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Category Zoning

The banks aren’t beating first time buyers – It’s the NIMBYs.

A few weeks ago the Times reported that Lloyds Banking Group had purchased 45 new homes to let in Peterborough. This is part of a plan for Lloyds to own 50,000 homes by 2031. Given the median home in the City is now worth over 7 times the annual earnings of the typical resident, it is understandable why people would be upset. Indeed, why should a huge corporation be able to buy up all the properties in the City, when its own residents can’t afford to buy a new home there? However, this outrage is misdirected. Lloyds buying a few thousand homes over a decade will do nothing compared to the astronomical effect that NIMBYism and our planning system has had on house prices.  The reason for this lies in a piece of legislation called the Town and Country Planning Act. This law abolished the automatic right to develop regulatory compliant housing, and added an additional stage of planning permission. As a result, it became mandatory for one to require state permission to build on one’s own land.  Over the years this system has morphed into an almost quasi-right to block others’ construction giving residents the ability to stop others from moving into their area. This chiefly benefits homeowners – the people who engage the most in the planning system – since new houses will slow down the speed their own home’s value increases. The effect is that almost no houses get built. For example, in London during the 2010s we built around 25,000 houses per year; in the 1930s before the Planning Act was introduced that number was 61,500.  Sadly housing just behaves like any other scarce asset. When there’s a shortage the sellers have more bargaining power and consumers are forced to pay more to buy the goods. […]

Financialization and housing costs

One common explanation for high rents is something called “financialization.” Literally, this term of course makes no sense: any form of investment, good or bad, involves finances. But I think that the most common non-incoherent use of the term is something like this: rich people and corporations have decided that real estate is a good investment, and are buying it, thus driving up demand and making it more costly. But if this is true, to blame financialization for high rents and sale prices is to confuse cause and effect. If real estate prices weren’t going up, it wouldn’t make sense to buy buildings as investment. Thus, high housing costs cause financialization, not vice versa. In fact, if government did not restrict housing supply through zoning, financialization would be a force for good. Why? Because instead of buying existing buildings, people with money might be more willing to build new buildings for people to live in- which in turn might hold housing costs down. PS I am running for Borough President of Manhattan, and am gradually creating a Youtube page that addresses anti-housing arguments in more detail.

Local iniquity

There was an interesting article in the New York Times magazine this week on the rise of extended stay hotels, which specialize in renting to a group within the working poor- people who have the cash for weekly rent, but cannot easily rent traditional apartments due to their poor credit ratings. This seems like a public necessity – but even here the long arm of big government seeks to smash affordability. The article notes that Columbus, Ohio “passed an ordinance that subjects them to many of the same regulations as apartments” because “The hotels had an unfair competitive advantage.” In other words, the city is basically rewarding landlords for turning out bad-credit tenants, and punishing the hotels who seek to house them.

The Duplex: Gateway Drug to Urban Density

duplex

After over a century, Berkeley, California may be about to legalize missing middle housing – and it’s not alone. Bids to re-legalize gradual densification in the form of duplexes, triplexes, fourplexes, and the like have begun to pick up steam over the last several years. In 2019, Oregon legalized these housing types statewide while Minneapolis did the same at the city level. In 2020, Virginia and Maryland both tried to pass similar legislation, though they ultimately failed. This year, though, Montana and California may pick up the torch with their own state bills (even while the cities of Sacramento and South San Francisco consider liberalizing unilaterally alongside Berkeley). Allowing gradual densification is an absolutely necessary step towards general affordability. Supply, demand, and price form an iron triangle–the more responsive we can make supply to demand, the less price will spike to make up the difference.* What I really want to focus on here, though, is less about policy and more about political economy. I believe allowing medium-intensity residential development could make additional reforms easier to achieve and change views around development going into the future. We Love What We Know More often than not, I think a generalized status quo bias explains a lot of NIMBYism. Homeowners are most comfortable with their neighborhoods as they are now and are accustomed to the idea that they have the right to veto any substantial changes. Legalizing forms of incrementally more intense development could re-anchor homeowners on gradual change and development as the norm. The first part of the story is about generational turnover. If the individuals buying homes today–and the cohorts that follow–are exposed to gradually densifying neighborhoods in their day-to-day, they’ll anchor on that as what’s normal and therefore acceptable. Moreover, if we’re debating whether to rezone an area for mid-rise […]

California Housing Reform: 2021 Edition

Current events being what they are, I’m happy to be writing about something positive. Once again, we’re getting an ambitious housing reform package in the California legislature. The various bills focus on removing obstacles to new housing and are a sign of the growing momentum Yimby activists have built up over the last few years.  The permitting process for new housing in California is the bureaucratic equivalent of American Ninja Warrior. Localities use restrictive zoning and discretionary approvals to block new construction. When faced with state level oversight, California cities have historically leaned on bad faith requirements to ensure theoretically permitted and approved housing remains commercially infeasible. And as if that weren’t enough, “concerned citizens” can use the ever popular CEQA lawsuit to kill projects themselves (independent of direct involvements from electeds).  This year’s housing package helps reduce the difficulty of getting a project through the gauntlet. Still an obstacle course, but with a few less water hazards and a slightly shorter warped wall.  Still suboptimal, but directionally correct in a very big way. There are several pro-supply bills in the package, but two are especially worth calling out.  SB 6 allows for residential development in areas currently zoned for commercial office or retail space. The bill would also create opportunities for streamlined approval if some portion of a proposed project site has been vacant. This last bit seems to be intended to encourage redevelopment of dead malls and similar retail heavy areas that could be better put to use as housing.  SB 9 allows for duplexes and lot splits in single family zones by right. This type of missing middle housing could – at least in certain parts of California – be new housing that’s less expensive then existing stock; that’s a great outcome from a policy perspective, but […]

