Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124

Category housing

Obama administration pushing dissolution of Fannie and Fredie

Big news out of Washington: Fannie Mae and Freddie Mac – which many (including me) think were at the heart of the financial collapse, and currently have some stake in the vast majority of post-crash mortgages – may be getting wound down soon. This NYT is reporting that the Obama administration may be releasing three plans at the end of the week, and the preferred (!) one is to shut down the two lenders entirely. These lines also stood out to me: Representative Scott Garrett, the New Jersey Republican who is chairman of the House subcommittee that deals with housing finance, on Monday told a mortgage conference in Florida that the government should leave the mortgage business. “I believe that, if there is to be any government assistance to homeownership, it should be limited to first-time homebuyers or rental housing,” Mr. Garrett said. Note that “rental housing” isn’t “homeownership” at all. Personally I think it’s a good idea to get the government out of encouraging homeownership entirely, on the grounds that homeowners are more likely to be in the perverse position of wanting the cost of housing – a basic expense for everyone – to go up, resulting in pervasive government interventions like anti-density zoning and blowing up the housing bubble. But even beyond this indirect sprawl promotion, they have inherent anti-density biases like their refusal to fund small mixed use projects.

Why I don’t like Inclusionary Zoning

Inclusionary zoning is a hot item among urban planners today, and is often seen as a solution to residential segregation and high housing costs. Exact implementations vary, but the general idea is that developers of multi-unit housing projects are encouraged to set aside a certain percentage of their units, generally ranging from 10-30%, but sometimes even more, as “affordable housing” units. In other words, some proportion of the units are under rent controls to the point where they must be rented (or sold) at a loss by the developer. Sometimes the schemes are voluntary and give developers density bonuses, sometimes developers can pay a fee instead of setting aside units. The exact proportion of units that must be set aside and loss developers take on each unit also varies. As you can imagine, I’m not in favor of this system, but it’s a complicated issue, so this is going to be a long article. Inclusionary zoning is a relatively new concept, first implemented in the 1970s, to combat the growing problem of residential segregation of classes and races, whose origins are interesting and, I think, germane to the conversation. I generally see two explanations given by proponents of IZ for why segregation and unaffordability arose in the first place: market forces and zoning (or, as they call it, exclusionary zoning). Quoteth a law review article: Affordable housing has always been a problem in the United States. Cities and towns originally engaged in forms of discrimination through exclusionary zoning to exclude low-income residents. Of course, this is only true if your history begins in 1930. But from the mid-18th century to the turn of the century, America underwent a tremendous urban population boom fueled by railed transit and a massive immigration wave from Europe, and the housing stock adjusted just fine […]

This is how gentrification happens: Northwest DC and the height restriction

Lydia DePillis wrote the Washington City Paper’s cover story on the case for Congress overturning DC’s height limit, which should be very familiar to readers of this blog. It’s got some interesting history in it (DC’s height limit was apparently influenced by George Washington’s personal aesthetics, despite the fact that he never governed from the city), but the part that was really interesting to me was the part where she discusses what the new limitations should be. It’s not politically practical to advocate for lifting the limit without reservations, as we here would like, and there are the usual caveats and equivocations (“What if additional height were granted on a competitive basis, and awarded for the best design?”). But the part that really stood out to me was this graphic (click on the image and scroll to the bottom of the linked page to see a bigger version), outlining where Lydia thinks the height restrictions should be lifted: Anyone familiar with DC geography will notice that the area most insulated from change – Northwest DC – is the richest part of town, full of desirable white neighborhoods. The areas where DePillis advocates lifting the height limit – neighborhoods east of the Anacostia River figure prominently in the graphic – are far blacker and poorer than the rest of DC. Sure, there are pretty buildings in NW and a lot of ugly ones in Anacostia, but there are also beautiful homes off of Benning Road and shitty ones in Burleith. (Which, I should add, could desperately use some taller buildings, given its proximity to the perpetually housing-strapped Georgetown University and its rather ugly architecture compared to Georgetown proper.) This tactic of upzoning poor black neighborhoods while leaving white neighborhoods unchanged is very common, and I realize that Lydia is just trying […]

