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Market Affordable

Check out my new post at Metropolitan Abundance Project: How “inclusionary” are market-rate rentals? In metropolitan Baltimore, a family of four making $73,000 in 2024 qualifies for 60% AMI affordable housing, where it would pay $1,825 per month for rent, utilities included. A third of new market-rate three-bedroom units in Baltimore are rented at around that level.Baltimore is typical, as it turns out. In most U.S. metro areas, a substantial share of rentals constructed since 2010 were, in 2021 and 2022, affordable at 60% of AMI… You can also check out maps showing rentals affordable at 80% and 120% of AMI. The ACS data don’t let me distinguish market-rate from subsidized rentals, so these include LIHTC and other subsidized rentals. Those, however, can’t explain away the core result, and the data don’t show the bifurcated market that some people imagine, with a huge gap between market and deed-restricted rents.

Ruminating on Sheetz

As anticipated by the “radical agreement” among the parties and justices at oral argument, the Supreme Court’s recently released decision in Sheetz v. County of El Dorado put to rest the question of whether legislatively-imposed land use permit conditions are outside the scope of the takings clause.  The unanimous ruling confirms the common-sense proposition that a state action cannot evade constitutional scrutiny simply because it’s a law of general application rather than an administrative decree, and subjects conditions on building permits – whether monetary or not – to the essential nexus and rough proportionality requirements enshrined in the Nollan and Dolan cases. The narrow ruling reflects the sound principle that, when dealing with constitutional questions, a court shouldn’t address hypotheticals or other issues not in direct contention among the parties. Nonetheless, the majority felt compelled to state that it would not address “whether a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development,” which seems to leave open the possibility that the answer might be “no.” Justice Gorsuch, in his concurrence, was astonished by this statement, wondering how a court which had just endorsed the universal applicability of the takings clause could stumble into another arbitrary distinction with no basis in common sense or constitutional law. The court’s concern was not a jurisprudential one, but apparently a policy one: in another concurrence, Justices Kavanaugh, Kagan and Jackson note that “[i]mportantly, therefore, today’s decision does not address or prohibit the common government practice of imposing permit conditions, such as impact fees, on new developments . . . .”  The justices’ impression that applying the current Nollan/Dolan formula to impact fees would or even could “prohibit” them is unfounded.  As Emily Hamilton and I wrote […]

The urban economics of sprawl

Should YIMBYs support or oppose greenfield growth? Two basic values animate most YIMBYs: housing affordability and urbanism. Sprawl puts those values into tension. Let’s take as a given that sprawl is “bad” urbanism, mediocre at best. Realistically, it’s rarely going to be transit-oriented, highly walkable, or architecturally profound. So the question is whether outward, greenfield growth is necessary to achieve affordability. And the answer from urban economics is yes. You can’t get far in making a city affordable without letting it grow outward. Model 1: All hands on deck Let’s start with a nonspatial model where people demand housing space and it’s provided by both existing and new housing. Existing housing doesn’t easily disappear, so the supply curve is kinked. A citywide supply curve is the sum of a million little property-level supply curves. We can split it into two groups: infill and greenfield, which we add horizontally. If demand rises to the new purple line, you can see that the equilibrium point where both infill & greenfield are active is at a lower price & higher quantity than the infill-only line. The only way to get some infill growth to replace some greenfield growth, in this model, is to raise the overall price level. And even then, the replacement is less than 1-for-1. Of course, this is just a core YIMBY idea reversed! In most U.S. cities, greenfield growth has been allowed and infill growth sharply constrained, so that prices are higher, total growth is lower, and greenfield growth is higher than if infill were also allowed. At the most basic level, greenfield growth is simply one of the ways to meet demand. With fewer pumps working, you’ll drain less of the flood. Model 2: Paying for what you demolish Now let’s look at a spatial model where people […]

YIMBY wins again in Vermont

On March 25, the city council of Burlington, VT, voted to pass a major zoning reform that one observer of Vermont politics (X.com’s pseudonymous @NotaBot) compared to the celebrated overhaul of Minneapolis’s zoning code. Burlington – the largest city in Vermont, at 45,000 inhabitants – has not escaped the housing crisis affecting the country. Burlington was an attractive destination for new residents during the pandemic and the rise of remote work; severe flooding last year put additional pressure on the housing supply. Policymakers statewide were well aware of the challenge and last year passed S.100, a sweeping package of housing reforms. Now Burlington, led by a pro-housing mayor, Miro Weinberger, has taken action at the local level. Burlington’s reform, known as the Neighborhood Code, is a welcome simplification of the city’s zoning. The Neighborhood Code eliminates the city’s ‘waterfront’ zoning districts and a ‘dense housing overlay’, adding a higher-density ‘residential corridor’ district, for a total of four residential zones. There are also significant increases in allowed density across the city. The Neighborhood Code allows up to fourplexes in all residential districts, allows townhouses everywhere but the low-density residential zone, and expands the option to create a cottage court or add a second freestanding unit on the same lot. The new code also limits requirements for minimum lot size, lot coverage, and setbacks. The reforms took some haircuts before final passage in response to pushback from organized groups of residents, but remain a meaningful change. In their report presenting the Neighborhood Code, Burlington’s city planning department reviews the city’s history. Planners explain that much of Burlington’s housing stock predates its zoning code, and in particular many existing lots are smaller than the official minimum lot size. Also, in Burlington’s first era of zoning, the city had a single residential district which […]

