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“The traditional model”
The traditional model of cities proves useful yet again - even when researchers neglect their discipline's roots.
Liberalizing Cities
From The Ground Up
Tag California
Solano County Dreamin’: Is there a market urbanist way to build a new city?
Conor Dougherty and Erin Griffith revealed the identities behind a Silicon Valley investor group, Flannery Associates, that had gradually purchased 55,000 acres of ranchland near Travis Air Force Base in Solano County, California. Scale check: that’s a lot of land. San Francisco is 30,000 acres; San Jose is 116,000. Earlier WSJ reporting includes a map of Flannery’s holdings, which are predictably a bit scattered. To zoom out and give a scale comparison, I outlined a 55,000 acre contiguous blob around the core of the Flannery holdings. At the density of nearby Vacaville, this much land would be home to nearly 300,000 people. If it matched Oakland, it would be more than twice that. Many, especially at the Charter Cities Institute, have written about new cities. But can a new city ever be truly “market urbanist”? Or is the intent to create a city necessarily an exercise in centralized planning? Monopoly Bizarrely, the one actor who could most purely create a market-driven city is the government: It could use eminent domain to assemble only the land needed for new infrastructure, tax all landowners fairly, and allow competition among landowners to compete via development and land use. At the opposite extreme, when a profit-maximizing private actor owns all the land, it faces a unique form of the monopolist’s tradeoff: The longer it holds onto land, the higher price it can charge on sale, but the less that land contributes to urban growth. One way to sidestep this tradeoff is for the monopolist to develop land itself. But of course that concentrates risk, and the cost of development is at least a hundred times more than the land cost (which appears to have averaged about $16,000 per acre in Solano County). Zero to one So what’s a mega-landowner to do? I’d start by […]
Entrepreneurs and the Changing Political Economy of Housing
Discussions about land use reform focus on policy – as they should. Overcoming NIMBYism will require deep legal, political, and regulatory reform. That said, entrepreneurs may be helping to short circuit the perverse incentives that give rise to NIMBYism in the first place. New companies may be encouraging homeowners to embrace density and helping to break the tie between homeownership and anti-deveolpment attitudes in the process. Creating Demand for Density Belong is an early stage startup making it easier for homeowners to rent out their single family home. The main use case is that of a homeowner renting (instead of selling) after a move. A lot goes into becoming a landlord and Belong’s elevator pitch is that they simplify the process. The company’s customers access insurance, connect to contractors for repair and renovation, get help with listing, and find anything else they need all in one place. To the extent they’re successful, they’ll be creating a class of small scale landlords with every reason to develop missing middle housing. Transforming the family home from a speculative asset to one producing a monthly stream of revenue makes ADUs and duplexes more attractive. More units mean more tenants and therefore better monthly returns. And once an owner is no longer an owner-occupier, “neighborhood character” concerns become less salient as well. That said, this is admittedly speculative. Whether single property landlords will be as YIMBY as I suspect is an empirical question for the future. More immediate, though, are the incentives another new startup is creating for homeowners across California. Densification as the Path to Homeownership Homestead is a property developer that’s using legislation like California’s SB9 and SB10 to build housing. They work with homeowners interested in the upside of doing a lot split and adding housing like a duplex or an […]
California should indeed build new cities – but don’t let Nathan J. Robinson anywhere near them
Urbanist and YIMBY Twitter had a field day dunking on Nathan J. Robinson, whose essay in his publication Current Affairs called for building new cities in California. But California really could use some new cities - and we need to think about them in primarily economic terms.
Yimbyism: The Evolution of an Idea
Five years ago everything in California felt like a giant (land use policy) dumpster fire. Fast forward to today we live in a completely different world. Yimby activists have pushed policy, swayed elections, and dramatically shifted the overton window on California housing policy. And through this process of pushing change, Yimbyism itself has evolved as well. Learning by Listening Yimbys started out with a straightforward diagnosis of the housing crisis in California. They said, “…housing prices are high because there’s not enough housing and if we want lower prices, we need more housing”. And they were, of course, completely right…at least with regards to the specific problem-space defined by supply, demand, and the long run. As Yimby’s started coalition building, though, they began recognizing related, but fundamentally different concerns. For anti-displacement activists, the problem was not defined by long-run aggregate prices. It was instead all about the immediate plight of economically vulnerable communities. Increasing supply was not an attractive proposal because of the long time horizons (years, decades) and ambiguous benefit for their specific constituencies. Yimbyism as Practical Politics Leaders in the Yimby movement could have thrown up their hands and walked away. But they didn’t. Instead they listened and developed a yes and approach. The Yimby platform still embraces the idea that, long run, we need to build more housing, but it now also supports measures to protect those who’ll fall off the housing ladder tomorrow without a helping hand today. Scott Weiner’s SB50 is a great example of this attitude in action. If passed, the bill will reduce restrictions on housing construction across the state. It targets transit and job rich areas and builds in eviction protections to guard against displacement. At a high level, it sets up the playing field so that renters in a four story […]
What Should YIMBYs Learn From 2018?
