In an extended version of 10 Blocks, Brandon Fuller and M. Nolan Gray join Michael Hendrix to discuss the state of housing in America and the political coalition driving pro-development policies at the local level, known as YIMBY (“Yes In My Backyard”).
Construction of new housing isn't keeping up with demand in American cities. With leaders and residents eager for solutions to high housing costs, pro-development advocates are making their presence felt.
YIMBY policy solutions typically involve lowering or removing regulatory barriers to new housing, like parking minimums and height limits near transit stops. Cities such as Minneapolis, Portland, and San Diego have already taken steps in this direction. If these reforms prove successful, more cities may follow suit.
Brian Anderson: Welcome to the 10 Blocks podcast. This Brian Anderson, the editor of City Journal. The cost of housing is one of the biggest political issues facing American cities today. If you check the news, you'll likely find stories every week about Silicon Valley tech workers paying insanely high rent to live in shoe boxes, or long-term residents being priced out of their old neighborhoods as newcomers move in. But over the last few years, a coalition of activists on the left and the right have joined together to fight against rules and regulations that hold back new housing development. They call themselves "YIMBYs," which stands for yes in my backyard, to contrast with "NIMBYs," not in my back yard. Coming up on today's show we'll here from supporters of this interesting shift who will discuss the state of urban housing in America and how, in their view, we can lower the barriers to building in our cities. Michael Hendrix, our director of state and local policy at the Manhattan Institute will interview two City Journal contributors, Brandon Fuller and M. Nolan Gray. Michael will formally introduce our two guests in a moment, but one announcement before we get started. City Journal readers will be happy to know that the summer 2019 issue is hot off the press. To name a few highlights, Steven Malanga and others on the return of disorder in U.S. cities, Rafael Mangual on the truth about mass incarceration, which you can already find online; John Tierney on Pittsburgh's latest revival; Roger Scruton on Yuval Harari, a Silicon Valley guru; Jonathan Meer on why raising the minimum wage is a bad idea for the labor market; and much more. Visit city-journal.org to check out the new issue and to find out how you can subscribe to the magazine. That's it from me. The conversation between Michael Hendrix, Brandon Fuller, and M. Nolan Gray begins after this.
Michael Hendrix: Welcome to the 10 Blocks podcast from your friends at City Journal, here at the Manhattan Institute. I'm Michael Hendrix, the director of state and local policy. I'm joined today by M. Nolan Gray and Brandon Fuller to talk "YIMBYism." That's yes in my backyard, for the uninitiated, and it's a movement transforming the politics of housing in America. What is it, who's for it, and where does it all go are all questions we're going to be asking today. M. Nolan Gray is an urban planner in New York City and a contributor to outlets such as CityLab, Strong Towns, and Market Urbanism. Brandon Fuller is the deputy director and research scholar at NYU's Marron Institute. Thank you both for joining us. We're talking housing today for one simple reason. The rent is just too high. Something seems broken in our housing market. Costs are soaring as housing supply fails to meet demand in the most prosperous corners of America. I think it's Econ 101. Some blame markets, but many blame government. Something is off. Home prices nationwide are rising at twice the rate of income, three times the rate of inflation; rents in places like San Francisco are easily running north of $3,500 a month for a one-bedroom apartment— in fact, that seems like a steal, probably, to some of our listeners in San Francisco— and apartments in New York, L.A., Boston, places like that, are frankly not much better. Meanwhile the rate of new housing units being built every year is more than 20% below the average they were running at between 1975 and 2000 and by some estimates last year alone, the United States fell 400,000 homes short of the total needed to keep up with population growth. These numbers sound bad. So I ask us all, what's the problem here? What's going on?
Nolan Gray: Well, part of the problem is that things have actually gone spectacularly well for cities. Cities like New York and San Francisco have come roaring back. There's huge demand to live in these cities. Globalization, the rise of tech, all of these things have led salaries to increase pretty dramatically, especially in places like the Bay Area. At the same time, there's more of a need to be in a central location. As we moved over to an information service, innovation oriented economy, it's very important to be in a handful of locations. The problem is that supply of new housing has not kept pace with that demand, especially in central cities and in inner suburbs where you're basically working with the housing stock that was built, in many cases 150 years ago. And it's very difficult to add anything new.
Michael Hendrix: So this is more demand. We've become a victim of our success. Cities are just too great right now.
Nolan Gray: Yeah, in a way it's a situation where a population moved in the '80s and '90s, and they've got theirs, and there's really no incentive if you already live in a city to allow for more housing. On the contrary, you actually benefit. If you own a home or a condo in a city that's not adding a sufficient amount of new supply, prices are going to go up and you're going to benefit enormously. And the way that we've structured our tax system and the way we structure property taxes in many cases isn't fully capturing that value. So what you have is a situation where established special interests are militating against any new supply to the detriment of newcomers and people who might want to move to a city but can't afford it, so they're kept out. And you'd rarely hear from the newcomers because they're sort of dismissed politically, and then you never hear from the people who want to move to the bay area or New York City, but they can't because of the price.
Michael Hendrix: This seems like a tension between newcomers versus incumbents. And in this case it's incumbent homeowners, incumbent residents, citizens. Is that right?
Brandon Fuller: There is a tension there between newcomers and incumbents, but I'd also point out that it's becoming an issue that if you are a younger person who perhaps grew up in one of these high-demand cities, you share something in common with newcomers. You wouldn't think of yourself that way, but you can't afford housing.
Michael Hendrix: This almost sounds more like a generational conflict.
Brandon Fuller: It can certainly be thought of as a generational conflict and I think that shows up in the composition of the YIMBY movement—
Michael Hendrix: Wait, pause here. So, we have this political movement that's rising up to address what we're describing as a supply and demand issue around housing. So there's lots of demand for valuable real estate in America's most prosperous cities and the supply of the housing stock is not really keeping up with that demand, so prices soar. There's now a political movement rising to address it. It's a YIMBY movement. What is YIMBY?
Brandon Fuller: Sure. So I'm going to actually let Nolan mostly address the 'what is YIMBY question.' I do want to make one distinction, though. Certainly there were political movements around affordable housing before YIMBYs. I think the more unique challenge that's sprung up with the return to the city, and then supply-side restrictions— restricted zoning and land use policies— is that now housing is out of reach for middle income folks or people who might be looking at a starter home or condo or something like that. An issue that's really with every city, high demand or not, is sort of capital A affordable housing. So you have an issue— people have low incomes, they can't afford housing necessarily; many of them do end up getting housing through the market, but there's also a role for the public sector to subsidize housing and provide some assistance to low-income families. And of course there's an entire political movement around that, affordable housing activists and so forth. When Nolan describes the YIMBY movement, I think one of the challenges that the YIMBY movement faces is engaging with those existing housing advocates and building a coalition that includes them and others, and comes up with some sort of harmonious policy prescriptions.
Michael Hendrix: How to engage with existing affordable housing advocates is a good question that I want to put a pin in and come back to. Nolan, what are YIMBYs and how do they differ from NIMBYs?