The economics of redevelopment and the shape of socialist cities

Earlier today I read an article by Daniel Garst about Bejing’s awkward population distribution that reminded me of a journal article about the general shape of socialist cities that I read a while back. Garst talks about Beijing being a “circus tent” when it comes to density, with population density increasing as you travel away from the city center, in contrast to the “pyramid” style of most cities, with high densities in the center and lower densities around the periphery (see chart for a visual representation). This immediately made me think of an article by Alain Bertraud and Bertrand Renaud called “Socialist Cities without Land Markets,” where they describe exactly this phenomenon, and explain it as a failure of administrative urban planning. Here’s an excerpt: As their economy and their population grow, cities expand through the progressive addition of concentric rings, similar to the growth of trees in successive seasons. New rings are added to the periphery as the city grows. With each ring, land use reflects the combined effects of demography, technology, and the economy at the time when the ring was developed. Wile this organic incremental growth is common to all cities, in a market city changing land prices exert their pressure simultaneously in all areas of the city, not just at the periphery. Land prices exert a powerful influence to recycle already developed land in the inner rings when the type and intensity of the existing use is too different from the land’s optimum economic use. Thus, changing land values bring a built-in urban dynamism as ceaseless variations in land prices put a constant pressure on the current uses of land and trigger changes to new activities and/or densities. Under the administrative-command economy, the absence of land prices eliminated the main incentive to redevelop built-up areas by […]

Darien, CT gets sued by the DOJ over inclusionary zoning

The New York Times has an interesting article about a Justice Department probe into Darien, CT’s local inclusionary zoning rules. Inclusionary zoning means essentially that multi-unit developments have to offer a portion of the project as “affordable housing,” which invariably means charging below-market rents. We here at Market Urbanism oppose it because it essentially acts as a tax on dense development that’s not levied on the sort of one-off developments that are usually large lot, detached houses, which discriminates against the very people that it purports to be helping. While the people who live in the units certainly benefit from the too-good-to-be-true rents, every other poor person loses out as their housing costs rise. But unfortunately, the DOJ doesn’t appear worried about inclusionary zoning generally, but rather is interested in the “priority populations” provision, which determines who gets the low-rent housing, which is in high demand because of the artificially low price. Currently the town favors current residents, which the Justice Department is right to find discriminatory, since the well-healed New York City suburb is overwhelmingly white. While I’m always glad to see inclusionary zoning challenged, the focus on the priority populations provision strikes me as a bit narrow-sighted – they should be concerned about inclusionary zoning itself reducing affordable development. And in fact, the New York Times seems to recognize this, as they quote a developer at length as she describes the difficult of developing anything affordable in Darien. Sorry for such a long quote, but it’s very interesting: Inclusionary zoning was one strategy for accomplishing that goal. The policy hasn’t been used yet, as no qualifying developments have been approved since it went into effect in May 2009. The federal inquiry came to light last month, when Christopher and Margaret Stefanoni, a local couple who have sought approvals […]

Rothbard the Urbanist Part 5: Diversity and Discrimination

This 5th installment of the Rothbard Series dovetails well with the most recent post on segregation by guest blogger, Stephen Smith, as well as a post back in July over at Austin Contrarian.  If you haven’t kept up with our discussion, Murray Rothbard’s classic For A New Liberty can be downloaded free from Mises.org as pdf, web page, and audio book, and you can read the first four parts: Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion Rothbard the Urbanist Part 2: Safe Streets Rothbard the Urbanist Part 3: Prevention of Blockades Rothbard the Urbanist Part 4: Policing In the comments of the first post of this series on public education’s roll in segregation, the discussion delved into the topic of discrimination.  Bill Nelson and I shared our thoughts on discrimination by co-op boards, while another guest inquired about my statement, “elitist institutions often exclude others to their own detriment”  (Rothbard’s words further below make a similar case)  I also referred the guest to a great article on the economics of discrimination and a snippet from an article discussing how private streetcar companies fought discrimination: The Market Resists Discrimination The resistance of southern streetcar companies to ordinances requiring them to segregate black passengers vividly illustrates how the market motivates businesses to avoid unfair discrimination. Before the segregation laws were enacted, most streetcar companies voluntarily segregated tobacco users, not black people. Nonsmokers of either race were free to ride where they wished, but smokers were relegated to the rear of the car or to the outside platform. The revenue gains from pleased nonsmokers apparently outweighed any losses from disgruntled smokers. Streetcar companies refused, however, to discriminate against black people because separate cars would have reduced their profits. They resisted even after the passage of turn-of-the-century laws requiring […]

Do We Need “New Urbanism” To Fix “Unwalkable Sprawl”?