Believe it or not, the YIMBY movement won a lot in 2018. It kicked off with January’s high of California State Senator Scott Wiener’s introduction of SB 827, which would have permitted multifamily development near transit across the state, but fell to a low after its eventual defeat in committee, invariably followed by a flurry of think pieces about how the pro-development movement had “failed.” At the time, I made the case for optimism over on Citylab, but that didn’t stop the summer lull from becoming a period of soul searching within the movement. And then, a strange thing happened: YIMBYs started winning, and winning big. In August, presidential-hopeful Senator Cory Booker released a plan to preempt exclusionary zoning using Community Development Block Grant funds, quickly followed by a similar plan from Senator Elizabeth Warren in September. Also in August, Housing and Urban Development Secretary Ben Carson unexpectedly outed himself as a YIMBY. Then, in December, things really got crazy: two major North American cities, Minneapolis and Edmonton, completely eliminated single-family zoning. States like Oregon soon started talking about doing the same. In the same month, California kicked into overdrive: San Francisco—ground zero for the YIMBY movement—scrapped minimum parking requirements altogether. State Senator Wiener introduced a newer, sharper version of SB 827. And rolling into 2019, elected officials at every level of California government—from the state’s new Democratic governor to San Diego’s Republican mayor—are singing from the YIMBY hymn sheet. All in all, it wasn’t a bad year for a movement that’s only five years old. But what really made 2018 such an unexpected success for YIMBYs? Focus on Citywide Reform Over Individual Rezonings Showing up and saying “Yes!” to individual projects that are requesting a rezoning, variance, or special permit is bread-and-butter YIMBY activism. And while YIMBYs should still […]
Housing Still Suffers the Same Ills That Caused the Great Recession—Just Not the Ones You Think
If you type “housing crisis” into Google search, “2008” is no longer the first result. The subprime mortgage crisis that toppled the global economy just a decade ago has been supplanted on Google trends by “housing crisis 2018.” This time, the crisis isn’t an overabundance of housing; it’s a chronic housing shortage. But economist Kevin Erdmann argues that the 2018 housing crisis is just the second act of the same tragedy. With local governments issuing fewer building permits and millennials beginning to buy their first homes, millions of Americans struggle to find affordable housing in 2018. The crisis is arguably the worst in California, where about one-third of all city-dwellers cannot afford local rents in every city in the state, San Diego to Sacramento. Economists and policy experts that study housing largely agree that the chronic unaffordability of American housing stems from persistent shortages in the quantity of housing supplied relative to the quantity demanded. Most housing scholars agree that “not in my back yard” (NIMBY) zoning laws are to blame. In many areas, NIMBY zoning laws have prevented developers from building multifamily housing in residential areas or forced developers to adhere to mandated minimum lot sizes. What resemblance, then, does our world of NIMBY-induced housing shortages have to do with the pre-2008 world with fast-and-loose credit policies [pdf] and overbuilt McMansions? That pre-2008 world, Erdmann argues, doesn’t really exist. [pdf] The traditional loose credit story is an easy one to tell––it appeals to populist sentiments (by demonizing rich bankers) and exudes the moral weight of an anti-capitalist parable about greed and gluttony. It makes for a great movie, “The Big Short.”And, to its credit, the traditional credit story even seems to explain much of the financial bedlam of 2008. Banks and investors placed too much confidence in risky mortgage-backed assets, […]
Quantifying the effects of California zoning rules
Yet another study in a long line of others provides evidence that land-use regulations restrict housing supply. A new paper identifies a correlation between land-use regulations in California cities and the growth rate for housing units. Kip Jackson finds that California zoning rules and other land-use restrictions not only reduce the growth rate of new housing stock, but a new regulation can actually be expected to reduce the existing stock of housing by 0.2% per year. This correlation is greatest when looking only at multifamily buildings, where each new restriction results in 6% fewer apartments built annually. Kip uses panel data on California land-use regulations from 1970-1995. Researchers sent surveys to municipal planning departments to create a dataset including both the regulations in effect in each city and the year they were enacted. The panel dataset allows Kip to use two-way fixed effects. That means that his