Nolan Gray: So, the basic definition is a YIMBY is somebody who says "yes in my backyard," so they would want new development near them or in certain areas of the city and this is sort of a neologism. Historically, of course, you have NIMBYs, which are people that say "not in my backyard." So this means a lot of different things at a lot of different points in history. So at some point, NIMBYs have meant people who didn't want a highway through their backyard, and I'm very sympathetic to that. Or NIMBYs might've been people who didn't want certain undesirable uses, like a toxic waste facility or a landfill near them. But what NIMBY has come to mean today is people who fight any new development, especially housing, near where they live. And this is a really big problem, especially in places where housing costs are really high, because the only way you're going to bring those costs down is if you have enough new supply being added to meet the growing demand. So that's why you've had this YIMBY reaction of a lot of young people— but it's not just young people, it's anyone who's concerned about housing affordability— who are responding to the homelessness crisis. They're looking at the situation and saying, there's no way out of this crisis without more housing. And to what Brandon was saying, it's very broad and politically diverse. There's multiple issues at play here. So, you do have to increase the housing supply. At the same time we have to contend with the fact that we have a housing affordability crisis that's decades in the making, so another element of that is how do you help people today? So there are a lot of ideas; it's a very politically diverse community. You have socialists all the way over to conservatives. It makes going to a YIMBY meeting fun, because there'll be, at best, some good-natured debates and at worst some interesting arguments. But it's a huge political coalition, not too dissimilar from a lot of movements that are successful today. It's been most pronounced in the Bay Area, where the crisis is completely out of control— you have a homelessness crisis, you have people living in tents and they can't afford homes, you have people who are commuting two hours from Stockton into the Bay Area— and it's also become quite popular in the Northeast where you have a similar situation; not nearly as bad, but it's certainly pretty rough with places like Boston, where it's become very prosperous, but as many of the listeners may know, it's very hard to build things in Boston. So it's this cross-ideological, intergenerational movement that's trying to say, 'let's build more housing and let's go out there and not let the NIMBYs be the only voice in the room.'
Michael Hendrix: What I find fascinating is that this YIMBY movement seemed to have appeared out of nowhere. You would have gone back maybe a decade ago and, as best I know, there wasn't much of a thing called the YIMBY movement. But all of a sudden, from the ground up, from the grassroots, young people— particularly on the coasts, and particularly in California— seemed to gather together, prompted by the internet, being able to coordinate and say, 'we actually agree on a number of planks for housing reform,' that are all roughly market oriented that want to lean into the market and say 'if there's a problem with supply and demand, we need to fix that problem through the market.' And there's a role for government. But maybe the first role for government here is for policy makers to figure out what the barriers are limiting this new housing supply coming on the market. And they began to find each other, began to coalesce and form, and all of a sudden get some traction that maybe hadn't occurred before. By the way, this opposition to new housing development didn't just start five years ago or 10 years ago. This is something that happened or started maybe in the 1980s. And I'm curious what prompted the growing concern with new housing development? Where did that come from?
Nolan Gray: Well, there's a big history there. There's a concept within urban planning history called the Quiet Revolution. Essentially what happened was you had rapid inflation in the United States, so people needed to have a place to store their money. At the same time, this was when the U.S. housing finance system was really in full swing. We were building a lot of new housing on the periphery, many Americans for the first time were buying homes in the '50s and '60s. By the '70s, a lot of people had bought homes out in the suburbs and the periphery, there's not really a lot of good places to park your money, and home values are skyrocketing as a result. At the same time, in many cities, not fully understood is the fact that in the '70s actually is when many of these really nice— what are today nice— inner suburbs were starting to turn around. Greenwich Village— Jane Jacobs was there in the '60s, and I love Jane Jacobs, but she was a gentrifier at the time. She was turning around the village and leading the charge for middle-income and high-income Bohemians, which would lead to professionals, et cetera. So around this time you have these macro trends that encourage people to park money in real estate, especially their homes, and you have this framework that supports that.
Michael Hendrix: And if you're a homeowner, you've parked your money in a place that you live in and you're treating it not just as a roof over your head, but potentially even a financial instrument, you've levered up that financial instrument— and by the way, that leveraged financial instrument that's taking a large part of your paycheck also maybe is connected to where your kids go to school, I would feel like I would want to protect that asset.
Brandon Fuller: Yeah. This is William Fischel's "Homevoter Hypothesis." People are super sensitive to their housing values. That was a change that, as Nolan suggested, appears to have really taken place in the late 1970s. That's also the time we see land use and zoning becoming more restrictive, but then there's also a really nice paper by Peter Ganong and Daniel Shoag about regional income divergence. Prior to that period, people were migrating more within the United States, so I might leave a poor area in the South for a more affluent urban area in the Northeast in pursuit of higher wages.
Michael Hendrix: And broadly, opportunity.
Brandon Fuller: Yeah. And when that happens, the labor supply from wherever I left contracts, which puts upward pressure on wages. So you're actually seeing convergence between places like Connecticut and Mississippi, and after the late 1970s, that convergence comes to a halt. People are no longer moving around as much, and this Shoag and Ganong paper suggests that restrictive land use policy, driven in large part by the behavior of very protective homeowners, was a big reason that people are no longer migrating and that housing prices went up. It's a long and interesting multi-decades-from-where-we-are history.
Michael Hendrix: In turns out the big business developers, all the people that maybe would have resided in the city proper, weren't pushing for as much housing or weren't outweighing the influence of these home voters as much as we thought would happen.
Brandon Fuller: Right. I think there was an operating theory from sociology at the time associated with Harvey Molotch about a coalition of big business developers, labor unions being sort of a growth coalition and forcing overdevelopment in cities. And that turns out really not to have been the case. Looking at the '90s and the 2000s and the decade we're in now, it really is homeowners that have controlled that process. And in addition to the macro trends that Nolan sided, particularly stagflation in the '70s, we've developed a series of federal policies that reinforced those instincts. Similarly, you mentioned education. We've developed an educational system that reinforces those instincts. So, we reward people disproportionately for home values. Home values have preferential capital gains treatment, for example. So it's better to park my money in a house if I can sell it at a profit than it is to diversify into other assets because I have a better tax treatment on selling the house. We have state and local income tax deductions which allow me to take out from my tax bill a large portion of property tax that I might, pay for example. So all of those things will make me even more sensitive and more wrapped up in that house as a financial investment than would otherwise be the case.
Michael Hendrix: Also, with the automobile post World War II, the construction of highways— also federally subsidized— that makes it easier than ever to live farther away from the city center. And there's just changing employment patterns. There's changes in the industry mix in America that was, for a time, less dependent on being in a dense city center. But then something changed, and I think this is why history matters: because it helps us understand the present and maybe where we're going in the future. While the economy did change and people's tastes maybe adapted as well, so we had this advent of a knowledge economy. We thought the knowledge economy would help people disperse even further. It turns out that's not true. To get more innovation, more productivity, it actually helps to have really— especially really smart people, but really just anybody be closer together to do what we're doing right now, sitting across the table from one another, exchanging ideas. And then maybe together the ideas can result not just in City Journal articles but can result in fantastic companies in Silicon Valley, and all sorts of amazing things. People discovered that, you get this knowledge economy prioritizing proximity, and that proximity is attractive to people. So as the productivity and all the greater opportunity in wage gains that come along with that came about, simultaneously people's tastes began to change. Maybe the thought of living close to a McDonald's was not quite as attractive as it once was. People were really excited about that back in the day, in the age of Howard Johnson, and McDonald's, and shopping malls. All of a sudden maybe what's offered in Brooklyn in a little corner bodega seems a little more attractive to me versus the shopping mall.