And the Oscar for best paper goes to…

A friend asked what are the best papers supporting land use liberalization. That’s a broad question, but here are some of my answers. Affordability The basic case for zoning reform, across the political spectrum, is that the rent is too damn high. Michael Manville, Michael Lens, and Paavo Monkkonen give a combative and accessible review of the evidence in their Urban Studies paper (2020). The principal drawback is that it is rapidly becoming dated, as evidence and research come in from more recent reforms. The most important of those may be Auckland’s, which Ryan Greenaway-McGrevy has reported in a few papers, including this Economic Policy Center working paper (2023). Using a synthetic control method (which is not perfect, to be sure), Greenaway-McGrevy finds that upzoned areas had 21 to 33 percentage points less rent growth. A new candidate for the best review of the evidence on zoning reform and affordability is Vicki Been, Ingrid Gould Ellen, and Katherine M. O’Regan’s late 2023 working paper, “Supply Skepticism Revisited.” Racial integration Many authors from different disciplines have shown that both the intent and effect of zoning as practiced in the U.S. were racist and classist. That is, zoning policies have separated people by race, homeownership status, and income more than would have occurred in an unregulated market. Allison Shertzer, Tate Twinam, and Randall Walsh’s review of the evidence in Regional Science and Urban Economics (2022) is concise and helpful. However, fewer authors have attempted to show that removing specific zoning restrictions reduces existing patterns of segregation. One is Edward Goetz, in Urban Affairs Review (2021). He makes a qualitative argument. I’m unaware of a good causal, quantitative paper showing how broad upzoning impacts local integration (but I would happily commission it if anyone wants to write it!) Environment & climate Along some […]

Apples to apples housing cost comparisons

I recently ran across an interesting discussion on Twitter about housing costs. Someone praised Chicago’s low housing costs, and someone else responded that because Chicago’s most troubled neighborhoods are so unusually dangerous and disinvested (compared to the most troubled parts of a safer city like New York), the low costs of these areas artificially deflated citywide averages. To put it another way, to compare Chicago and New York you should look at comparable neighborhoods rather than regionwide averages. For example, one reasonable comparison might be between Chicago’s reasonably desirable inner suburbs and New York’s. I picked four suburbs that I have visited and that are reasonably close to city boundaries: Great Neck and Cedarhurst on the New York Side, Skokie and Evanston on the Chicago side. According to Trulia.com, the cheapest two bedroom condo* (other than one that clearly needs major renovations) in Evanston sells for $115,000 and the cheapest in Skokie for $165,000. By contrast, Great Neck condos start at around $350,000, and Cedarhurst prices are similar. Similarly, elite intown areas are cheaper in Chicago. I looked at Chicago’s Lakeview, where I spent part of my honeymoon five years ago; two-bedroom units there start at $235,000. By contrast, in Manhattan’s Upper West Side such units start at $730,000 (not counting units that require extensive renovation or are income-restricted). To sum up: regional averages do seem to reflect the reality of housing costs, at least in these two cities. *I picked two bedroom condos for the somewhat arbitrary reason that I currently live in a two-bedroom apartment. *

Poor People Move Too

It is well known that rent control is not particularly effective in controlling rents; cities like New York and San Francisco have rent control and yet are quite expensive. Supporters of rent control, however, often argue that rent control is valuable for a different reason: it makes housing more stable, by making it more difficult for a tenant to be evicted for nonpayment of rent. But it seems to me that there’s an assumption hidden behind this idea: that the neediest people are the ones who are ordinarily most stable, and thus do not suffer from rising housing costs as long as they are protected by rent control or similar measures. For example, law professor Richard Schragger complains that pro-housing zoning reform will “redound to the benefits of investors and developers and not to those residents with limited resources who seek to afford to remain in place.” (emphasis added) In the next sentence, he adds that “those in the market for housing- including middle-class families, recent college graduates, and young families– are often priced out of high-cost urban markets. But reforms should be careful not to equate their interests with those of the working class and especially minority poor…” (emphasis added)* In other words, the “working class” and “minority poor” and people “in the market for housing” are somehow two separate groups. This assumption might be persuasive if poor people moved less often than other people. But neither common sense nor data support this idea. If you are poor, you might be less likely to have steady employment, which means that your income is likely to be unstable. Thus, you are more likely than other Americans to be evicted or to move voluntarily even if rents are stable. Even if you rely on government transfer payments, you are at risk […]

Milton’s Zoning Referendum

“Wow!” the reporter said, “I knew you from Milton, but I didn’t know you were from East Milton. Tell me what it feels like?” Well, until last week it was not that dramatic. East Milton is an old railroad-commuter neighborhood favored by affluent Boston Irish. It’s separated from the City of Boston by the Neponset River estuary and from the rest of Milton by a sunken interstate highway that makes it more congested and big-city than the rest of town. MBTA Communities In January 2021, Massachusetts passed the first transit-oriented upzoning law of the YIMBY era, now called “MBTA Communities,” “MTBA-C”, or “Section 3A”. Implementing regulations assigned a multifamily zoning capacity to each town. Milton was always going to be one of the toughest cases for MBTA Communities. The northern edge of town is served by the Mattapan Trolley, which John Adams rode to the Boston Tea Party links up to the Red Line at Ashmont. The trolley makes Milton a “rapid transit community”, which means it has to zone for multifamily units equal to 25% of its housing stock. Among the dozen towns in the rapid transit category, Milton is the only one where less than a quarter of current housing units are multifamily; it also has few commercial areas to upzone. East Milton dissents East Milton voters went to the polls on Wednesday and led a referendum rebuke of the plan. In Ward 7, it wasn’t close: 82% opposed the rezoning. The Boston Globe offered a helpful breakdown of the surprisingly varied voting: There are several hypotheses as to why the neighborhood went against rezoning so hard, all probably played a role. East Milton was assigned more than half the net new multifamily zoning capacity despite lacking good transit access. The neighborhood has been in a contentious, multiyear […]

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