shame, because it would be very good for the people living in public housing.
My primary point was to say that immigration does more than simply crowd the labor market. Immigrants really do start more businesses and their children are more ambitious. I can agree that limiting unskilled immigration would probably be a great idea, but there is no interest in doing that. Furthermore, even if we changed the rules, plenty of rich people are obsessed with keeping our border to the South open (such as Jeff Bezos' ex-wife). We could fix most of our problems legalizing drugs, banning loitering in downtown areas with physical punishments (whipping, banishment, forced detox back in the place of their birth,...), and sealing our southern border with strict rules allowing only skilled immigrants in, but there are too many interests who are against this. There is too much money in drugs. Too many people seem like homelessness (always rich people, never anyone who has actually been homeless before), and there are all these people who would rather make it ever more difficult for university graduates to migrate here, but love large numbers of unskilled workers coming in to depress the wages of the poor. So-called "liberal" companies such as Amazon and Starbucks ruthlessly fighting unions is a perfect example of this. The relentless destructions of public education (destroying math education, eliminating proven methods for high-paid snake oil, making schools as unpleasant for young minority men as humanly possible,...) is part of a huge plan by rich white ladies to destroy this country. Yes, Chinese and Russian intelligence are promoting this, but actual Americans are doing their bidding.
In my opinion, out best option is to outsource our government and rule-making to Singapore. We can easily pay them a small fortune to manage our domestic affairs. We clearly cannot do it anymore.
I recently saw that illegal immigrants are 32% service work, 15% construction and only like 4% farm/crop work. Not really sure there's political will to expand immigration for areas of labor need while significantly cutting down illegal immigration beyond a lot of talk.
The point about more immigration creating a demand curve shift for more labor would fall under Noah's point about building housing creating a demand inducement, although I suspect the effect is much greater for immigration's effect on labor demand than for new housing built effect on housing demand. Mexicans are really into creating new businesses.
Personally the education policy I favor is a track system where kids who are falling behind learn some skills that will help them economically and stop wasting their time on academics that won't do them much good. Germany has such a system.
Yes, Germany's system has much to admire. The entire idea that everyone should go to university is foolish and cruel. The US also does a terrible job nurturing its best and brightest.
As for creating new businesses, from the stat's I have seen, Asian immigrants are the most prone to entrepreneurship. Where I live in Chicago, there are Asian businesses everywhere doing everything (so many food items that were imported when I was a child are now manufactured locally, from noodles to traditional clothing).
Sounds like developer propaganda to me.
Thanks for doing such a thorough job of explaining this issue. Now instead of explaining it over and over, I'll just start linking this piece. You did a good job breaking this concept down so most people should be able to understand unless their genuinely don't want to understand it. Not much you can do about those people.
Thank you!!
Yes, very helpful and useful for discussions with many many people who haven’t had exposure to economics, etc. TY
I checked Google Maps this past week, and I see that western Geary Blvd remains undeveloped starting in Japantown.
I think YIMBYs should quit complaining about zoning in Pacific Heights — clearly that comes from class anger — and focus on solutions to the problem that will make EVERYONE happier.
I think they should direct all of their effort to upzoning Geary. Make it all six stories high, with shops on the first floor — including Japantown.
I suspect this would generate 50,000 new units in San Francisco.
With a dedicated express bus lane, residents could get downtown from Ocean Beach in twenty minutes.
Once this has been demonstrated, other boulevards can be targeted and improved.
It certainly would be nice if Japantown looked like 2024 Japan and not 1950 Japan.
On another note, SF needs Oakland to stop being a basket case.
Oakland is a 15-minute BART ride away. Lake Merritt and the Oakland Hills are delightful. The weather is better in Oakland than SF. The views of SF at sunset make East Bay residents fall in love every night.
Oakland needs functional police, 100,000 more apartments, and job training programs for those struggling there.
The Bay Area needs thousands of electricians to transition to all-electric appliances and vehicles, for example — not to mention carpenters to build all the needed homes. There should be opportunities to turn people’s lives around.