Nolan Gray: I would take a Trader Joe's, personally.
Michael Hendrix: Trader Joe's is actually nice.
Brandon Fuller: All of that is true. I think that there are benefits from urban proximity in a knowledge-driven economy, but I think we'd be remiss, since we're on a City Journal podcast in particular, to not acknowledge the role that the national decline in the crime rate, and particularly violent crime, played in the return to the city. So regardless of what you attribute to the driving factor behind the crime decline, cities became more pleasant places to live because you didn't have to fear victimization as much as you might have in the 1970s, or in the 1980s, for that matter. And that's important.
Michael Hendrix: This is very important, especially because in the studio that we're in, there's a picture of former NYPD police commissioner Bill Bratton staring down at us right now. I know the listeners of this podcast can't see it, but I hope you will appreciate it all the same.
Brandon Fuller: Yeah. We were talking about the San Francisco Bay area and the knowledge economy. Silicon Valley traditionally has been a very suburban environment. So it's not as though a knowledge economy can't thrive in the suburbs. It might do even better with higher density, but there are other things and other social factors that play into that and that need to accommodate that.
Michael Hendrix: And these forces all converge in the city writ large, and they have. And they have, and the city comes back, and people want to be in the city, especially if you're educated or prosperous, you have some wealth, young educated, maybe also wealthier empty nesters. And from a period— Nolan maybe, you'll have the numbers better than I would— maybe from at the very least 2000 to 2010, and let's just choose that 10 year period, the city really came back. The city writ large, whether it's New York or San Francisco or Boston, but many other places, too. And then something began to change, especially as housing prices began to skyrocket, and especially most recently, that demand seems to have tapered off a little bit. And simultaneously you have young people getting up in arms about their inability to access an affordable place to live, it being harder than ever to buy a place to live if they do choose to stay in a place like New York City, and maybe choosing, either for their own personal reasons or just because it's completely unaffordable to live in the city, just saying 'it's not worth it. It's not worth it any more. We're going to move away.' And others trying to stick it out. So, now we get to this place where the YIMBY movement is coming to the forefront to represent those interests, people who want to be in the city or live in the city, finding it more expensive than ever. So what are they proposing to change this dynamic in cities that make it so expensive to live here? What's being proposed?
Nolan Gray: Well, there are about as many proposals as there are YIMBY groups—
Michael Hendrix: I'm assuming that's a lot?
Nolan Gray: Yeah, it's a lot; and more and more every day. It's heavily based on the local context, what is throttling housing development in a given city. For example, in Minneapolis, just recently they overhauled their comprehensive plan, which is a document that sets the terms for things like land use regulation, and infrastructure investments, and school planning, and things like that. And a key part of the reform that the YIMBYs actually pushed for pretty aggressively was to end what's called single-family zoning. Single-family zoning says in many cases in most of the city, you can only build single-family homes. You can't take a single-family home and divide it in half and turn it into a duplex. You can't have, for example, a corner grocery. You can't convert your unused garage into an extra housing unit, let's say, and in many cases that's important because people get older, maybe they want to have company, but they also need help defraying bills. Traditionally, this was very common: to take single-family homes and take in a boarder or subdivide them or even, as home prices went up, to purchase a home and redevelop it to accommodate more people in a neighborhood. In Minneapolis, a big part of that was ending the zoning, which says you can't do any of that. Now, of course, in those areas you still can have single family homes. Some people hear single-family zoning and they think, 'oh, if you've ended it, then we can no longer have a single-family home.' That's not the case. But they're essentially allowing property owners to do more and respond to this rising demand.
Michael Hendrix: Right. So such a reform is not telling people how to live or where to live. It's giving people the choice and the freedom to choose the type of housing that they would like and be able to either construct it or live there if they so desire.
Brandon Fuller: Now, I think, and Nolan can correct me if I've got this wrong, but the changes in Minneapolis as I understand them also do a good job of responding to a common problem that existing residents might have, which is about the physical character of a neighborhood. So, you can convert a single-family home into a duplex or triplex without structurally changing the appearance of the home from the outside. You can add an accessory dwelling unit in the backyard without—
Michael Hendrix: An accessory dwelling unit is, say, if you have a detached garage in the back, a little spot above it for granny, you can build—
Nolan Gray: They're literally called granny flats.
Michael Hendrix: Exactly. You can build a housing unit in your backyard and maybe, let's just say, invisibly densify a neighborhood.
Brandon Fuller: Right. Or with very minor adjustments to the physical appearance and character of that neighborhood. I'm not suggesting that perhaps this shouldn't be an option in certain areas, but at least as far as the changes in Minneapolis go, also the changes that Portland recently made along the same lines, what you're not going to see is a high-rise apartment building go up on at the intersection of a traditionally suburban, single-family neighborhood. Now, that may eventually happen, but I think part of what the YIMBTs are after is more regulatory flexibility to evolve in that direction. So, places that were inner suburbs a long time ago may now be thought of as part of the urban fabric, and they've evolved over time. You fly into any major city and you can sort of see how that might be the case spatially. I think one goal here is to get some incremental changes in place on zoning and land use that allow these neighborhoods to adapt over time and add housing units, and one strategy that— at least in the case of Minneapolis and Portland— YIMBYs have settled on is not saying, 'okay, you can build anything anywhere.' What we really want is, instead of restricting this to single family homes, let's give people the option to build a duplex or triplex.
Nolan Gray: That's an important and subtle distinction, too. My approach to YIMBYism is, we're just expanding opportunities for people in a way. You're taking these historical zoning ordinances, which in many cases were written in the 1920s, 1930s— if you're lucky, as recently as the 1960s— but in any case, you're taking these zoning resolutions that are pretty seriously out of date and they're enforcing a lifestyle that might have made sense in that time period, but doesn't now. For example, when we had abundant land, and land costs were low, and we could capture all this low hanging fruit, and just expand cities outward, single-family zoning wasn't a huge restraint on the amount of new housing being built. But now that the next stage of development is taking those and subdividing them or building new small multifamily fourplexes, for example, it is a serious constraint. And so the YIMBY ethos, as I interpret it, is allow people to do more with their property. They don't have to if they don't want to. If you own a single-family home, nobody's going make you subdivide it. Maybe there's a more radical fringe of YIMBY, who are not coming on to the City Journal podcast who would push that. But that's not my approach to it. And it's the same with suburban development, too. I know that Brandon and I recognize that there are many people who do just prefer to live in a single-family home in the suburbs, and that's totally fine, too. As long as you're paying the costs of the infrastructure, in any case, I don't particularly mind how people want to live. If they can afford to cover the costs that they're imposing on society or anything of that nature, then surely it's perfectly fine.
