I think the causality runs from bad land-use regulations to bad lending policies. Several generations of Americans, including bankers, have held onto the madness that a single family house shall always appreciate in value at a rate that exceeds inflation. The structural damage done by large lot, single family zoning in the ring suburbs of closed access cities is too profound to be solved with better lending policies. However, I do support policies that increases housing abundance of any type--which has always been one of your consistent points. If we build more rental units, the impact is positive across the spectrum.
Cogent analysis. I often times think most discourse in the US begins and ends with our Puritanical beliefs. The front-loaded cash crunch problem of straight-line payments seems to fit the bill nicely.
Our work isn’t done with the current structure of the 30 year mortgage. Glad to see there’s some thought going in to it.
Of course, all of this gets less painful if we just break the restrictive zoning cabal.
This problem of unaffordable housing in developing nations is spreading. Canadian social media is aflame with angry people talking about rents, house prices, and that they will never be able to buy a home in Canada, or even afford rent, on middle class incomes.
I am getting the sense unless developed nations place a priority on robust housing construction, then housing markets go screwy. Of course, in Singapore 80% of housing is public housing, but most people say they have good government (and model citizens too).
As always, Japan is the exception. After rents, the average resident of Sapporo Japan is much better off than US residents in housing restricted cities, or almost anyone in Canada.
But if you chart per capita income, it does not look that way.
An interesting reversal of 'common knowledge' that it is the illiquidity and front-loading of cost that drives cost up. Still, as you mention, a major part of the solution is build more & remove veto power from the stasis/NIMBY/BANNANA crowd.
I'd be interested in how we could from new financing products that enable people to access housing and it's value in a way that doesn't create more NIMBYs yet also creates stable, invested communities.
Maybe like a rent-to-own model, but you 'own' a stake in the community, getting some dividend value that aligns your incentives with density? Local tax-rebate or something.
Also, ownership into the health of the town and not the specific non-fungible plot of land you have might help with the 'this tower will create shade over my carrots' complaint. If you view might be blocked, but that new tower juices your owner's dividend, maybe it isn't worth your Tuesday afternoon to protest at city hall.
In Germany there are housing cooperatives that you can buy shares in.
You can rent from the cooperative and the more shares you have, the cheaper your rent.
Historically, after ww2, many people got their shares by working on the construction sites (besides their normal other jobs) instead of buying them.
Cooperatives are typically active in one city. So you get diversified access to the housing market in the whole city.
The cooperative form will appeal to people who are less thrilled about capitalism.
You can get a similar effect with even more diversification, if you remove the tax differences between owner occupies housing compared to owning index funds (or shares in REITs) and paying your rent from the returns.
Though the more localised cooperative model gives you more of a local anchoring.
I don't think the motivations are, at their root, financial. It is just status quo bias and a political path where we let petty local political processes give voice to those motivations. To me, the pictures of locals yelling at black students walking into new desegregated schools is an icon of this problem. That was a situation where a group of people simply had political power they shouldn't have had, and taking that power away from them, rather than finding ways to reimburse them for the troubles that progress brought them, was the path forward. I think that the grievances themselves are mostly inflated simply as a result of the political processes that give them voice. I'm not saying there are no externalities, but the supposed externalities have become so inflated through the process of negotiation that municipalities have created that they are too unmoored to serve as a guide to compromise.
That might seem like it leaves some legitimate political grievances unanswered. But, I would offer as a counterpoint that when we did build amply in this country, housing filtered down and the typical neighborhood's socio-economic center of gravity declined over time. It frequently even led to conflict. We don't have a solution to that. We don't even try to have a solution to that because we have a shared political principle that you can't tell a family they aren't welcome. I think in a housing market that was free to build, that decentralized change of families, one-by-one into existing neighborhoods would be a greater long-term source of conflict and change. So, I don't think focusing so much worry on the challenges of changing the built environment is productive.
"That was a situation where a group of people simply had political power they shouldn't have had, and taking that power away from them, rather than finding ways to reimburse them for the troubles that progress brought them, was the path forward. I think that the grievances themselves are mostly inflated simply as a result of the political processes that give them voice."
