A few more thoughts (and links) to discussion from The Rent is Too Damn High.
On rent control: Mike Konzcal (linking to JW Mason) notes how Yglesias’ book is more or less an endorsement of renting, yet rent control and similar sorts of tenant protections are part of what helps give renters similar levels of stability to owners. While rent control often gets a bad name because of distortions it can cause in the rental market, the purpose was not explicitly to distort the market, but to provide stability. Mason:
I would just add that a diversity of income levels in a neighborhood is also a goal of rent regulation, as is recognizing the legitimate interest of long-time tenants in staying in their homes. (Not all rights are property rights!) So by framing the question purely in terms of the housing supply, the Booth people have already disconnected it from actual policy debates in a way favorable to orthodoxy. Anyway, no surprise, orthodoxy wins, with only a single respondent favoring rent regulation. (And I think that one might be a typo.) My favorite answer is the person who said, ” Rent control will have similar effects to any price control.” That’s the beauty of economics, isn’t it? — all markets are exactly the same.
Defenses of rent control aside, I think this critique misses Matt’s broader point, which is that the kinds of entities focused on maintaining affordability via non-profit affordable housing development and via rent subsidies and so on should be on the forefront of wanting to grow the overall housing supply – but they seldom are. There’s a blind spot and a disconnect here. Peter Frase takes Matt’s argument to the extreme:
The problem, here as elsewhere, is that in the tradeoff between social stability and aggregate material prosperity, Yglesias appears to assign stability a value of zero. If people “tend to resist change”, then this is simply an obstacle to be overcome by “state and federal officials”. The ideal type of society that’s evoked here is a perfectly frictionless world of market transactions, one that fully realizes Marx’s comment that under capitalism, “all that is solid melts into air”.
Glaeser’s Triumph of the City suffers a bit from this same problem in its policy descriptions (the ones regarding historic preservation are particularly illustrative), but just because their policy ideas might be a bit extreme doesn’t negate the substance of the analysis. Glaeser’s broad point is that cities are important, density is good, and we’ve severely restricted some of our most innovative and creative places.
On incremental change: Given the huge value current regulations place on maintaining the status quo (providing too much stability in many cases), any changes will necessarily happen at the margins. They’ll be incremental, not transformative. Even a large change to the procedural environment around these markets will take years to adjust given the current levels of pent-up demand. Frase hints at this:
It’s not that Yglesias’s line of critique is totally wrong—I agree that NIMBYism and fear of change is often an impediment to desirable policies, and I agree that people with generally Left politics often betray a confusion about these issues. But while it’s not desirable to just freeze our current cities and neighborhoods as they are, it’s unreasonable to simply dismiss the desire for stability out of hand. To take this to itsreductio ad absurdam, I don’t think most people—or probably even Matt Yglesias—would want to live in a world where we all had to change jobs and move to new apartments every few weeks, even if such an arrangement would make us materially richer.
On confounding factors in housing markets: Mike Konzcal notes (#2) the major differences in housing price due to other variables beyond just supply and demand – namely, school districts, infrastructure, and all of the other elements of ‘location, location, location.’ The economic comparison requires an assumption of all else being equal, yet it seldom is.
The quality of your schools, the relationship you have with the police, your ability to move freely and transport yourself, how you’ll be represented democratically, the primary means through which you’ll transfer wealth across generations (if you are a homeowner) and more are all in play even before you get to the economic efficiency, public sphere and social/health arguments about what housing brings. Perhaps we can reform housing regulations without having to reexamine these issues, but it will be difficult.
Indeed, these kinds of intermingling of various issues is part of what makes zoning decisions so emotional and contentious.
On upzoning: Matt notes two cases where upzoning could be useful (or even just relaxation of existing rules around, say, accessory dwelling units), one about the broader need to increase the overall housing stock:
The question is not whether some fixed pool of people should give up stability in exchange for more money. The question is whether the incumbents should be asked to give up some stability for the sake of other people who are currently excluded from the opportunities the incumbents enjoy. My answer is that yes they should.
Consider the reactions against such increases in the housing stock, often exemplified by those incumbents. Again, these decisions are incredibly emotional and contentious. However, Chris Bradford notes how this ability to add supply is working in Houston:
The difference between Houston and a lot of other cities is that it is still easy to add housing in Houston’s nice, central city neighborhoods (unless your project has “Ashby” in the title). There are currently 15 apartment projects with 4,300 units under construction in the Montrose/River Oaks area. That’s not “announced” units; that’s 4,300 units under construction. For point of reference, only 3,089 building permits were issued for housing units of any type in the entire San Jose-Sunnyvale-Santa Clara metropolitan area in 2011.