Michael Hendrix: So for single-family zoning, and the zoning we're talking about generally says you can only build a certain type of dwelling in a certain area and anything else is effectively illegal. We're also saying that that form of zoning applies to the vast majority of cities— I'm just running through the basics— it applies to the vast majority of cities. And in the vast majority of cities where you do see zoning and, broadly, just land use laws in general, they predominantly allow only single-family homes to be built. So you'll have some cities where you're talking 90-95%, 99% of all residentially zoned land, only allowing single-family homes, and if you want to build anything else, it's illegal, right?
Nolan Gray: Yeah. And it's not just single family-zoning. I think that's a huge element of it. That was what they really zeroed in on in Minneapolis, because they did have this situation where something like 80% of the city only allowed single-family homes. In other cases, where they've already moved past that stage of development and are building larger apartment buildings, potentially. In many cities, a big YIMBY cause is the issue of parking requirements. Again, to frame it like single-family zoning, you can still build as many parking spots as you might like, but what minimum parking requirements said was that, if you're going to build so many residential units, you have to build so many parking spaces, or if you're going to build a restaurant every 1,000 square feet, you have to have 10 parking spaces regardless of if your customers drive, regardless of if the people that live there want to drive. You might be in a city and you'd be right on top of a train station or a rapid bus station, in a very walkable neighborhood, and the city will still say 'no, you have to build this parking garage.' And, depending on local labor costs, material costs, that can increase the cost of a new apartment or a new condo anywhere from $30,000 to $90,000. And that's a threshold that's going to price a lot of people out of a neighborhood. The YIMBY approach to that is, if people want parking spaces, that's fine. They can cover the costs and pay for a more expensive condo that comes with a garage. But if they don't, there's really no reason for the government to be forcing developers to incorporate that.
Brandon Fuller: Yeah. It's certainly something that developers can figure out for themselves. So we started on this strain because you asked what are representative YIMBY policies, and Nolan just got us away from dealing strictly with single-family zoning, but I think the granddaddy of them all is Senate Bill 50, California. This is the biggest expression of YIMBYism that we've seen today.
Michael Hendrix: Right. And I should note that you two wrote a piece for City Journal called "Who Killed Zoning Reform in California?," which sounds like a murder mystery. It's Colonel Mustard in the suburbs with a lead pipe. What is the statewide zoning reform in California that you were talking about?
Nolan Gray: So, SB 50 was a bill by a California State Senator Scott Wiener—
Brandon Fuller: is—
Nolan Gray: —is; we'll get to that in a minute. It essentially said to cities, 'you have to allow a certain amount of new housing to be built—" allow emphasis on the allow— "near transit such as rail or frequent bus service.' And this was in certain urban areas. In less urban areas, they would have to just allow fourplexes wherever they allow residential. So this was pretty dramatic; this was a statewide bill for the entire state of California. And it was basically a way to try to deal with the housing crisis. Part of the problem with state involvement is that, in many cases, states will come in and say, 'okay, here's your housing targets, try to meet these,, we'll review your zoning code.' But it's so complicated and it's so easy for cities to play games and find ways to not actually build their fair share of housing, and you experienced this, for example, in New Jersey, which has Mount Laurel where the state says 'every municipality has to build their fair share. Here's your fair share. Send us a plan that complies with that and we'll sign off on it.' Of course, anyone with any experience in New Jersey knows that this is a litigious process. Lots of games are being played. The courts have to really scrutinize these plans. So the California response was, 'okay, well, we're just going to set up a statewide land use regulation rule;' kind of a blunt instrument to say 'within transit, it's appropriate to have, let's say four to five stories multifamily units.' Unfortunately it was tabled, despite the fact that there was a lot of polling coming out right around the time that this happened, that indicated this was a pretty popular thing.
Brandon Fuller: When Senator Scott Wiener, who represents San Francisco, proposed SB 50, which is a follow-on from a prior bill that had gotten a lot of attention, and was even more aggressive about taking a swipe at the state's affordability crisis, it looked like this SB 50 bill at least had the political winds at the back in order to reach the governor's desk. And then in May, it was tabled. And people are wondering why, who killed SB 50? I think you guys have an answer.
Brandon Fuller: Yeah. We make a case that plenty of other people have made, which is that the constituents of suburban towns that are zoned for single-family housing are ultimately to blame for this. One of their representatives who chairs the appropriations committee is the person who pulled the bill, or at least tabled it for next year. This was done unilaterally, but this is a person that comes from a district that— I think, in the in piece we mention— hasn't approved multifamily housing for decades. So the notion here is going back to what we discussed earlier, the sensitivity of homeowners, particularly homeowners and communities that are zoned for single-family detached homes to resist change over concerns about the impact that that change might have on the value of their homes, on the education situation in their community. Scott Wiener did a fantastic job of building a coalition. We also talked earlier about affordable housing advocates who are very skeptical of this sort of market-driven supply-side approach in the previous session, and did not sign onto it largely. So, when he reintroduced SB 50, he did a better job of coalition building. There was bipartisan sponsorship of the bill, which is not a terribly big deal in California because it's largely a blue state, but it's symbolic. There was some bipartisan support. But interestingly, a lot of these housing issues don't break cleanly on party lines and they create some interesting fractures within the Democratic Party in particular because democrats tend to be in control in states where these issues are most problematic: Washington, Oregon, California and New York. That's not to say that's exclusively the case. There are places that have affordability challenges related to affordability for middle-income folks that are red states. But at least in those states, this housing issue and the pushing this yes-in-my-backyard agenda is creating some contention within the democratic coalition. SB 50 is a good example of that. So, introduced by a Democrat, killed by a Democrat.
Michael Hendrix: For the Democrats, you see their coalition split right down the middle on housing issues. You can see environmentalists, for instance, on both sides of the housing debate. Some saying we need more housing, or at least more options for more housing in denser areas in order to reduce our environmental impact. Others are using, say in California, environmental rules in order to stop new development, or at least to slow it down. So for as much as you get bipartisan support, sometimes, for YIMBY proposals, NIMBYism can also be bipartisan.
Brandon Fuller: It can be, and I'll also say among the YIMBY or pro-housing coalition. There can be some division depending on where you sit in terms of state, local, or federal government.
Michael Hendrix: SB 50 was notable, then, because this was a statewide reform. There has been a lot of push for local reform because land use regulation, whether we're talking zoning or parking, it's all decided locally, really. A lot of it is, at least. And at some point we, collectively— anybody who is a YIMBY— decided maybe there's another fight that can be had at the state level. Maybe reform on housing at the state level could introduce different political coalitions and maybe could at least set the terms for debate differently than what's been done before. And Scott Wiener recognized that, pushed for SB 50, and it seems like they got much more traction than you can get, say for housing reform in Palo Alto.
Brandon Fuller: Right.