When you passed civil rights people fled for the suburbs and erected zoning as de facto segregation. When you bussed kids to the suburban schools it was a complete disaster.
It doesn't even have to be political power. Levittown's were free market HOAs, its what people choose if they are left alone.
Either you have to allow discrimination to keep the underclass out (Levittown), or you have to be iron fisted enough to enforce a general level of behavior onto basically every community and demographic often regardless of their political will (say, the Singapore solution).
I'd add that the biggest issue is schools. You ask why people fight over zoning so much and it's always going to come back to schools. As long as place you live = where you go to school, place you live is going to be fought over.
I'll believe YIMBY's are real when they address public order, school choice, and the civil rights regime. Otherwise, they will beat their head against the same problem they've been beating it against for fifty years. But complaining about the annoying guy at the zoning board meeting is easy, and taking on the teachers union is hard.
These are good points, and you are correct that these are difficult social issues to manage. On the other hand, zoning and related land use regulations, in the aggregate, don't do anything to help them. It may be that residents will find new ways to counter these social fears and stresses. But, the way they have been doing it for a century has added up to, effectively, banning the urban form itself. At this point, the cumulative outcomes of that process are worse than anarchy, so it is worth reversing that system and taking a chance on what replaces it.
To your first point: I certainly have a bias for homoeconomicous-based solutions. I find economics and behavioral economics beautiful and game-like, but that does not mean that this is a case where you can sufficiently bribe homeowners. I think you are right to identify it more as status quo bias than any economic motivation. The solution then, would be visionary leadership: inspirational, aspirational, positive views of the future.
Somewhat ironically, Trump suggested just building new cities. That might be a great way to demonstrate an overall car-independent, conformity dense city system. At the same time, islands of walkability and density continue to expand.
What I read from your second point is: Civic unity is upstream from community harmony is upstream from building codes, so focus on positive feelings of unity. I also see this as going to the sense of renewal and positive vision. When people feel things are going south, they batten down the hatches and use all their political tools for local stasis. We need to believe in the future of our local community as one that can be inclusive, necessarily different, and thriving.
I think the causality runs from bad land-use regulations to bad lending policies. Several generations of Americans, including bankers, have held onto the madness that a single family house shall always appreciate in value at a rate that exceeds inflation. The structural damage done by large lot, single family zoning in the ring suburbs of closed access cities is too profound to be solved with better lending policies. However, I do support policies that increases housing abundance of any type--which has always been one of your consistent points. If we build more rental units, the impact is positive across the spectrum.
Any kind of increase in supply would be useful. Rental or otherwise.
Cogent analysis. I often times think most discourse in the US begins and ends with our Puritanical beliefs. The front-loaded cash crunch problem of straight-line payments seems to fit the bill nicely.
Our work isn’t done with the current structure of the 30 year mortgage. Glad to see there’s some thought going in to it.
Of course, all of this gets less painful if we just break the restrictive zoning cabal.
Spot on. Unzone property, let it rip.
This problem of unaffordable housing in developing nations is spreading. Canadian social media is aflame with angry people talking about rents, house prices, and that they will never be able to buy a home in Canada, or even afford rent, on middle class incomes.
I am getting the sense unless developed nations place a priority on robust housing construction, then housing markets go screwy. Of course, in Singapore 80% of housing is public housing, but most people say they have good government (and model citizens too).
As always, Japan is the exception. After rents, the average resident of Sapporo Japan is much better off than US residents in housing restricted cities, or almost anyone in Canada.
But if you chart per capita income, it does not look that way.
An interesting reversal of 'common knowledge' that it is the illiquidity and front-loading of cost that drives cost up. Still, as you mention, a major part of the solution is build more & remove veto power from the stasis/NIMBY/BANNANA crowd.
I'd be interested in how we could from new financing products that enable people to access housing and it's value in a way that doesn't create more NIMBYs yet also creates stable, invested communities.
Maybe like a rent-to-own model, but you 'own' a stake in the community, getting some dividend value that aligns your incentives with density? Local tax-rebate or something.
Also, ownership into the health of the town and not the specific non-fungible plot of land you have might help with the 'this tower will create shade over my carrots' complaint. If you view might be blocked, but that new tower juices your owner's dividend, maybe it isn't worth your Tuesday afternoon to protest at city hall.