results control both for factors that affect housing growth in all cities at a given time and for factors that affect growth in a specific city over time. This survey data makes it possible to study both the effects of the total quantity of rules along with the effects of specific rules. Kip finds that rules that are likely to make it more difficult to build in the future lead to an increase in building permits at the time they are implemented. For example, urban growth boundaries and rules that require a supermajority council vote to approve increased residential density spur current year housing permits. This increase is likely due to developers’ belief that building permits will become more difficult to obtain the longer the new regulation is in effect. He points out that some studies that fail to find a relationship between zoning and housing supply may find this null result because of rules that change the timing of development while reducing it over the […]
The Stealth Guide To Nimbyville
Hovering somewhere just beyond all the land use zoning regulations, building codes, finance mechanisms, aspirational comprehensive municipal plans, state mandates, and endless NIMBYism lies… reality. If you happen to want to live in certain parts of coastal California you need to come to grips with a serious supply and demand imbalance. Demand is endless. Supply is highly constrained. And there’s a huge amount of money on the table. Horizontal growth is essentially verboten. A powerful coalition of existing property owners, environmental groups, resource allocation schemes, and multi-tiered government regulations stymie new greenfield development. The personal interests of conservative Republicans and liberal Democrats line up exactly when anyone attempts to build anything near them. “Over my dead body.” It’s understood that if a town accepts endless low density horizontal development the overall quality of the area will decline. You can’t have expansive large scale suburbia without paving over the countryside, creating a great deal of traffic congestion, and inducing strip mall blight. At the same time, no one wants infill development on existing not-so-great property that’s already been paved over and degraded. The neighborhood associations break out the pitch forks and firebrands at the suggestion of multi-story condos or (Heaven forbid) apartment buildings. The population of any older suburb could double or triple without using a single inch of new greenfield land. But that kind of growth is feared and hated. So the aging muffler shops and parking lots linger in the middle of a massive housing crisis. Google Google Google On the other hand there’s radically less regulatory or community push back against expanding and improving existing suburban homes. Google Street View makes it possible to observe how a little post war tract home was transformed into a substantially larger residence. This kind of growth is entirely acceptable. The building […]
Trickle-Down Housing Economics? Laying Reagan’s Ghost to Rest
In a recent 48 Hills post, housing activist Peter Cohen aimed a couple rounds of return fire at SPUR’s Gabriel Metcalf. The post comes in response to Mr. Metcalf’s own article critiquing progressive housing policy. Mr. Cohen bounces around a bit, but he does repeat some frequently used talking points worth addressing. Trickle-down economics Mr. Cohen calls the argument for market-rate construction ‘trickle down economics’. Trickle down economics actually refers to certain macro theories popularized during the Reagan years. These models assumed a higher marginal propensity to save among wealthier individuals. And given this assumption, some economists concluded that reducing top marginal tax rates would result in higher savings. This would then mean higher levels of investment which would, in turn, have a positive effect on aggregate output. And from there we get the idea of a rising tide lifting all ships. Note that none of that has anything to do with housing policy. Labeling something ‘trickle down’ is a way to delegitimize certain policy proposals by associating them with Ronald Reagan. It’s somewhere between rhetorically dishonest and intellectually lazy. Though to be fair, it’s probably pretty effective in San Francisco. The concept Mr. Cohen is trying to critique is actually called filtering. In many instances, markets do not produce new housing at every income level. But they do produce housing across different income levels over time. Today’s luxury development is tomorrow’s middle income housing. The catch, however, is that supply has to continually expand. If not, prices for even dilapidated housing can go through the roof. For a more thorough explanation, see SFBARF’s agent based housing model. If you build it, they’ll just come But even accurately defined, Mr. Cohen still objects to the concept of filtering. He cites an article by urban planning authority William Fulton to make […]