Nolan Gray: And that's the problem. With a place like San Francisco, San Francisco could certainly be building more housing. There's no question. But a real problem for San Francisco is that the suburbs in the bay area basically build nothing. They build next to nothing despite the fact that they allow in hundreds of thousands of new jobs. So this is a huge problem and, really, you have kind of a prisoner's dilemma. If I'm a suburban municipality and I succeed in blocking housing, not only do the home values of my current constituents go up, but I can essentially try to offload that housing on to someone else. What ends up happening— and this ties into the broader discussion about gentrification— is that since everyone is not cooperating, and they're not building new housing, what ends up happening is that people go into these lower-income areas where home values are low, and they bid them up, and in many cases lower income people— predominantly, racial minorities, people who historically are marginalized in the planning process— can no longer afford their communities. And this is why, in places like the Bay Area and major northeastern cities, you have such a huge problem with gentrification, because people are priced out of the areas that might be high opportunity, high access to jobs, good access to transit. So they're going farther and farther out into these areas where, for historical reasons, home values and land values are low. There's a big debate about how to solve that, but the YIMBY suggestion is, why don't we just build more housing where people want to live? Don't give people a reason to have to go out and bid up these properties that are housing people who might not have other opportunities.
Michael Hendrix: Where they want to live, and maybe close to where they work. Brandon, your colleague Alain Beratud argues that cities effectively are labor markets. That's the best way to understand them. So, if somebody lives very far away from a job, has a long commute— in California, as you noted, Nolan, it's not unusual to have sometimes a two hour commute, also not unusual in some parts of New York— that could be a problem. That can be a hindrance to the functioning of a city, and the city as a labor market. So, by allowing housing to be built closer to where people want to have jobs or already have a job, that can help the city as a whole to function better and to become more prosperous and better off generally.
Brandon Fuller: Absolutely. It points to another issue that we have, which is maybe for another topic, that folks have certainly written about in City Journal, most recently Connor Harris. Part of this idea of the city as a labor market is, if you have an efficient and effective transit system, that can be a massive area. So I might physically live quite far away from my job, but in terms of commute time, I can get there relatively quickly. And that comes back to a dual challenge for high-demand American cities: building more housing, accommodating more people who want to live in those areas, but also getting them from a to B in an inefficient manner. The problem we have there, of course, is that in the United States it is exceptionally, extraordinarily expensive to build infrastructure compared to peer countries in the rest of the world. No one has a good answer as to why that's the case, but we're starting to crack that code, and I think it's another important challenge for YIMBYs to address. It's a complimentary issue, this issue of transit and lowering the cost.
Michael Hendrix: That's right. So where there are pressures to grow cities, which YIMBYs are generally pro growth— if there's growth pressures, let's accommodate them— there's also the question of how you help scale the city to accommodate that growth. And scaling, lot of it comes down, essentially, to infrastructure. So we can't ignore what it takes to drive your car in a city, what it takes to ride the rails in the city. Those are very important questions, especially in New York.
Brandon Fuller: Right. And SB 50 reflects this. Certainly there was some logic behind drawing the zone around transit nodes. But there's still a big challenge there. It's not as though building transit infrastructure in California is significantly, or any less expensive than it is building it in New York.
Michael Hendrix: By the way, I think it's also interesting to quickly pivot back to something that you were saying, Nolan, that opponents of housing reform— you see this in some places like Cupertino or Palo Alto— say rather than allowing housing supply, we should just stop the demand. So, take your tech jobs somewhere else. We don't want your growth, we don't want your opportunity. That seems really counterproductive, but it also could potentially fit with what some homeowners there that are already doing just fine would consider to be in their best interest.
Nolan Gray: Yeah. There was just an op-ed recently in some Bay Area paper where somebody was making some kind of Theranos argument about, 'oh, well the problem is we just have too many people.' We have these people coming to the bay area. This is not China; we don't have checkpoints where you show your visa to travel over state lines. So, there's really no way to throttle this demand, and it's not just a matter of 'we'll close down the gates, we'll not build any new housing, and it will only hurt the people that are coming here.' No, it's hurting the people who are getting their properties bidded up on. If they're renters, their rents are going up; those are the people that are suffering when you say, we're not going to build any new housing. Because the people aren't going to stop coming just because you've stopped building housing. There's no doubt, in my mind, that the primary function of cities is to make people more productive, to get them into massive labor markets. You should read Alain Bertaud's book; it's fantastic. But that's certainly not the only reason. In many cases you have people who have certain lifestyles that they would prefer; they want to live in a city. Maybe people don't want to own a car, for lifestyle reasons, but also for health reasons. If you are in a unique religious community or a unique ethnic community, you might need certain social infrastructure that doesn't exist in a small town. So cities don't just make us more productive; they offer something much bigger in the sense of these cultural amenities that are really important. There's always going to be this draw. So to just say, 'oh, well we need to deal with the demand problem, and in the meantime we're not going to build any housing' is really just to kind of not take the issue super seriously.
Michael Hendrix: So, California is not the only state trying its hand at reform, nor are local governments just sitting back and doing nothing. Oregon, just north of California, passed some of the most significant housing reforms in the country recently with bipartisan support. It says that in the Portland metro area and other Oregon cities that have more than 25,000 residents they should allow duplexes, triplexes, fourplexes and quote unquote cottage clusters on land previously zoned for single-family houses. It also affects cities with at least 10,000 residents; they're required to allow duplexes. That's Oregon. Minneapolis, which was mentioned here, passed sweeping reforms. I'm curious what seems to work. When YIMBYs win, what seems to work?
Brandon Fuller: One thing I learned from Joe Cortright, who writes at City Observatory and is worth checking out, is that Oregon actually has a history of stronger state preemption on housing issues; whether you think that's led to good things or bad things, that's the case. Whereas the Minneapolis reform was city specific, the Oregon reform was statewide. But I think in some ways it was less noteworthy, the build-up, the tension around it. Oregon's smaller than California and maybe less significant in the American culture in terms of whether the New York Times is covering a state policy issue, for example. But I think this came up, especially in the wake of SB 50 it was sort of like, 'oh wow, this happened. Cool'. And I think Courtright's point was, well, there's a history here of state preemption. It's a big deal, but it's consistent with the history here. In a lot of other states, getting over the state preemption hurdle is a big political challenge, particularly in California. And I think local control is going to be a compelling and effective opposition to this type of reform. One thing we mentioned in our piece is the notion that eventually— let's see what happens next session— the YIMBYs, the reformers, the pro-housing coalition in California may have to look at a bill that does allow for more local flexibility. There's a legal scholar at UC Davis who's written about this, Chris Elmendorf: a way to basically create a compact where the state says you need to come up with a plan to facilitate this much housing.
Michael Hendrix: Which has been happening.
Brandon Fuller: Well, that's been happening, yes. You're free to do that how you see fit, so you implement whatever zoning reforms, you approve whatever projects, you have to come up with a plan that will do that. That all happens now— they have housing elements— but his suggestion is to give this thing some teeth. So if the municipality is not actually following through on the plan, they would no longer be in compliance, and at that point there would be financial penalties. There's also a mechanism where if the city doesn't come up with a compliant plan, the mayor would have the ability to unilaterally impose one. Another point about SB 50 is that it all sounds great in principle, but we we're talking about how municipalities in New Jersey gamed the system on the Mount Laurel ruling. It's plausible that California cities will come up with clever ways to game the system even if SB 50 is in effect, whether it's through permitting fees or some other mechanism to stall things out and prevent housing growth. So I think we're in for a long fight. What seems to be working politically is this idea that, one, YIMBYs have a voice. They show up at local meetings, they're part of this process. It's not the case that elected officials are only hearing 'no' on development issues. I also think incremental changes, winning those arguments on going from single-family to duplexes and triplexes.