At Volokh, Ilya Somin discusses a recent piece in the American Prospect (also linked from here) that favors “New Urbanism” to prevent “unwalkable” sprawl.  Somin favors “voting with your feet” as the preferred method of satisfying location preferences.  Unfortunately, voting options have been whittled down through government interventions: To the extent that we do need to enable more people to live in densely populated urban areas, it’s far from clear that government planning is the best way to achieve that goal. We can better achieve the same objective by cutting back on planning rather than increasing it. In many large cities, the cost of housing is artificially inflated by restrictive zoning laws, which tends to price out the poor and some middle class people. In the suburbs, as Adler points out, zoning policies sometimes artificially decrease density, for example by forbidding "mixed use" neighborhoods where commercial and residential uses are in close proximity to each other. The ultimate question is whether we should trust deeper interventions into land use to fix the complete failure of past interventions.  Long before “New Urbanism” was the progressive utopian ideal, sprawling, auto-friendly and trolley-free, single-family suburbs was their “American Dream”.  But, progressives quickly forget their history when it turns out their past visions created something they are now supposed to hate: Like previous generations of planners, the new urbanists often ignore the diversity of human preferences. Some people do indeed like high-density "walkable" environments. Others prefer to have more space and more peace and quiet. Neither preference is inherently superior to the other. To paraphrase a popular liberal slogan, we should celebrate diversity, not seek to use urban planning to force everyone to live the same lifestyle whether they want to or not. The post evokes the typical variety of comments ranging from standard […]

Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion

I’ve been meaning to address the public education system’s complex role in land use patterns, and found that Murray Rothbard does a better job in his 1973 manifesto, For a New Liberty than I ever could.  In summary, locally-funded public education is an engine of geographical segregation, which encourages flight from urban areas, and was a driving motivation for the popular acceptance of exclusionary zoning in newer suburbs.  As a result, wealth is consistently concentrated geographically, and housing affordability is at odds with these restrictions of supply intended to exclude poorer people from draining the property tax base. Here’s a paragraph from the chapter on education: The geographical nature of the public school system has also led to a coerced pattern of residential segregation, in income and consequently in race, throughout the country and particularly in the suburbs. As everyone knows, the United States since World War II has seen an expansion of population, not in the inner central cities, but in the surrounding suburban areas. As new and younger families have moved to the suburbs, by far the largest and growing burden of local budgets has been to pay for the public schools, which have to accommodate a young population with a relatively high proportion of children per capita. These schools invariably have been financed from growing property taxation, which largely falls on the suburban residences. This means that the wealthier the suburban family, and the more expensive its home, the greater will be its tax contribution for the local school. Hence, as [p. 133] the burden of school taxes increases steadily, the suburbanites try desperately to encourage an inflow of wealthy residents and expensive homes, and to discourage an inflow of poorer citizens. There is, in short, a breakeven point of the price of a house beyond which a […]

Undead Ideas: Rent Control

In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it.” (Assar Lindbeck, The Political Economy of the New Left, New York, Harper and Row, 1972, p. 39) Never underestimate opportunistic politicians when they smell blood in the water.  With housing prices already falling, politicians want to be seen as champions of the little guy and do something for “affordability” with one side of their mouth, and force housing prices to “recover” with the other.   With the economy in disarray, even widely discredited schemes such as rent control are making a comeback in politician’s playbooks of idiotic moves that please certain constituents. Rent control was implemented twice on a national scale in the United States.  Rents were first frozen during the difficult years of World War II, and frozen again in 1971 as part of President Richard Nixon’s wage and price controls intended to curb inflation.  After Nixon’s wage and price controls expired, many cities kept some form of rent control intact. Could President Obama resurrect an undead Richard Nixon to implement […]

My Article at FreePo on the Resurrection of Rent Control

The Orange County Register’s new site, Freedom Politics just posted an article I wrote for them on rent control.  Here’s a snippet: In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it." The article is part of a series called “Undead Ideas” and I’m told the article is supposed to feature a humorously hideous illustration of a zombie Richard Nixon, which is the reason for the Nixon joke.  I will share the illustration once it is public.     Could President Obama resurrect an undead Richard Nixon to implement nationwide rent control in the face of the impending stimflation?  There’s a 93% chance his economic advisors wouldn’t let him do such a thing.  However, Nixon’s undead corpse has been spotted mumbling "I am now a Keynesian" in places like California and New York City where bad ideas never seem to die. I actually thought of the word “stimflation” on my own, but I checked and learned I wasn’t the first to think of it.  The domain stimflation.com had just been reserved last week… […]

Trending now

Zoning kills dreams
YIMBY should not become a political party
War worker housing of last resort: Chicken coops?
Why didn’t people sleep on the streets of US cities during World War II?
Mini-review: Chapter 1 of Wonder City
An Anti-Development Manifesto