Podcast Summary
Two main housing issues: supply and affordability: In high-cost metros, a lack of housing supply drives up prices, while the poorest households nationwide struggle to afford housing, leaving them with limited funds for other necessities
The term "housing crisis" is misleading as we're dealing with overlapping housing affordability issues with distinct solutions. Jenny Schuetz, a senior fellow at the Brookings Institute, identifies two main problems: one is the lack of housing supply in high-cost metros like San Francisco, New York, and DC, leading to skyrocketing housing prices. The other issue is the affordability struggle faced by the poorest households across the country, who spend more than half of their income on housing, leaving them with insufficient funds for other essentials. These issues challenge our political intuitions, as the places with the most stringent housing regulations and highest demand for housing are also the ones experiencing the most significant failures in addressing these crises.
Democratic-leaning states with strict housing regulations have high homelessness rates: Democratic-leaning states with strict housing regulations struggle to provide affordable housing, leaving low-income households with limited resources for other expenses
The Democratic-leaning states with the highest homelessness rates, such as New York, Hawaii, California, Oregon, and Washington, have implemented regulations that make it difficult to build housing in response to strong demand, leading to inelastic housing supply. Meanwhile, red states have generally allowed housing markets to function and for supply to respond to demand. However, it's important to note that the correlation between democratic governance and bad housing policy is not direct. The belief in giving communities control over their neighborhoods, which originated from a progressive reaction to past injustices, has been weaponized by wealthy communities to prevent the construction of low-income housing. When it comes to housing affordability for low-income Americans, the standard measure used by the US Department of Housing and Urban Development (HUD) is that people should spend no more than 30% of their monthly income on housing. Spending more than 30% is considered cost-burdened, and more than 50% is severely cost-burdened. This leaves low-income households with about $400 a month for all other expenses, which is not enough to cover basic necessities according to the Census Bureau's supplemental poverty measure.
Housing Affordability for the Poorest 20% in the US: Despite the effectiveness of Section 8 Housing Vouchers, insufficient funding limits their accessibility. In areas with housing supply constraints, a combination of vouchers and new housing is needed. In regions with a surplus of housing, subsidies or cash could help the poorest afford housing.
For the poorest 20% of households in the US, they spend over half of their income on rent, making them cost burdened or severely cost burdened. This is a significant issue as they often have to choose between paying rent and other basic needs. Section 8 Housing Vouchers, a federal program that helps poor families afford housing, are effective but not accessible to all eligible households due to insufficient funding. Critics argue that subsidies might not solve the problem as landlords could increase prices or there might not be enough housing to accommodate everyone. However, in areas with an excess of housing, providing vouchers or cash could help solve the problem. In areas with housing supply constraints, both solutions are needed - increasing funding for housing assistance and building more homes. In regions with depopulation problems and a surplus of housing, bringing in homeless people or immigrants to buy homes could be a win-win solution.
Housing crisis in high-opportunity areas is an inequality and opportunity problem: Limiting housing supply in strong job markets hurts individuals, families, and the overall economy by limiting access to opportunities and amenities
The housing crisis in California and other high-opportunity areas is not just a housing issue, but also an inequality, justice, and opportunity problem. By restricting housing supply in areas with strong job markets and high productivity, we are limiting access to opportunities for individuals and hurting the overall GDP of the country. This issue is further compounded when the highest opportunity neighborhoods do not build enough housing, effectively gatekeeping access to amenities like schools, jobs, and transit. This not only affects individuals and families, but also limits innovation, creativity, and job growth for the entire economy.
Uneven development patterns in cities: Strict regulations in affluent areas limit building, while fewer barriers in poorer neighborhoods lead to uneven development, contributing to gentrification and potential displacement of residents
Within cities or metropolitan areas, there's a complex dynamic at play when it comes to housing production and development. While some areas, like affluent neighborhoods, have strict controls in place that make building difficult, poorer neighborhoods may see more development due to fewer regulatory barriers. This results in uneven development patterns and can contribute to gentrification, where neighborhoods become more affluent and housing prices rise, potentially displacing current residents. It's important to note that opposition to new development isn't just a rich versus poor issue. Coalitions against new development can include poor and middle-income residents who fear being priced out by luxury developments and rising property values.
New housing construction and gentrification: New construction can both increase rents and keep them down, but the impact is not evenly distributed, leading to unequal gentrification and displacement. To mitigate this, a more equitable distribution of new housing development is needed.
The relationship between new housing construction and gentrification is more complex than it seems. While the arrival of new, expensive developments can lead to rent increases and displacement for some residents, research suggests that new construction can also help keep rents down by increasing the overall supply of housing. However, the impact of new development is not evenly distributed. Neighborhoods that have seen significant new construction tend to be those that were already gentrifying, leaving other areas with outdated housing and rising rents. The challenge lies in the political dynamics of urban development, where opposition to new construction is often strongest in poorer, historically marginalized neighborhoods, even as the greatest need for new housing exists there. This results in a concentration of change and dislocation in these areas, exacerbating the cycle of gentrification and displacement. To effectively address these issues, a more equitable distribution of new housing development is needed, focusing on areas that have been historically underinvested.