Michael Hendrix: Or even accessory dwelling unit reform as an initial step.
Brandon Fuller: Right. Some of these proposals of limiting the changes to areas that are near transit stations. Nolan and I had a piece in CityLab about legislation in Utah that passed this year, which is sort of incrementalist. It says 'look, we're recognizing that affordability is becoming an issue in some parts of the state, particularly the Salt Lake City area. We're going to nudge and encourage municipalities to adopt a more aggressive posturing on housing growth. And if you don't start to do that, we're going to withhold state highway funds, in this case. Again, it doesn't have teeth in the sense that if the cities don't actually deliver on the housing growth that they planned for, the state's not going to come in and be super punitive. They're not preempting anything. They're not saying, 'this municipality now needs to allow for eight-story apartment buildings near transit,' but they're encouraging cities to become more reform-minded about housing growth. I think those incremental steps matter, even if they're largely toothless. There's a Republican U.S. senator from Indiana, Senator Young, who has proposed a similar measure. It's sort of the name and shame strategy. If you get community development block grants from the federal government and you're not adopting pro-housing reforms and removing barriers to housing growth in your zoning code and land use, you need to explain to us why. This is going to take time to change people's minds, and I think an incrementalist approach is probably going to work best, even if I hope that SB 50 passes and California dramatically increases the supply of housing overnight. I'd love that. But I think it's going to be trickier.
Michael Hendrix: And as I've written for City Journal, too, I think it's a good thing that we're seeing the political coalitions around housing begin to change and morph, that tech companies, for instance, are now stepping up. You see Google making this billion-dollar bet on housing in Silicon Valley. They have land; they said 'we're going to use that land, which is worth a lot of money, to build a lot of housing.' Google is saying this, Microsoft is betting hundreds of millions of dollars in housing. All these tech companies are stepping forward and saying they support a YIMBY approach to housing. They may not explicitly say that, but they're stepping up on the side of those who say we need more housing. Especially in the areas where our employees cannot afford housing, even though we're paying them a lot of money. It hurts our ability to attract new employees, too, to a place like Silicon Valley or San Francisco. I think with those players beginning to step forward, we may see the politics of housing reform begin to change and develop over time.
Brandon Fuller: Yeah, and I don't want to give short shrift to the YIMBY movement in California. It's actually pretty tremendous, in the span of a couple of years, ehat was very close to happening.
Nolan Gray: Less than five years.
Brandon Fuller: Yeah. And this was certainly fueled, in part, by the tech sector. If you look at public letters in support of whatever version of the bill, whether it's last year's or this year's, that we introduced, there are a lot of tech CEOs signing on to this strategy, in addition to academics and so forth. And I think that's an important piece of it. The other thing is that sometimes the people who found those companies give money to the YIMBY political organizations that are out there trying to affect policy in the state capitol. That was certainly the case with the YIMBY movement in California. They received a big financial boost from folks who are involved with the tech sector, and not necessarily the companies directly. So that's a good point: business people who are concerned about affordable housing. I think now, with SB 50, Wiener has figured out how to engage with traditional affordable housing groups and address their concerns, which is also important because they're very well organized and have a lot of experience. I don't know how labor or labor unions factor into this, but one has to think that they would be part of an urban growth coalition because there are a lot of jobs at stake for folks in the construction sector.
Michael Hendrix: For instance, in the case of accessory dwelling unit reform in California, all of a sudden the labor unions realized that maybe some of their employees, on the weekends, for instance, could go build a dwelling unit in someone's backyard and make a little bit of extra money. And this was in their best interest, now, to support a potential new revenue stream to their employees.
Nolan Gray: Well, in a way that's the genius of the coalition that's formed in California. You basically have this traditional growth machine slowly reigniting. The traditional growth machine is unions, developers, city boosters, business groups, who are pushing collectively for it. And now that you have groups like environmentalist groups, which we haven't even touched on, but that's a huge element of it, that if you are concerned about greenhouse gas emissions, you should be very concerned about all these people who are being forced to have these two-hour long commutes. That's a huge source of emissions. Or you should be concerned about how not building in cities forces more farmland or more natural areas, potentially, to be developed. Maybe they would have been developed in any case, we don't know, but my guess is that if you allow more housing in cities, you're probably going to get less of that. So you've brought environmentalists into it. And then you have the traditional housing affordability activists, and just like the YIMBYs, there are as many factions as there are people in the movement, but they are aware of this increasingly, that there's no solution to the housing affordability problem without a large increase in the supply. And you might want to have all sorts of things on top of that, such as expanding Section 8, building more dedicated housing for low-income households and especially low income seniors. That's all fine, but if you don't solve that supply piece, nothing gets solved.
Michael Hendrix: Sometimes, though, what the affordable housing advocates are pushing for may sometimes hurt the broader YIMBY movement. There seems to be some tension, for instance, that you saw in California on the rent control initiative, where you saw some people saying, 'well, establishing some form of rent control in California will help make people feel secure in the cities where they live so that we can go over here on the other side and free up broader housing supply.' Others are simply saying, 'no it's just the right thing to do.' This is something that we, the affordability housing advocates, have been fighting for for a very long time. Meanwhile, you had other YIMBY advocates saying, 'no, if you fight for rent control, there's a way in which you are essentially helping freeze the city in amber,' and that will actually potentially make the affordable housing problem worse. It also may make the quality of housing worse over time. And even though we have concerns over gentrification, you may just be trading them for actual shabbification. Now, of course, while the rent control initiative failed in California, now the rent control and rent regulation argument has shifted to New York City, where Albany passed a stringent law setting permanently certain requirements on landlords that limit how much they can be investing in their property and therefore can get certain hikes in the rent, and beginning to offer something to those who rent here and feel cost burdened-by rent while not, on the other hand, allowing the new housing development that would help the broader supply challenge.
