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Welcome Michael Nahas

Market Urbanism is proud to welcome Michael Nahas as a new writer who will bring an Austin perspective to the blog. Michael’s Twitter handle is @MichaelDNahas, and he also blogs at City Econ. Here’s a short interview we did over email. Emily: How did you become interested in cities? Michael: A coincidence back in 2018 got me to look into cities. I had read a pop science article about how zoning policy in San Francisco was driving up the price of homes. The article stuck with me, because I’m fascinated by economics and it was so strange. I had always rented and didn’t know how regulated housing was. Then, at a party, I happened to mention this curious article in a conversation. The person I mentioned it to was Josiah Stevenson, an influential member in AURA, Austin’s YIMBY organization. He quickly recruited me into AURA and got me to look at cities. And once I started looking into cities, I wondered why economists haven’t studied them more! Cities are where they gather. They’re where information and goods are gathered. In cities, the biggest economic decisions get made and the most goods trade hands. Fission reactors work by bringing refined uranium into a tight space, causing an energy-producing chain reaction. Likewise, when you bring people into a tight space (with the right conditions), it causes the bright glow of economic activity. I believe that making that economic glow brighter will improve my life and everyone else’s life too. That’s what made me so interested in cities. Emily: What cities have you lived in? Michael: Ordered by the time I’ve spent as an adult: New York, Austin, Charlottesville (Virginia), Minneapolis, London (UK), Berkeley, and Nijmegen (NL). I have a great love for Philadelphia, having grown up an hour away, but I never […]

The fallacy of total rent regulation

One of the most-common beliefs many leftists in America hold is that the staggering increase in apartment rents is not a result of not building enough supply but rather a combination of greedy landlords, corporations buying out rental properties, and landlords intentionally keeping units vacant to drive up prices. Take for example this recent post by my former San Francisco supervisor, the socialist Dean Preston. He claims that San Francisco could become affordable within a year, and proposes a set of regulations to be imposed on the rental market.  How to you allocate housing? But these regulations have one fatal flaw. San Francisco is a very attractive city. Even if the economy is worse than it used to be, the culture, geographical location and climate make it a place where thousands of people would love to live, and are currently blocked only by the high rental prices. If you artificially lower these prices (through legislation), you end up with way more demand that the supply can handle. Even if you think this is morally the right thing to do, you have to address the mismatch between the demand and supply you’re creating.  In other words: how will you allocate housing in the absence of the market mechanism?  When confronted with this question, American leftists usually do not have an answer, or provide some muddy explanation that still focuses on existing residents, as if their living situation was never changing: they never got married, divorced, their kids never grow up, they never leave for a reason other than being priced out etc., and as if there were no new potential residents who would like to move to San Francisco for whatever reason.  History provides a warning In the absence of their answer, we can look at history. In the Eastern Bloc […]

Should governments nudge land assembly?

For a reading group, I recently read two papers about the costs and (in)efficiencies around land assembly. One advocated nudging small landowners into land assembly; the other is an implicit caution against doing so. Graduated Density Zoning Although he’s mostly known for parking research and policy, Donald Shoup responded to the ugliness of eminent domain in Kelo v. City of New London, with a 2008 paper suggesting “graduated density zoning” as a milder alternative. Graduated density zoning would allow greater densities or higher height limits for larger parcels – so that holdouts would face greater risk. Samurai to Skyscrapers Junichi Yamasaki, Kentaro Nakajima, and Kensuke Teshima’s paper, From Samurai to Skyscrapers: How Transaction Costs Shape Tokyo, is a fascinating and technical account of how sweeping changes put the relative prices of different-sized lots on a roller-coaster from the 19th century to the present. First, large estates were mandated as a way for the shogun to keep nobles under his close control. Then, with the Meiji Restoration, the nobles were released to sell their land, swamping the market and depressing prices. The value of land in former estate areas stayed low into the 1950s. But with the advent of skyscrapers – which need large base areas – the old estate areas first matched and then exceeded neighboring small-lot areas in central Tokyo. A meta-lesson from this reversal is that “efficiency” is a time-bound concept. One can imagine a 1931 urban planner imposing a tight street grid and forcing lot subdivision to unlock value on the depressed side of the tracks. That didn’t happen; instead, the large lots were a land bank that allowed a skyscraper boom right near the heart of a very old city, helping propel the Japanese economy beyond middle-income status. We should take a long, uncertain view of […]