Many of Oakland's problems with homelessness are due to SF kicking out many of its homeless people in the last ten years (Prop Q), many of whom ended up in Oakland. It is too poor a city to manage the homeless population in the way neighboring cities do so the issue persists. Same with crime- there's not enough money to support an effective police force. Oakland has been royally screwed by SF's inability to build enough housing resulting in huge increases in property prices which has further fed the homelessness issue. Also Oakland is also one of the few cities in the Bay Area that has met its state-mandated quotas for market rate housing, so while I wouldn't complain about 100,000 more apartment, cast your blame at other local cities for that one. There is a lot of criticism that can be deservedly directed at the city of Oakland, but somehow blaming it for SF's problems make no sense. SF can take a long look in the mirror for that one.
I’m not blaming Oakland for SF’s problems. I’m criticizing it, because it should be overflowing with new residents.
While it is technically a separate city, it is super close to SF and right in the center of the Bay Area, making it a vital part of the metropolitan community. Everyone needs Oakland to be doing better.
I’m glad to hear it is building lots of new units. But that should be generating lots of money for the city to pay for police and homeless services.
I went out to dinner and drinks a year ago in Downtown Oakland, and it was just nigh of a war zone, with streets blocked off and cops parked everywhere with their lights going and overhead street lamps out. Everyone was carousing and scuttling about in the dark. It seemed occupied. It was frightening, not welcoming.
To be fair, there are (rare, but widely publicised) instances of developers here in Australia knocking down existing apartment blocks to replace with apartment blocks that contain fewer, but more luxurious apartments.
I don’t think this is common enough to be a substantive problem, but it is in some cases a PR problem for YIMBYism.
I think this has occasionally happened in NYC too, but it's rare. In any case, Japan has regulations against this, which we should copy.
IIRC, California has "no net loss" rules which make it illegal to demolish deed-restricted / covenant-affordable units without replacing them with equivalent units in the new building. (And I think there's also a right of first refusal where the previous occupants of the demolished units, if they had been there a certain length of time, get a shot at renting the new units.)
What are the Japanese regulations against that?
I know that it is standard for Land Readjustment projects that replace a low rise neighborhood with luxury high rises to offer pre-existing residents heavily discounted units in the new development, but I was under the impression this was done out of a combination of needing popular buy in to go through with the LR process, and reducing the scandal risk.
I expect that the new apartments would have to be EXTREMELY expensive in that case (or the old apartment block in a truly dilapidated state), as it's the only way the developer would be able to eat the cost of the torn-down apartment block and still come out with a profit at the end of it.
I've said this once on Twitter too: IMO, the activist class hates market rate housing in part because they don't want Yuppies who don't share their worldview and tastes in their cities.
They want themselves and their friends to be the 'trendsetters' of their cities and fear displacement from other yuppies.
I think the “market” calls to the minds of Leftists things like laissez-faire capitalism, pre-unionized labor markets, unregulated environmental pollution, etc.
If you want to help bring them around, explore these associations and separate them from your intention.
How about laissez-faire capitalism and more unionized labor? It worked very well in the 1950's and 1960's. Remember the national interest? We need more old fashioned nationalism, but that is not cool. We need more housing, more unions, and more trust. I fear we will only be able to pick one. The saddest thing is, Florida is booming and it is sweaty, hurricane-prone and not very sophisticated. Think of what California could be if people would just get out of the way.
The best line is the final line “ es, your city needs to build more market-rate housing in order to become more affordable. So build more of it.”
This recent post by Joseph Politano supports your case: https://www.apricitas.io/p/new-zealands-building-boomand-what
Thank you for writing this. I’ve been saying this on Twitter and NY Times comments sections for years. The fact that developers love building luxury dwellings is one of the main arguments liberals used against building more.
Could you get back on Threads? I’ve been off xitter for a few weeks and it’s made a refreshing difference
As soon as it becomes an important news platform!
You are the news sir 🫡
Maybe the 30% drop in Twitter users you’ve remarked upon is related to Threads…
No I didn’t like threads when I first got on there, but twitter became exhausting with the sheer number of altright bozos. It was just bad for my mental wellbeing, feeling so much freer now.
I have over 5,000 followers on Threads.
I’ve even started seeing trolls on there!