A Staggering Array of Social Ills
There is no policy area where progressives are in greater need of libertarian thinking than housing. Constraints on the supply of housing, often at the behest of or with the tacit acceptance of progressives, create a staggering array of social ills. Libertarians preference for deregulation is the single best way to create abundant housing and thus alleviate those social ills.
High housing costs consume a huge portion of the take-home pay of poor and middle-class people. In 2017, roughly half of renter households paid more than 30 percent of their income in rent, the threshold for being considered cost-burdened, and about a quarter paid more than 50 percent of their income on rent. High housing costs make it so that the poor and middle class have less money to spend on other goods and services. They make it harder for them to save money, and -at the extremes- pushes them out of housing altogether. Homelessness in the wealthiest country the world has ever known is a humanitarian failure in its own right, but it is also a significant impediment to the safety and functionality of America’s cities, particularly on the West Coast.
High housing costs make it harder for people to move, thus lock people out of areas with good jobs and so stymy socioeconomic advancement while making class divisions more rigid. They make it harder for young people to build wealth. They contribute to zero-sum thinking between citizens. They reinforce racial wealth gaps. They make it harder for people with lower incomes to move into better school zones. They make people commute farther, thus taking up people’s valuable time and causing greater pollution. They slow overall economic growth and increase inequality. And they make a mockery of the idea that progressives govern well. Taken together, this staggering set of socials ills is an equality-destroying maw, a political economy black hole from which the light of the American Dream for the poor and the working class struggles to escape.
The ills caused by bad housing policy are so multitudinous and so corrosive to all that progressives say that they value that progressives should be searching anywhere and everywhere for policy ideas to alleviate these problems.
A Staggering Array of Counterproductive Regulations
What makes all of these ills that much more frustrating is that they are entirely self-imposed. We have high housing costs because we choose to make it more costly, and in some cases close-to-impossible, to build more housing. All told, the country is short about 3.8 million houses. We could have 3.8 million more houses, but we choose not to let that happen. And it’s not just the overall number that matters. That 3.8 million missing homes is disproportionately entry-level or starter homes. In the early 1980s, 40 percent of newly built homes were starter homes; in 2019 just 7 percent were. Importantly, blue states are the worst offenders when it comes to these rules. The ten states with the most onerous land use regulations are (in order): Oregon, New Jersey, Maryland, California, New York, Vermont, Hawaii, Maine, Rhode Island, and Connecticut. The ten states with the least onerous rules are (in order): Alabama, Georgia, Oklahoma, Virginia, Arkansas, Kentucky, Iowa, Nebraska, Kansas, and North Dakota. These are problems of blue states’ own making.
There are seven different kinds of regulations that contribute to burdensomely high housing costs. Let’s call them the Seven Deadly Sins of Bad Housing Policy:
1) exclusionary zoning,
2) minimum lot sizes and setback rules,
3) discretionary review,
4) lengthy review periods,
5) mandates for below-market units,
6) parking minimums, and
7) tariffs on construction inputs.
All of those need to be loosened or abolished.
In many localities, particularly suburbs, the kind of housing that can legally be constructed are detached single-family homes, no apartments, duplexes, or townhouses permitted. If allowed, a capitalist developer would gladly build those more affordable homes, sell them, and keep the profit. Single-family zoning is pretty clearly aimed at preventing this kind of pro-poor people capitalism. Simply put, an uncomfortably large number of upper-middle class families (usually white) do not want poorer people (often Black and Hispanic) living near them and so they use political power via zoning to restrict the economic liberties of the poor and the lower middle class.
These are the people I call Two Signs Progressives. Here’s an image from Weston Massachusetts, one of the wealthiest suburbs outside of Boston (median income: $197,000 in 2017) and it is beyond parody.
Yes, that’s one photograph from just one place but it is indicative of a broader phenomenon: showy progressive virtue-signaling spouted by the exact same people who fight tooth-and-nail to keep the working class and poor out of their tony $197,000 a year income zip codes. It’s exclusionary and it shows just how empty progressive rhetoric around equality often is.
Minimum lot sizes work in much the same way. By mandating that new buildings occupy a certain lot size, these regulations constrain density and so get in the ways of developers building new housing units. For example, in Connecticut, on 80 percent of the land that is zoned residential, a house must come with at least one acre and on half it must come with at least two acres. In other words, in literally half of Connecticut, it is illegal to build a home on 1.9 acres of land and on four-fifths of it is illegal to build a home on .9 acres of land. Many lower income people do not need or want an entire acre, much less two, but you can’t build houses for them because….. minimum lot sizes. Minimum lot sizes may seem like just a technical nuisance, but they are important contributors to increased housing costs. Setback rules, i.e. regulations on how far away from the street a house must be, likewise regulate how builders use space and so likewise push up housing costs.