Brandon Fuller: Right. Eric Kober had a good piece, when the legislation was still under consideration before it passed, in City & State about this. It's exactly the point Nolan just made, which is that doing this in isolation without addressing the supply-side issue is really not going to move the needle. It may, in fact, make things worse if it discourages what rental supply could come down the line. If you were having a discussion with someone who was advocating for rent control, whatever you think about rent control, if we're also aggressively increasing housing supply, or at least allowing people to build housing where the market will support it, whatever ill effects of rent control that those of us who are less supportive of that policy might imagine, will have far fewer negative effects. Rent control is one example, but demand-side subsidies are another one. So you even see this in the field of candidates in the Democratic primary for the presidency, you see different housing platforms. Usually all of them include some sort of demand-side subsidy, some of which also address supply-side issues. Senator Booker's plan in particular, but then some that exclusively address demand-side issues. And I think that the point there is if we subsidize the demand side of housing in high-demand cities like New York or San Francisco, where there are other impediments to supply and housing growth, really you're just going to compound the problem. Even if you would stand on the side of devoting even more federal resources to demand-side subsidies, doing that in isolation, you have to acknowledge that that is, in all likelihood, going to make the problem worse. Also addressing supply-side issues, finding common ground, whether it's within the YIMBY coalition, but also addressing supply-side issues is important. And we see some evidence of bipartisan exploration. We mentioned Senator Young from Indiana, I mentioned Senator Booker from New Jersey— a Democrat, obviously— we mentioned Ben Carson. The White House has an executive order on this, putting together a commission that Carson will head, that will explore how to lower housing costs. So we're starting to see some bipartisan exploration of this issue, and I think there is enough common ground where we can have effective reform. I do think, going back to the state level, it's tricky. We haven't mentioned him, but I think we were planning to, which is the mayor of San Diego, Kevin Falconer who's a self-described YIMBY. It's notable, and Nolan can correct me if I'm wrong, that he never came out and endorsed SB 50. So even for a self-described YIMBY mayor, there's a lot of tension around this local control issue. Even within the pro-housing coalition, who's in charge? Who's taking the lead? Are mayors signing up? I think London Breed was a little more suggestive that this is a good policy, like 'please tie our hands. I'm dealing with a city council that's not good at all on this issue.' But Falconer was much more— not skeptical per se, but not coming out and saying, 'yes, please, state of California preempt local control in San Diego and tell us what we have to do in terms of zoning reform.' Maybe that will change, but I do think local control is going to be a sticking point.
Michael Hendrix: Meanwhile Kevin Faulconer has his own 'Housing SD' plan.
Brandon Fuller: Yep.
Michael Hendrix: He wants to, among many things, raise the height limits that are across much of San Diego. He wants to address the parking minimums that are across San Diego and he's finding his own battles to pass these initiatives. He's also fighting his own battles on homelessness. But nevertheless, he's probably the most vocal YIMBY mayor outside of San Francisco and London Breed. And he’s certainly the leading Republican at the local level on this issue, because so far the GOP kind of feels MIA on the YIMBY issue. Even though YIMBYism, when you look at what's often being proposed on its platforms, plural, it's generally market-oriented. Which, generally— although who knows where these parties are shifting these days— it's really market-oriented policies that are more often found on the right and the Republicans are more than often found on the right as well. But you have Kevin Falconer, and then who else? Where else do you really see the GOP leading on this? And by the way, can we even talk about this without addressing the lack of a GOP presence at the local level, generally in large cities in the United States.
Brandon Fuller: I think Falconer is the only Republican mayor in the 10 largest cities in the United States, for example. I'd like to think that since we wrote this piece asking 'where are GOP YIMBYs?' some of them have come out of the woodwork. It probably has nothing to do with our article. Again, going back to the Young proclamation introduction of this 'YIMBY Act,' as he calls it, that's a significant development. I don't know what to read into this. This is an issue that I think certainly will come to effect urban areas outside of New York and California, Oregon, Washington state. There's a senator from Indiana. I feel like there are places— Austin, Denver, Boise, Idaho, Salt Lake City, Indianapolis, maybe— that are... Even Minneapolis, which is held up as this shining example of a YIMBY success. If you just look at median income to median house price ratios, which is a measure of how affordable or unaffordable a place is, Minneapolis, the metropolitan area, is remarkably affordable compared to most of the places we've been talking about. Yet, I think the municipalities still felt pressure that was making the city become unaffordable for folks that used to be able to make a go of things there, and enacted this reform. So, in a way, it's relative. I think people from New York would laugh at people from Salt Lake City who say, ‘we have an affordability crisis.’ But that's what it feels like on the ground for people who have lived there for a long time, who've grown up there and who now, say, graduate from high school and have a job, a trade job, and they're unable to afford a house.
Michael Hendrix: In Minneapolis, you may look at other cities on the coast and say, 'I don't want to end up like them.' Just as the NIMBYs may fear the Manhattanization of their community, in other communities, where they're YIMBYs, they may fear becoming like a San Francisco— or Los Angeles, or New York, where housing prices have just gone through the roof. Our policy analyst, Connor Harris has written on how Texas, even as a red state, while it may be also full of blue cities, places like Dallas, Houston, Austin, all of these places are facing tremendous demand to live there. People are moving from all over the country to live in the major cities of Texas. And if you actually dig into the land-use regulations affecting the communities, even in a place like Houston, there are limits on developing the kind of communities that people may be demanding there— or at least having the freedom and flexibility to build. And whether it's Texas or Indiana or Minnesota, maybe some communities are beginning to say, 'I don't want to be like the coasts. I want to get out ahead of these housing demand pressures by loosening up supply.'
Nolan Gray: I think that's part of the piece, too, about ‘where are the Republican YIMBYs?’ is that historically, a lot of these red state metros in the Sunbelt in the mountain West have been pretty affordable. Unlike San Francisco or New York City, there aren't really geographic constraints. Houston is almost the model, the urban economic model. It's a flat, featureless plane that, unfortunately, occasionally floods. So, they haven't had this problem. But now lot of these Sunbelt cities— which, as you mentioned, are bumping up against the limits of what they can do under the sort of conventional land-use regulation paradigm— while right now they are very affordable because they can keep growing out farther and farther, after a certain point, a car commute can only take you out so far, at which point, if the city wants to stay affordable, it'll have to start adding a little bit of density incrementally. I was back in my hometown, Lexington, Kentucky, for the 4th of July weekend, and it's a huge issue there. Lexington's population has doubled, probably tripled over the last 40 years. Very typical of a Sunbelt state: high opportunity, university, healthcare. It's the classic city that's done well for itself. And there's an urban growth boundary. So there's an artificial constraint on the growth out of the city. After a certain point, you can't build housing, and it's designed to protect the horse industry, which is a big local debate: housing affordability versus this industry that's tied to the cultural heritage. But I was talking to a buddy of mine, who's a real estate agent, and he said he sold a house— a starter home— he had 13 offers and a few of them were cash offers. This is a home that's about $150,000. That's your first leg up and into ownership. That's a lifeline for somebody in eastern Kentucky in a coal mining town who wants to move into a city and make a better life for themself. So if you don't have these starter homes that are affordable, you don't have Lexington as this growth machine, as this place of opportunity. And the same story could be said about Charlotte. It could be said about Atlanta. It could be said about Dallas, Houston, any number of these cities which are absorbing incredible amounts of people from the countryside. People from distressed areas in the Midwest, people from distressed areas in Appalachia. And if you don't have that, then those people just can't move there and they're stuck where they are.
Michael Hendrix: It's not just New York that's growing anymore. Or at least New York is actually slowing or shrinking. But these second-tier cities, or at least smaller- or medium-sized cities, are experiencing growth pressures for various reasons. So a place like Indianapolis, let's say, is drawing in residents from the rest of the state. Columbus is as well. Nashville, meanwhile, is attracting people from all over the country and sometimes even all over the world. A place like York is attracting people literally from all over the world. All of these places are growing for different reasons, but they're still growing, and the pressures are still there. And the people that are moving in there often have some money to spend.
Brandon Fuller: Some money to throw around.
Michael Hendrix: If you're a resident, you're going to be competing with them, with some of these newcomers and that same housing market.