Houston has a lot of needless land-use controls, including excessive minimum-space requirements and parking minimums, but there really aren’t many other places in the country where there is both strong demand for infill development and a regulatory environment that freely allows it.
On the direct link to affordability: Matt’s second post takes aim at Arlington, VA:
What you see is a narrow thread of urbanism between Wilson Boulevard and Clarendon Boulevard, with a bit of a thicker blob of urbanism around the Metro station itself. I don’t really want to condemn this development paradigm because if you compare it to other suburban jurisdictions around the United States, what Arlington has done really stands out as practically best in class. But still the fact of the matter is that these single-family homes adjacent to the corridor of urbanism are sitting on some extremely expensive land. If you opened it up to redevelopment, you’d see denser building. Perhaps tall apartments in some cases, perhaps attached rowhouses in others. Opening this up would both bring the luxury market closer to saturation, and also just create some housing that’s a bit less convenient to the Metro and thus perhaps a bit more affordable.
One commenter expresses skepticism about the the ability of new luxury units to actually filter down as more affordable units. As a counter, I always like to link to Chris Bradford’s posts on the subject of filtering: one here, another one, and a third.
On sprawl and governance: Charlie Gardner notes that growth on any given space has its limits. Sooner or later, growth can’t just go up, it must go out.
A basic point I’d raise is that in almost all times and places, the solution for urban population growth has not been vertical densification, but outwards expansion into greenfield areas. Historically, dramatic vertical growth was the product of exceptional circumstances, generally related to the presence of city walls paired with external military threats discouraging sub-urban construction, or the occasional imperial mega-city. The development of skyscrapers in the late 19th century looked to have the potential alter this longstanding pattern, but for several reasons, greenfield development still remains today the overwhelming source of accommodation for urban population growth.
While I think Charlie is a little too attached to shorter cities (just as perhaps Glaeser and Yglesias are too attached to high rises), the point stands. I don’t recall the source, but I remember seeing a chart estimating the number of New Yorkers who live on the 5th floor or below. Some very small portion (say 5-10%) lived above the 5th floor (i.e. in mandatory elevator territory).
Indeed, growing outward is natural. It need not be sprawl, since outward growth is only one key part of sprawl. Part of the problem (particularly when discussing regulatory and policy issues) is that of governance – and how our governance structures no longer match the actual economic geographies of our cities.
Some of this is inherently confusing our own terminology in discussing the issue. Mike Konzcal (#3):
There’s a good Foreign Affairs review of Glaeser’s Triumph of the City, which points out the trouble the economics-driven, supply-side housing costs arguments have with dealing with the suburbs. As someone who read Suburban Nation early when he began to think critically about these issues, I find that a lot of these arguments just focus on city regulations while ignoring the whole existence of suburbs. Foreign Affairs review:
Glaeser overlooks one of the central issues confronting cities for most of the last century: their competition with suburbs. Glaeser sees the competition as primarily between cities that restrict growth and those that accommodate it…
Getting any traction on this issue depends on defining suburbs. The Joel Kotkin-esque definitions aren’t really useful, nor do they illuminate the differences between the real economic geographies of cities (that is, their regions) and instead focus on arcane and often anachronistic political boundaries.
None of this even gets at the key points about the regulations and governance structures that lead to sprawl – from Payton Chung:
Here’s the main problem I have with anti-government status-quo boosters: they’re somehow completely blind to how government created the existing situation, but then loudly whine about how government shouldn’t change anything! Not even removing its distortionary supports for the status quo!
On prospects for reform: Ryan Avent circles back to the same issues, albeit by approaching them from a different direction:
At some point, however, we need to stop and ask why the most sensible of ideas aren’t adopted by the American government. It’s not that congressmen are corrupt dolts—they may be, but that’s beside the point. It’s that America’s legislative institutions are not set up to encourage the adoption of the policies opinion editors want to see. Every once in a while an op-ed writer stumbles toward the truth with a “Washington is broken” sort of piece. It is incredibly rare to see a systematic analysis of the incentives facing legislators, which follows its logic through to the end: if Americans want Congress to behave differently, then it may make sense to devote more energy (or, really, energy) to assessing areas of institutional weakness and figuring out whether reform is needed.