In many areas, proposed projects go through discretionary review. That is, even if a project complies with all of the relevant regulations, it still has to go before planning authorities who can decide to deny the project approval. These discretionary review processes give opponents of the project the ability to at minimum delay if not outright stop a project. It is worth noting that this is where Not-In-My-Back-Yard activists, or NIMBYs for short, are able to do their dirty work. It is also worth noting that NIMBY activists who block housing tend to be disproportionately older, wealthier, and whiter. Instead of discretionary review, we should have what is called “by-right” review under which projects that comply will all regulations are automatically approved. If the NIMBYs will not get out of the way of new housing, the answer is to marginalize the NIMBYs from the regulatory process. People should not get to pick their neighbors.
Many cities and states require additional layers of studies to be performed by a new project’s proposers, which only adds to development costs. To give just one example, in Vermont, because of Act 250, developers must provide information on a bevy of different topics ranging from aesthetics to local educational facilities and then go through multiple rounds of environmental review on any project that involves more than 10 housing units. Once you factor in all of those delays and costs, developers, if they haven’t completely given up by this point, have to make up that costs somewhere and that somewhere is in the price of the newly constructed housing. There is a reason you don’t see many neighborhoods in Vermont; it’s because building at scale is hyper-regulated, basically to the point of being impossible. Not building at scale makes building more expensive. And that’s one of the major reasons why, in Chittenden Co. Vermont, a newly built three-bedroom house goes for roughly $650,000.
A better way to do things would be to adopt Phoenix’s 24-hour model, in which developers apply and can get approval to start a new development in less than 24 hours.
Another set of problems involves local governments mandating that a certain percentage of units be sold at below-market rates. While this is well-intentioned, these requirements backfire because, once you’ve made it unprofitable to build new housing, developers don’t build any new housing, market rate or below-market. To make the project profitable at all, and thus to make it a reality, the developer has to charge more for all of the other units.
In urban areas, regulations requiring new housing units often come bundled with parking requirements, which make housing more expensive both by ensuring that more land is dedicated to cars instead of people and by forcing developers to purchase additional land.
Finally, the United States imposes tariffs on all kinds of building materials including softwood lumber, aluminum, steel, rebar, hardwood flooring, and appliances. All of that directly adds to housing costs too.
Hating Developers More Than You Love Your Fellow Citizens
What we have then is a thicket of regulations that drive up housing costs and cause all kinds of social problems that progressives really should care about. So then why are progressive enclaves the worst offenders when it comes to this kind of over-regulation? Why do progressives sabotage themselves so badly with counterproductive housing policy? I discussed the Two Signs Progressives in the suburbs earlier, and they are certainly a big part of the problem, but they are not the only source of the problem.
To put it directly, this self-sabotage also stems from a stubborn refusal to accept that capitalists can be a force for good. Progressives’ distaste for profit is so strong that it can override other arguments that might lead them to support new housing. Researchers at UCLA conducted a fascinating study in which they tested the extent to which different rhetorical frames affect people’s opposition to new housing. They found that opposition to developers’ profiting from new housing was the single most powerful opposition frame. They “find strong evidence for this idea: opposition to new development increases by 20 percentage points when respondents learn that a developer is likely to earn a large profit.” They go on to say “our findings show that some opposition to housing is motivated not by residents’ fears of their own losses, but resentment of others’ gains.” Between seeing a problem alleviated while a developer makes a profit and see that same problem get worse, an unfortunately large share of progressives will pick the latter. This is perhaps not as nakedly selfish as the Two Signs mentality but it is just as intellectually blinkered.
In some ways this is not that surprising. A growing number of progressives these days hold very critical theory-oriented worldviews and this where that worldview leads. When all actors are ranked on their virtue in inverse proportion to their privilege, the developer (no matter how many housing units they build) can never ever be anything other than a villain while the socialist activist purporting to act on behalf of the less privileged (no matter how much real world damage the activists does) can never ever be anything other than a hero. Whereas the Two Signs Progressives are the main problem in the suburbs, it’s the Critical Theory Progressives who tend to cause the problems in urban areas. Dean Preston is a good example here. He’s the democratic socialist Supervisor of San Francisco’s District 5 and he is singlehandedly responsible for blocking housing for more than 8,500 people. Instead of allowing new housing, he has instead argued for addressing homelessness with rent controls and taxes on corporations and rich property sellers.
