Considering housing shortages and gentrification together

An MIT economist looks at the relationship between gentrification and a shortage of cheaper housing:

Unsurprisingly, the geography of a place and the community residing there are linked. Along the most measurable dimensions, richer people tend to live in places with attractive geographies. Conversely, places with undesirable attributes like industrial or transportation pollution, poor access to jobs, and uninviting climates are usually left for the poorest and most marginalized.

Usually—but not always. Occasionally, physically attractive locations come to be occupied by low-income communities, immigrant communities, black communities. Neighborhoods like these are ripe for gentrification. Changes in labor markets, large investments by public or private institutions, or even just changing preferences among the wealthy move these neighborhoods into the sight lines of richer people, and then they gentrify.

The housing shortage, meanwhile, is a region-wide round of musical chairs, in which the winners sat down before the music even stopped. Whereas gentrification reshuffles which communities occupy which parts of the city, the housing shortage can operate at the scale of cities and regions as well as neighborhoods…

Policies introduced to fight gentrification—rent control and tenant protections—may ameliorate the effects of neighborhood change, but they won’t build new homes. We must allow new construction somewhere, despite the changes this will bring. Of course, we must do so in a way that avoids gentrification.

Four quick thoughts on this argument:

1. This reminds me of my post from the other day comparing the perspective that there is not enough housing and there is plenty of housing but it is not cheap enough. This piece suggests there are multiple housing issues at work and policies might tackle one particular issue and not others (or even make other housing issues worse).

2. Does the multiplicity of housing issues require that Americans prioritize which issue matters to them most? If middle-class people want cheaper housing, that will lead to different approaches (public policies, legislation, urban planning, decisions by developers, etc.) compared to a consensus that gentrification is not desirable. Historically, Americans have tended to prioritize housing for the middle-class (broadly defined) at the expense of housing for the poor or homeless.

3. To truly address all of these issues, metropolitan-wide approaches are needed. Individual neighborhoods or municipalities are often left to tackle these on their own even though decisions by nearby neighborhoods or municipalities have significant effects on their housing.

4. Additionally, a comprehensive housing policy is needed, not just one that tackles the most important or noisiest issue at the moment. On one hand, many Americans would not want the government to become involved in such issues even as the government has promoted suburban homeownership for roughly a century.

Competing claims: America has a shortage of housing versus it has plenty of housing (albeit overpriced or inaccessible)

Does the United States have lots of housing units or a shortage? The two sides of the argument:

  1. A few years ago, I had a conversation with a sociologist who studies housing. When I brought up the issue of not enough housing units in connection with a need for more affordable housing, they said the problem was not a lack of units. Rather, more of those units needed to be made available to the people who for a variety of reasons could not easily access them now.
  2. A recent opinion piece states the other side of the argument:

“Stephen, you’ve been proven right on housing, and I think you’re about to be proven even more right. The most important driver of home prices is supply and demand. And right now, there is a chronic undersupply of homes in America.

As I said, the 2008 bust turned a lot of folks off from investing in housing. It shattered the confidence of homebuilders, too. Census Bureau data shows an average of 1.5 million homes were built each year since 1959. Yet since 2009, just 900,000 homes have been built per year. In fact, fewer homes were built in the past decade than in any decade since the ‘50s!

We have a serious housing shortage in America today. It would take less than six months to sell every existing home on the market, as you can see here…

…In the past year or two, the first wave of young homebuyers came into the market. But every year for the next decade, tens of millions of Millennials will hit home-buying age.”

I could see a possibility where both prognosticators could be true: there are many dilapidated or older units that need to be updated and priced in ways that more people can access them and there is a relatively shortage of new homes that meet the demands and tastes of younger buyers.

But, this gets at some bigger questions about housing in the United States:

  1. How many older housing units can be renovated to today’s codes and standards? And who should pay for this?
  2. Should anyone be put in charge of or help set housing prices so that more housing units are within economic reach of more residents?
  3. Should developers and builders primarily focus on profit or do they also have a responsibility to communities (beyond paying a fee for affordable  housing or sprinkling in a few cheaper units)?
  4. Can housing be revitalized in areas without significantly changing the population composition or housing values or other ways that might significantly disrupt what current residents like about the location?