Democracy in Housing Decisions: A Complex Issue: Political scientists note that hyper-local housing decisions may not be truly democratic due to power imbalances and lack of representation for diverse populations.
The argument about small "d" democratic processes in housing decisions may not be as democratic as it seems. While it may appear that those most affected have the most power, political scientists have observed that those who show up to neighborhood meetings are often older, wealthier, and more invested homeowners, rather than the diverse population directly impacted by the decisions. Additionally, decisions made at a hyper-local level do not account for the spillover effects on the region as a whole, including economic and climate consequences. A more nuanced perspective is to view democracy as an open communicative culture, where democratic outcomes emerge from this culture, rather than a specific government type. This perspective highlights the importance of addressing the power imbalances and ensuring representation for all those impacted by housing decisions.
Democracy is more than just surveys or polls: Ensuring democratic responsiveness requires addressing the lack of experimentation in housing construction due to restrictive zoning laws.
Democracy is more than just surveys or polls; it's a culture and system where people have access and can express their views. However, as democracies develop, there's a risk that the culture of voice can be used to protect one's position rather than promote pluralism and equality. Direct democracy, where citizens show up and express their views on individual development choices, is different from representative democracy, where elected officials make policy decisions. While experimentation and localized decision-making are key aspects of democracy, the reality is that building diverse housing types has become increasingly restricted due to zoning laws. For instance, it's illegal to build anything except single-family detached houses on roughly 75% of land in most cities today. This lack of experimentation in housing construction is a significant issue that needs to be addressed to ensure that democracies remain responsive to the needs and preferences of their citizens.
Historic zoning laws limiting diverse living arrangements: Historic zoning laws have led to the outlawing of affordable housing options like boarding houses and multi-unit buildings, contributing to the housing crisis and rise of homelessness.
Historic zoning laws have led to the outlawing of diverse and communal living arrangements, such as boarding houses and multi-unit buildings, which once accommodated a wide range of incomes and living situations. Today, these structures, which exist in many cities, are considered nonconforming and often illegal. This raises questions about the true intent of zoning laws, which have effectively imposed a minimum quality and size on all housing, leaving many low-income individuals without affordable options. We've also become less flexible with alternative living arrangements, such as underground apartments or communal living spaces, despite their potential benefits for those who cannot afford more expensive housing options. The loss of these diverse living arrangements has contributed to the housing crisis and the rise of homelessness and tent encampments.
Historically exclusionary housing policies: Housing regulations have disproportionately affected low-income Black and Latino households, often using safety and health concerns as a pretext. To promote equitable access, invest in social infrastructure and adopt inclusive housing policies.
Housing policies and regulations, particularly those limiting the construction of affordable housing, have historically been exclusionary, disproportionately affecting low-income Black and Latino households. This exclusion is driven by both income and race. While there are valid safety and health concerns for some housing regulations, they often serve as a pretext for keeping out unwanted populations. The connection between housing crises and the decline in investment in social infrastructure, such as schools and transportation, is another crucial issue. Local governments must consider the infrastructure needs when allowing more housing in certain areas. However, many cities lack effective planning systems, leading to new housing development in areas with no infrastructure or underused infrastructure, resulting in increased costs and environmental impact. To address these issues, it's essential to invest in social infrastructure and adopt inclusive housing policies that promote equitable access to affordable housing for all communities.
Tensions between sustainability and environmental reviews: Environmental reviews can delay or prevent sustainable development, leading to building in less sustainable areas and increased environmental harm. The system favors those who profit from the status quo over those who would benefit from change.
There are complex tensions between building in environmentally sustainable ways and navigating environmental reviews. On one hand, there's a need to consider the physical environment, wildlife protection, and potential negative impacts on water and air quality. On the other hand, there's a concern that these environmental reviews have become overly broad, leading to delays and even lawsuits that can prevent development in certain areas. This can result in building in less sustainable areas, such as wildfire-prone fringe zones, where people have to commute further and rely more on cars, ultimately contributing to increased environmental harm. The system is set up to heavily scrutinize proposed changes, but not to the same extent for the status quo. This asymmetry benefits those who profit from the status quo and can wield political power, while those who would benefit most from changes, such as affordable housing and transit projects, are often underrepresented and overlooked.
Historical Encouragement of Homeownership in the US: The US prioritizes homeownership, making it difficult to implement policies for housing affordability and density, contrasting countries like Germany and France with their focus on social housing and renter-friendly policies.