Why Houston Isn’t An Argument for Zoning

Someone just posted a video on Youtube using Houston, Texas as an argument in favor of zoning. The logic of the video is: Houston is horrible; Houston has no zoning; therefore every city should have conventional zoning. This video and its logic are impressively wrong, for several reasons. First, I’ve been to Houston and most of what I saw looks nothing like the video – there are plenty of blocks dominated by houses and the occasional condo. Second, most of the photos in the video could have easily happened in a zoned city, because one block in a neighborhood could be residential and the next block could be commercial, so the commercial or industrial activities can be easily viewable from the residential areas (not that anything is wrong with that). Third, most other automobile-dependent cities aren’t any prettier than Houston; a strip mall in Houston doesn’t look any worse than a strip mall in Atlanta. Fourth, it completely overlooks the negative side effects of zoning as it is practiced in most of the United States (many of which have been addressed more than once on this site). Typically, residential zones are so enormous that most of their residents cannot walk to a store or office. Moreover, density limits everywhere limit the supply of modest housing, thus creating housing shortages and homelessness. Finally, Houston’s negative characteristics are partially a result of government spending and regulation; as I have written elsewhere, that city has historically had a wide variety of anti-walkability policies, so it is far more regulated than the video suggests.

What’s a stickplex?

  A stickplex is a dense residential structure or group of structures built with inexpensive materials and techniques, most commonly wood. Stickplexes use 2,500 square feet of land per unit or less. Stickplexes have per-square-foot construction costs roughly in line with detached houses due to avoidance of costly features like elevators and more expensive construction methods. This type of housing includes features of both multifamily housing and single-family housing. They economize on land while avoiding the high construction costs of large multifamily buildings. Relative to high-rise housing, stickplexes can cost one-third less to build on a per-square-foot basis. And because they use a relatively small amount of land per unit, their land costs are lower than the typical detached house’s land costs.  Stickplexes versus missing middle Daniel Parolek coined the term “missing middle” and emphasizes that missing middle “is compatible in scale with single-family homes.” He advises caution about permitting three-story buildings, while a stickplex can be three stories or taller. A duplex on a 6,000 square foot lot would fit the definition of missing middle. But it would not be a stickplex since it would use more than 3,000 square feet of land per unit. Missing middle housing has found traction politically. Policymakers who have passed zoning reforms from Oregon to Nebraska to Durham have used the term to describe the type of construction they would like to see. Minneapolis Council Member Lisa Goodman described the city’s reform to permit triplexes in language similar to Parolek’s: “I like to refer to it as, ‘the box can’t change,” she said. “All that can change is how many families can live within the existing box.” However, in Minneapolis, questions remain about how feasible triplexes will be to build in permitted building envelopes. Zoning rules, including floor area ratio limits of less than one […]

Are Dollar Stores Wiping Out Grocery Stores?

I had always thought dollar stores were a nice thing to have in an urban neighborhood, but recently they have become controversial. Some cities have tried to limit their growth, based on the theory that “they impede opportunities for grocery stores and other businesses to take root and grow.” This is supposedly a terrible thing because real grocery stores sell fresh vegetables and dollar stores don’t. In other words, anti-dollar store groups believe that people won’t buy nutritious food without state coercion, and that government must therefore drive competing providers of food out of business. Recently, I was at the train stop for Central Islip, Long Island, a low-income, heavily Hispanic community 40 miles from Manhattan. There is a Family Dollar almost across the street from the train stop, and guess what is right next to it, in the very same strip mall? You guessed it- a grocery store! * It seems to me that dollar stores and traditional grocery stores might actually be complementary, rather than competing uses. You can get a lot of non-food items and a few quick snacks at a dollar store, and then get a more varied food selection at the grocery next door. So it seems to me that the widespread villification of dollar stores may not be completely fact-based. Having said that, I’m not ready to say that my theory is right 100 percent of the time. Perhaps in a very small, isolated town (or its urban equivalent), there might be just enough buying power to support a grocery store or a dollar store, but not both. But I suspect that this is a pretty rare scenario in urban neighborhoods. *If you want to see what I saw, go on Google Street View to 54 and 58 E. Suffolk Avenue in Central Islip.

Why “Move to Boise” Is No Answer

One common argument raised by NIMBYs is that zoning is not harmful to humans, because people priced out of expensive cities can always move to a cheaper one. But a recent story illustrates why this argument is misguided: the story discusses increased housing prices in small cities like Boise and Grand Rapids. When people are priced out of expensive, they move to cheaper ones, thus increasing demand for housing in the cheaper cities. In turn, this causes housing prices to increase in the cheaper cities. In a nation with lots of restrictive zoning, you can’t escape high rents because the high rents will follow you wherever you go. To take the argument further: some people justify local control over zoning by saying that what city X does is its own business. But when city X does things that harm city Y, its policies become the business of the state and federal governments. If city X has restrictive zoning, its policies raise housing costs in whatever city takes in X’s rent refugees- so at that point, a higher level of government should step in.

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