Keeping track of the Democratic field on housing

Curbed is tracking the housing positions of the Democratic candidates for president in 2020. Here is part of the overview of YIMBY policies:

Yes In My Back Yard (YIMBY)…

Because these laws are administered at the local level, federal policy can’t do much to directly change these laws and instead attempts to incentivize—or punish—local governments to change them. Castro has proposed a Presidential Commission on Zoning Reform to establish federal guidelines on land use and zoning. O’Rourke would direct HUD to come up with a model for setting zoning and land use policies that let formerly restrictive communities to allow more housing production.

Warren’s plan puts $10 billion into a new grant program communities can use to build infrastructure, but local governments have to reform land-use laws to be eligible.

Booker’s plan uses a similar mechanism by tying more than $16 billion in federal block grant money—including Community Development Block Grants (CDBG)—to local governments reforming zoning laws that serve as barriers to building more housing units. Castro also wants to expand CDBG and rural development programs by $2 billion per year and tie the money to zoning reforms. O’Rourke would double CDBG funding and provide new grants to communities that eliminate restrictive zoning laws.

Klobuchar proposes “prioritizing” local governments that reform local zoning laws when allocating federal housing and infrastructure funds, but doesn’t specify which ones.

Bennet would create a one-time $10 billion competitive grant program for state and local governments that reform zoning laws to allow for more housing density, in addition to increasing the funding of transportation grant program BUILD to $4.5 billion and make it eligible only to local governments that allow for more housing density near transportation hubs. Eligibility for New Starts, a grant program for fixing rail infrastructure, would also be deployed in this manner.

O’Rourke has a zoning-related proposal that’s unique among the candidates. He would allow people to deduct more in state and local taxes from their federal tax returns if they live in areas without restrictive zoning. There’s currently a $10,000 cap on SALT deductions, and that cap affects mostly coastal cities where restrictive zoning is a major issue. He would also pass a $1 trillion infrastructure package to repair transportation lines that would be tied to eliminating exclusionary zoning.

Three quick thoughts:

  1. As the section above goes on to note, it will be difficult to enact change within wealthy communities through federal policy. Without buy-in from whole metropolitan regions regarding housing, would any YIMBY policies at a federal level simply push cheaper housing into communities that already have more of such housing?
  2. The subheadline for this article suggests “Housing policy is taking center stage in the 2020 election.” This is a bold pronouncement as housing seems to attract little attention in debates or drives little national conversation. I would still be interested to see someone really run with the housing issue.
  3. I have not seen recent numbers on this: how does housing as an issue rank among other possible issues among the electorate? There are certain areas of the country – like some of the largest metropolitan areas – where this is a pressing issue while it is less important elsewhere. On one hand, housing effects all possible voters but it rarely attracts national attention, particularly compared to other national economic issues like jobs or income.

Six Democrat candidates push new housing policies and it does not register at the latest debates

I have asked when the candidates for president will address housing and homeownership. Apparently, six Democrat contenders have – but it does not come out in public very often.

Last week, Amy Klobuchar became the latest Democratic presidential hopeful to say out loud that cities and towns need to let people build more housing. She joined Cory Booker, Julián Castro, and Elizabeth Warren in proposing a more active federal role in getting state and local governments to loosen zoning rules—a topic that, up to now, has not figured prominently in campaigns for the White House…

Most proposals advanced by Democratic candidates do not fit neatly along the traditional ideological spectrum from “laissez-faire” to “activist government.” Some of Warren’s proposals could be described as classic Democratic tax-and-spend policy making—she would use proceeds from raising the estate tax to increase funding for the Department of Housing and Urban Development substantially. Yet Warren’s plan to address “state and local land-use rules that needlessly drive up housing costs” is decidedly pro-competition—in keeping with her stated philosophy of making markets work better through stronger rules. Booker, Castro, and Klobuchar likewise balance more government spending with calls to reduce anticompetitive regulations. Only two candidates, Harris and Buttigieg, call for more demand-side subsidies without addressing supply constraints.