The United States has historically encouraged homeownership as a primary means of wealth accumulation through various federal policies, such as the mortgage interest deduction and capital gains exemption on home sales. This has created a powerful political force, with homeowners often prioritizing property values and neighborhood characteristics above other issues. This "home voter hypothesis" makes it challenging to implement policies that could increase housing affordability or density, making the U.S. an outlier compared to countries like Germany and France, which have prioritized social housing and renter-friendly policies. These countries have different approaches to housing, with Germany incentivizing landlords to create accessory dwelling units and France investing significantly in social housing for both low- and middle-income households.
Challenging the myth of homeownership: Renter stability and community engagement depend on housing cost predictability and living condition quality, not ownership status. Germany's high rental rates and stable renters challenge the notion that homeownership is the only path to stability and involvement.
The belief that homeownership leads to a better society and more stable citizens may not be entirely accurate. The stability and community engagement of renters can depend more on the predictability of their housing costs and the quality of their living conditions than on their ownership status. Germany, with its high rental rates and stable renters, challenges the notion that homeownership is the only path to stability and community involvement. Additionally, the reputation of public housing in the US is largely undeserved due to past decisions to build and maintain it poorly. Countries like France and Singapore, which have successfully implemented social housing, provide alternatives to the traditional American housing model. However, the US's history and infrastructure may make it challenging to adopt these models, and a more optimistic view would require significant changes in funding, infrastructure, and social buy-in. The housing landscape in America is rapidly changing, and it's essential to consider alternative housing models that can provide stability and community engagement for all residents.
YIMBY movement and housing affordability crisis: The YIMBY movement advocates for building more housing to address the affordability crisis, but more aggressive policies are needed to make a significant impact. Younger generations, who face greater financial obstacles to homeownership, are driving this movement.
The YIMBY movement and political efforts to increase housing supply are gaining momentum, but more aggressive policies are needed to produce the millions of units of housing required to address the affordability crisis. Younger generations, who face significant financial challenges in achieving homeownership, are driving this movement. However, it will take decades to close the housing gap, even with policy changes. The divide between young and older people on housing in America is deep, with younger generations facing greater financial obstacles to homeownership due to the labor market, student loan debt, and rising housing costs. The YIMBY movement, which advocates for building more housing, is gaining traction in political establishments and on both sides of the aisle. While incremental policy changes are helpful in building political support, more aggressive policies are needed to make a significant impact on the housing crisis.
Exacerbating income and wealth inequality through housing: Older generations hoarding housing wealth worsens inequality, needs political attention, align median voter interests with YIMBYs to make progress
The intergenerational transmission of wealth, particularly in the context of housing, will exacerbate income and wealth inequality, particularly along racial lines, if older generations continue to hoard wealth. This issue is not being addressed effectively in the political sphere due to the influence of NIMBYs and the apathy of the median voter. To address this, it's important to engage the median voter and make the case that broken housing systems have far-reaching consequences for all of us, including contributing to climate change, underinvestment in education, and the creation of subpar living environments for millions of poor kids. By aligning the interests of the median voter with those of YIMBYs, we can make progress towards solving these issues. However, it remains to be seen if this message is reaching the intended audience effectively.
Exploring new solutions for housing crises: The current housing policies are not effective in addressing crises like homelessness. To make it easier to implement new solutions, we need to find ways to reduce legal challenges and community opposition, and explore alternative approaches.
There is a need for more experimentation and urgency in housing policy to address current crises, such as homelessness. The current approaches are not working, and there is a reluctance to try something radically different due to the fear of legal challenges and community opposition. The high cost of traditional solutions, such as building shelters, also hinders progress. To make it less difficult to implement new, less conventional solutions, it's crucial to explore ways to reduce the ability of blocking coalitions to form and challenge new policies in court. This could involve changing the legal landscape or finding alternative approaches to address housing crises in the short term while working towards long-term solutions.
Political climate and rising interest rates create uncertainty in housing market: Exploring historical context, political dynamics, and real-life stories can deepen understanding of complex housing issues
The current political climate surrounding housing is complex, with good-intentioned individuals advocating for impossible solutions and those with bad intentions blocking incremental improvements. This dynamic, combined with the Federal Reserve's increasing interest rates, has created uncertainty in the housing market. While higher interest rates may decrease demand for mortgages and potentially lower housing prices, it could also lead to increased rents and higher living costs for renters. It's crucial to remember that the mortgage and housing markets are distinct, and rising interest rates don't diminish the need for housing. Three recommended books to deepen your understanding of housing issues include "The Suburbanization of the United States," which provides historical context on housing development and policy, and "Neighborhood Defenders," which delves into the political dynamics surrounding housing. Lastly, the Netflix series "Made" offers a compelling look at the challenges faced by those at the bottom end of the housing market. By exploring these resources, you'll gain valuable insights into the complexities of housing and housing policy.