The conspiracy theory of rent increases

An article in Curbed by Lane Brown has gotten much publicity in Twitter.  The article makes two factual claims: 1) New York City is still losing households, and thus there was no reason for rents to go back up in 2021-22; and 2) landlords are conspiring to keep supply down because some apartments are still vacant. Since the city seems extremely busy to me, the first claim seemed a bit insane.  But having said that, I live in touristy Midtown Manhattan two blocks from Central Park, so my experience is probably not an argument-settler.  Brown relies on U.S. Postal Service change of address data.  Brown reasons: more people filed change of address forms to move out of the city than filed change of address forms to move into the city.  Thus, the city is continuing to lose people.  But as Brown himself admits, change-of-address data misses a lot. He admits that this data “misses [moves] to the city from abroad.”  Because of COVID-related travel bans, immigration presumably declined in 2020.  But legal immigration has rebounded to pre-COVID levels, and some of that increase may have spilled over into New York.  Change-of-address data might not include recent graduates and other people who left their parents elsewhere in the U.S. to move into the city, because those people might still be getting mail at their parents’ houses.    Such data also might not reflect people who left the city temporarily in 2020 but didn’t bother with change-of-address requests because they still picked up mail at their old homes. Most importantly,  change-of-address trends do not reflect people deciding to leave roommates and get their own apartments, at least not if people changed addresses within the city.  This means that even if population is stable or declining, the number of households looking for apartments […]

Herbert Hoover reconsidered

In recent years, I have thought of Herbert Hoover as sort of an urban policy villian, thanks to his promotion of zoning. But I recently ran across one of his memoirs in our school’s library. (Hoover’s memoirs were a multivolume set, and this particular volume related to his service as Secretary of Commerce and President). Hoover devotes less than a page zoning, noting that it was designed “to protect home owners from business and factory encroachment into residential areas.” He doesn’t mention the parts of zoning that have stunted housing supply in recent decades, such as the prohibition of apartments in homeowner zones, and minimum lot sizes. In fact, he brags about increases in housing construction when he was Secretary of Commerce, writing that “The period of 1922-28 showed an increase in detached homes and in better apartments unparalleled in American history prior to that time.” In particular, he notes that 449,000 dwelling units were built in 1921, and that this number rose to 753,000 in 1928. He claims some of the credit for this, primarily because the Commerce Department helped formulate a standard building code which he believed would be less costly than existing local codes, and because the Department sought to lower interest rates on second mortgages. One common argument against new housing is that because some new housing has been built, therefore there has been a building boom sufficient to meet demand. By contrast, Hoover was not a believer in the idea that any housing construction equals enough housing construction; he notes that “The normal minimum need of the country to replace worn-out or destroyed dwellings and to provide for increased population was estimated by the Department at 400,000-500,000 dwelling units per annum.”* *By the way you might be wondering how these numbers compare to current levels […]