In Germany there are housing cooperatives that you can buy shares in.
You can rent from the cooperative and the more shares you have, the cheaper your rent.
Historically, after ww2, many people got their shares by working on the construction sites (besides their normal other jobs) instead of buying them.
Cooperatives are typically active in one city. So you get diversified access to the housing market in the whole city.
The cooperative form will appeal to people who are less thrilled about capitalism.
You can get a similar effect with even more diversification, if you remove the tax differences between owner occupies housing compared to owning index funds (or shares in REITs) and paying your rent from the returns.
Though the more localised cooperative model gives you more of a local anchoring.
Good questions.
I don't think the motivations are, at their root, financial. It is just status quo bias and a political path where we let petty local political processes give voice to those motivations. To me, the pictures of locals yelling at black students walking into new desegregated schools is an icon of this problem. That was a situation where a group of people simply had political power they shouldn't have had, and taking that power away from them, rather than finding ways to reimburse them for the troubles that progress brought them, was the path forward. I think that the grievances themselves are mostly inflated simply as a result of the political processes that give them voice. I'm not saying there are no externalities, but the supposed externalities have become so inflated through the process of negotiation that municipalities have created that they are too unmoored to serve as a guide to compromise.
That might seem like it leaves some legitimate political grievances unanswered. But, I would offer as a counterpoint that when we did build amply in this country, housing filtered down and the typical neighborhood's socio-economic center of gravity declined over time. It frequently even led to conflict. We don't have a solution to that. We don't even try to have a solution to that because we have a shared political principle that you can't tell a family they aren't welcome. I think in a housing market that was free to build, that decentralized change of families, one-by-one into existing neighborhoods would be a greater long-term source of conflict and change. So, I don't think focusing so much worry on the challenges of changing the built environment is productive.
"That was a situation where a group of people simply had political power they shouldn't have had, and taking that power away from them, rather than finding ways to reimburse them for the troubles that progress brought them, was the path forward. I think that the grievances themselves are mostly inflated simply as a result of the political processes that give them voice."
When you passed civil rights people fled for the suburbs and erected zoning as de facto segregation. When you bussed kids to the suburban schools it was a complete disaster.
It doesn't even have to be political power. Levittown's were free market HOAs, its what people choose if they are left alone.
Either you have to allow discrimination to keep the underclass out (Levittown), or you have to be iron fisted enough to enforce a general level of behavior onto basically every community and demographic often regardless of their political will (say, the Singapore solution).
I'd add that the biggest issue is schools. You ask why people fight over zoning so much and it's always going to come back to schools. As long as place you live = where you go to school, place you live is going to be fought over.
I'll believe YIMBY's are real when they address public order, school choice, and the civil rights regime. Otherwise, they will beat their head against the same problem they've been beating it against for fifty years. But complaining about the annoying guy at the zoning board meeting is easy, and taking on the teachers union is hard.
These are good points, and you are correct that these are difficult social issues to manage. On the other hand, zoning and related land use regulations, in the aggregate, don't do anything to help them. It may be that residents will find new ways to counter these social fears and stresses. But, the way they have been doing it for a century has added up to, effectively, banning the urban form itself. At this point, the cumulative outcomes of that process are worse than anarchy, so it is worth reversing that system and taking a chance on what replaces it.
To your first point: I certainly have a bias for homoeconomicous-based solutions. I find economics and behavioral economics beautiful and game-like, but that does not mean that this is a case where you can sufficiently bribe homeowners. I think you are right to identify it more as status quo bias than any economic motivation. The solution then, would be visionary leadership: inspirational, aspirational, positive views of the future.
Somewhat ironically, Trump suggested just building new cities. That might be a great way to demonstrate an overall car-independent, conformity dense city system. At the same time, islands of walkability and density continue to expand.
What I read from your second point is: Civic unity is upstream from community harmony is upstream from building codes, so focus on positive feelings of unity. I also see this as going to the sense of renewal and positive vision. When people feel things are going south, they batten down the hatches and use all their political tools for local stasis. We need to believe in the future of our local community as one that can be inclusive, necessarily different, and thriving.