He sees non-market housing as the only possible housing solution for the working class and poor in cities like San Francisco, New York, and Los Angeles. Perhaps unsurprisingly, he’s also the most left-leaning Supervisor in San Francisco. His ideas might work in some DSA SimCity fantasy land but here in the real world opposing actual market-rate housing because you prefer theoretical non-market housing leads to the kind of affordability crisis and homelessness seen in San Francisco today. Walk around the eastern edge of Preston’s district and into the destitution and squalor of the neighboring Tenderloin district of San Francisco (during the day, without kids, and not alone) and tell me if you think his blocking housing for 8,500 people looks like compassionate, progressive policy.
Leftists like to decry privilege. Well, there are few things in politics more privileged than prioritizing utopian daydreams over using public policy to materially help people. When people with purchasing power look for a place to live, if they cannot find a newly built home, they will simply bid up the price of housing that already exists. The person displaced from that housing unit bids up the next one and so on. The response to displacement, rising rents, homelessness, and all of the other problems that emanate from housing scarcity is and always will be to make housing less scarce. We need more housing and we need it now.
Can government and private charities like Habitats for Humanity create some housing around the margins? Sure. Recently, Arnold Schwarzenegger bought 25 tiny houses for homeless vets. Stuff like that is heart-warming and awesome to see, but at the end of the day most housing will be supplied by the private sector and so, if we want abundant and affordable housing, we have to ensure that it is profitable for the private sector to build that housing.
Preston’s views and actions, as unhelpful as they are on their own, are reflective of a broader pathology. A lot of left-populists think corporations and billionaires are always the problem. When they run into a problem that is not actually caused by corporations or billionaires, they have near-zero ability to identify other root causes, and so they just lash out. As Jerusalem Demsas aptly puts it, “the boogeyman isn’t who you want it to be.” One of the reasons we can’t have nice things is because left-wing populists would rather there not be nice things than for someone to profit from providing the nice things.
So there we have it. In the suburbs, Two Signs Progressives block capitalist developers from building more housing because they don’t want less affluent people living near them and in urban areas Critical Theory Progressives block capitalists developers from building more housing because they don’t like capitalist developers. This is where the staggeringly counterproductive regulations and the staggering array of social ills comes from.
We Couldn’t Have Left the Trailer Today
These ills have real harms. I lived in a mobile home for the first 11 years of my life. We slept under electric blankets because the insulation was so bad that it was impossible to keep the trailer warm. In the winter, I could see my breathe getting ready to go to school. When I was 11, we were able to move to a real house because my parents had been able to save up enough for a down payment. My dad worked in a steel mill. My mom was a drafter. Neither went past high school. They were able to save up that down payment because in 1998 that house only cost $130,000 (that’s about $222,000 today). Both of my parents were from poor backgrounds. I don’t know how to describe how much pride they got from being able to buy a real house and have their kids live in a real house instead of a mobile home. We were working class, but because housing was affordable we got to live like we were middle class. That was 1998. If we had lived in today’s blue-state housing market, we never would have gotten out of that mobile home.
Progressives should stop listening to those with no ideas beyond the same tired NIMBYism or the same tired anti-development populism. When libertarians say the word ‘deregulation’, progressives sometimes roll their eyes. On housing in particular they shouldn’t. If progressives are truly dedicated to greater equality, to greater opportunity, to the poor and middle class having easier lives, to people having shorter commutes, to less pollution, and to more functional cities, the path to achieving those goals is libertarian housing policy.
This is not as radical as it seems. Each of these policy fixes is a relatively moderate idea. Even in combination, this is not as radical as either the Two Signs Progressives or the Critical Theory Progressives would have you believe. These are common sense market-friendly reforms that will help a lot of people. They will help people like my parents move from the trailer to the real house. They will help a lot of today’s renters own. They will help those who continue to rent pay less in rent. I refuse to accept that helping those people must take a backseat to socialists’ daydreams or NIMBYs’ change-aversion.
Here is what we need to do:
1) End exclusionary zoning,
2) Abolish minimum lot sizes and setback rules,
3) Change discretionary review to by-right review,
4) Expedite approval processes,
5) Drop mandates on below-market units,
6) Abolish parking minimums, and
7) Zero-out tariffs on construction inputs.
To borrow another line from Jerusalem Demsas, a rising star in housing policy, currently “Democrats have no plan to fight housing inflation.” Well, here it is. This is the plan to make housing more affordable. This is the path to genuinely progressive housing policy.