YIMBYs and liberals

The pro-housing movement (more colloquially known as “YIMBYs” as an acronym for “Yes In My Back Yard” can’t catch a break from either the Left or the Right. On the Left, pundits like to “expose” them as supporters of big business. But conservatives don’t always embrace YIMBYs either; both on this page and on Planetizen I have discussed conservatives who are lukewarm about zoning reform. So are YIMBYs liberals or libertarians? I have been at least somewhat active in New York’s YIMBY group, Open New York, for the past few years. There are some center-right people in the group, but my sense is that the membership tends to be more liberal than not, and that many members are more likely than I am to support regulations designed to protect tenants from landlords. Why might this be? First, New York City is to the left of the nation, and the most expensive and highly educated parts of the city (i.e. Manhattan and Brownstone Brooklyn) are especially liberal. So naturally, any organization (other than one focused on conservative policies) is going to have more liberals than conservatives. If there were YIMBY groups in more conservative places, they would probably be less liberal-dominated. Second, Open New York tends to be dominated by people under 50; older people are more likely to have purchased houses or condos, and thus aren’t really that interested in lower rents. In recent decades, younger voters have been well to the Left of older voters. So naturally, our group leans a bit left. Third, New York is dominated by the Democratic Party, and our city’s Democrats have arguably swung to the left over the past decade or so; a group that takes conservative positions is not going to find it easy to build coalitions or to get the attention […]

Are the new carbon footprint maps accurate?

Urbanists and zoning reformers would really like estimates that tell us how changing the built environment will change our own habits. But many of the variables that inform Jones' estimates won't change with environment: age, race, income, education. The fault is not in our stars, but in ourselves.

Wanted: Market urbanist research assistant

help wanted

Ever wondered how you could make your urbanism hobby a full-time job? Come work with me & Emily Hamilton at the Mercatus Center’s Urbanity project: Are you a gritty, liberty-minded researcher who is passionate about cities? This is a unique opportunity for an aspiring scholar to develop a portfolio of research in urban economics, planning, housing affordability, and land use regulations with talented scholars and staff at the world’s premier university source for market-oriented ideas.  The ideal candidate will think like an economist, deftly handle complex datasets, and express himself or herself clearly in writing. This position reports to the program manager of the Urbanity Project. Responsibilities Include:•Collaborate with research fellows on quantitative research projects using GIS and data analysis software.•Read, understand and summarize scholarship in urban economics, planning, and land use law.•Translate and promote research through media and outreach engagement.•Support Mercatus scholars and affiliated fellows in consultations with city and state policymakers. Requirements Include:•Degree or equivalent knowledge in economics, urban & regional planning, or a related field•Experience with either a GIS or a statistical software package such as Stata and R; familiarity with and willingness to master the other•Strong verbal, written, and interpersonal communication skills •Enthusiasm for collaboration and adaptability to a varying mix of responsibilities•A strong interest in the Mercatus Center’s mission, with a specific focus on cities and liberty https://us63.dayforcehcm.com/CandidatePortal/en-US/mercatus/Posting/View/732

An Anti-Anti-NIMBY article

During the Trump Administration, liberals sometimes criticized conservatives for being anti-anti-Trump: that is, not directly championing Trump’s more obnoxious behaviour, but devoting their energies to criticizing people who criticized him. Similarly, I’ve seen some articles recently that were anti-anti-NIMBY*: they acknowledge the need for new housing, but they try to split the difference by focusing their fire on YIMBYs.** A recent article in Governing, by Aaron Renn, is an example of this genre. Renn agrees with “building more densely in popular areas like San Francisco and the north side of Chicago, in other cities along commercial corridors, near commuter rail stops, and in suburban town centers.” Since I am all for these things, I suspect I agree with Renn far more than I disagree. But then he complains that YIMBYs “have much bigger aims” because they “want to totally eliminate any housing for exclusively single-family districts- everywhere.” What’s wrong with that? First, he says (correctly) that this would require state preemption of local zoning. And this is bad, he says, because it “would completely upend this country’s traditional approach to land use.” Here, Renn is overlooking most of American history: zoning didn’t exist for roughly the first century and a half of American history, and in some places has become far more restrictive over the last few decades. Thus, YIMBY policies are not a upending of tradition, but a return to a tradition that was destroyed in the middle and late 20th century. To the extent state preemption gives Americans more rights to build more type of housing, it would actually recreate the earlier tradition that was wiped out. Moreover, even if the status quo was a “tradition”, that doesn’t make it the best policy for the 21st century. For most of the 20th century, housing was far cheaper than […]

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