Nolan Gray: In many cases they have the same bad rules that a place like San Francisco and New York City have, they just haven't reached that level of prosperity and that level of quality living to where there's this explosive international demand for housing. Lexington is great, but people are not buying pied-á-terres in downtown Lexington— yet. It's important because all these rules prevent a lot of housing development in these areas that are currently experiencing crisis: high parking requirements, single-family zoning— another thing which we haven't even talked about is large-lot zoning, which says if you want to have a home, you have to situate it on a lot that might be, in many cases, as large as an acre. So if you can't afford that, then you're not allowed to live there. In many cases, these rules are on the books in these communities, and they're only now bumping up against the zoned capacity of the amount of housing that would be allowed. So I definitely think that, right now, the battlefield is the places on the coast that are currently experiencing housing shortages. But if we aren't proactive and thinking about, how we make sure that we have rules and regulations that are narrowly tailored to deal with the problems of externalities— noise, smell, traffic congestion, overcrowded schools. We need to deal with those problems now so that when the pressures do come to build more housing in existing neighborhoods, the cities are going to be equipped to do it. We spent most of this conversation talking about where the crisis is now, for very good reason, but I think that's the next sort of frontier of dealing with housing affordability. These are, in many cases, in red or purple states where you're going to have to have a bipartisan conversation, and it's going to have to be multifaceted. Another issue here, too, is local governments just aren't very good at scaling up services. In many cases, people are worried new housing is going to come in and my already-packed bus is going to be even more packed, or my already-packed train is going to be even more full. My kid's school— they already have my kid in trailers. We don't need more kids here. That's not a totally unsympathetic concern. And we need local governments with the ability to scale up these services to accommodate new demand. And part of that is, how do you finance it? Impact fees, things of that nature. But part of it is just building a local civil service that can accommodate this growth. So we talked about transportation, public services. Housing is fun and it's also terrifying for the same reasons. There are so many elements of it that you have to consider. Housing finance, tax policy.
Michael Hendrix: So you're saying it's complicated?
Nolan Gray: Yeah, it's complicated. You can pick the places where you want to have, pick the low-hanging fruit. And that's what I think the movement is in the mode of right now. But the longer term has to be, how do we get ourselves out of a situation where we had demand for these restrictive rules? So it's good enough if you can reform these rules that are blocking needed new housing. But if the institution that gave rise to those rules, which made it so hard to build housing, if that institution is still there, those rules are just going to come right back and we're going to be right back in this crisis in 20 to 30 years, no matter what we do now. And that's a much bigger and more complicated question.
Michael Hendrix: So it looks like the future requires a look, not just at how we can win as YIMBYs in the really, really big cities on the coasts, but also the cities that are a little bit smaller. The ones that there's demand from knowledge workers to live in, places that are seeing people move out of New York and moving into other cities, and cities that are accommodating demand from the interior of the state. Regardless, the battleground is large and growing on this policy fight. But what I'm also hearing is that while we've been able to maybe get some wins on some relatively incremental changes, there are still fundamental institutional fights that we have yet to fully reckon with. And it's going to be at the local, but also the state and federal level around housing.
Brandon Fuller: We get into this a little bit. There are a lot of ideas around how you chip away at NIMBY or, say, homeowner resistance to change, growth.We talk about tax reform, reforming capital gains tax, so there's no longer preferential treatment for home sales— getting rid of the state and local income tax deduction. So again, the 2017 tax reform greatly reduced the state and local income tax deductions. It also reduced people's ability to claim the mortgage interest deduction, which is another thing that encourages people to buy bigger, more valuable homes than they otherwise would have without that tax subsidy, which in turn indirectly makes them, again, more sensitive to that housing as an investment and then even more wrapped up in the value of the home rather than thinking of it as an asset that yields services over time. I think of it as my nest egg for retirement; that's certainly part of what drives NIMBY sensitivity. I think we get a little bit into the piece about education. This notion that you effectively can, by buying a more expensive home, buy your way into a higher-performing school district and how school choice might affect that calculation.
Michael Hendrix: What I'm hearing is that housing may be its own issue, but it does not exist in isolation from a host of other topics on everything from how local governments engage with their citizens and the services that they provide and budgets and transportation issues. And then there's states, and then there's the federal government, and all of these issues and questions over what it is these governments are supposed to be providing, and what kind of vision for flourishing. And indeed, the American Dream that we desire centers around housing, and the YIMBY movement, taken by itself, has notched tremendous victories and it seems like it has the wind at its back. As the years and decades go on, it almost seems as if the politics is going to become a little messier, and the coalitions are going to begin to change, and there's going to be more issues that we're going to unearth as we get reform momentum. But nevertheless, we can say that no matter where the debate goes from here, there seems to be a remarkable moment for housing reform in America, and that there is agreement— bipartisan agreement— on some incremental reforms that, in and of themselves, could potentially change what it looks like to get a job, have a place to live, and live your life freely in America's cities. And indeed, across all of America, in places both large and small.
Nolan Gray: As we were saying earlier, you have to consider YIMBY really has only been a thing for maybe four years, five years, since 2016, 2015 or so. Already, most serious Democratic presidential candidates have a housing platform which has incorporated elements of the kind of YIMBY message— not all, to varying degrees. The Secretary of HUD is taking this very seriously and I think Secretary Carson was jokingly calling himself a YIMBY.
Michael Hendrix: Nevertheless, at least asking some serious questions about HUD policy itself.
Nolan Gray: The policy was totally serious, and I think that the interesting element here is to what degree politicians or activists want to take on the YIMBY label, because it's loaded, it can mean different things to different people. That's fine. But you have a sitting HUD secretary taking this issue pretty seriously. All the serious presidential candidates are expected to take it seriously. You have mayors of two major American cities taking it very seriously, and presumably many more to come. State capitals all across the country are dealing with this. New Hampshire was looking at a tiny home legislation. Massachusetts is looking at ways to make it easier to amend zoning ordinances.
Michael Hendrix: And, to be fair, to speak of GOP leaders, as well. Governor Charlie Baker has pushed for more housing reform.
Nolan Gray: There's plenty of room for elected officials who want to come in here and start marching in front of a parade, if you will. YIMBY is almost perfect for that.
Michael Hendrix: A YIMBY parade.
Nolan Gray: I don't know that YIMBYs could ever parade. It's a huge opportunity.
Michael Hendrix: But we will podcast.
Nolan Gray: We will relentlessly podcast— and blog and tweet.
Brandon Fuller: I think if you step way back, and you look at urban growth around the world, the United States is really alone among high-income countries. Most of the rapid urbanization, in other words, is taking place in middle- and low-income countries. The United States is going to add tens of millions of people to cities over the next few decades. This issue is not going away. And whether the battleground shifts from the coasts to the interior, I think this pressure on housing affordability is going to be there. And I think we're seeing evidence of people experimenting with these ideas and starting to take positions on them, and they don't break cleanly on party lines. There's certainly going to be Democrat NIMBYs and Republican NIMBYs, but we're starting to see more embrace the banner, this sort of "Yes in My Backyard" banner. It's a promising sign. And I think we'll see more of that as these crises begin to manifest themselves outside of the coastal states.
Michael Hendrix: Brandon, I think that's a perfect ending. Nolan, Brandon, thank you very much for joining us.