One idea notable for its absence among the candidates’ plans is the furthest-left option: an expansion of traditional public housing. Sanders, as a self-identified socialist, would seem the most likely to call for building more public housing, as some left-leaning think tanks have suggested. So far he has leaned toward fairly modest housing interventions, emphasizing local government tools such as community land trusts and inclusionary zoning.

There is still an opportunity here for at least one candidate to really push on this issue. As the article notes, the cost of housing is one that many voters consistently think about, particularly in higher-cost cities and regions. Even in markets with lower housing costs, the price of a mortgage or rent is one of the biggest expenses a household will face.

Perhaps the issue is that no candidate has found a simple tagline or slogan regarding housing that could apply everywhere? Since so much about housing and regulations is local, even large-scale government programs might require some complicated explanations. In the current debate format, this might be hard to relay. At the same time, these candidates are making plenty of speeches where they could hone a pitch about housing.

One way to do this would be to introduce housing as an inequality issue on multiple fronts. Where people can afford to live affects all sorts of life outcomes as well as long-term wealth. There is not a free market in housing: housing outcomes are the result of federal policy, local decisions made by municipal officials and business people, and the actions of consumers.

Chicago area malls trying to reinvent themselves yet not adding many residential units

Multiple suburban shopping malls in the Chicago area are trying to turn it around with different uses:

A casino is envisioned for the former Lakehurst Shopping Center site in Waukegan, which closed in 2001 and was demolished in 2004. It was the proposed site of a casino until the 10th and final state license was awarded to Des Plaines in 2008. With the latest round of gambling expansion, Waukegan could revive that dream.

St. Charles has seen little momentum on a concept plan presented two years ago for the largely vacant former Charlestowne Mall site north of Route 64. It called for the property’s complete revitalization, including a residential development, a smaller mall building and the construction of free-standing commercial structures. Mall owners have yet to make a deal with developers.

Stratford Square Mall in Bloomingdale, which opened in 1981, has been struggling for several years having lost three anchor stores since 2014. It launched a multimillion-dollar renovation project featuring interior and exterior improvements at the 1.3 million-square-foot center. An earlier renovation included the 2014 opening of Round1, a 40,000-square-foot entertainment center featuring bowling, billiards, video games and karaoke…

To further increase foot traffic, several suburban malls have incorporated entertainment venues. There’s now a Cinemark movie theater at Spring Hill Mall in West Dundee, a Round One entertainment center at Fox Valley Mall in Aurora, an AMC Hawthorn 12 theater and a Dave & Buster’s at Hawthorn Mall, a Pinstripes near Oakbrook Center and Pac-Man Entertainment (formerly Level 257) at Woodfield.

With retailers everywhere struggling, the trend toward multiple uses in shopping malls continues. The hope is that multiple uses can attract people to the site who after eating might want to shop or who after seeing a movie might want to eat there and so on. (I think this then could lead to the issue of how many entertainment centers can make it in the suburbs but that is another problem to tackle later.)

One piece that is missing from these descriptions: adding residential units. This would likely require some zoning changes as the mall properties probably only allow commercial properties now. Furthermore, it could take some work to reintegrate the full property with the surrounding street grid (which likely includes residential units nearby). Having residents on site could address multiple problems facing suburbs: filling vacant space; providing round-the-clock customers; increased population growth which is an issue in many suburbs with no major land parcels left; and the possibility of having affordable housing. These residential units may not bring in as much money as stores and restaurants that add property and sales tax revenues but they could add life to stand-along properties.

Suing for more suburban housing

A California law makes it possible to sue communities regarding housing:

Pro-housing activist Sonja Trauss, a pioneer in the YIMBY movement, was reading about a controversial 315-unit affordable apartment project in Lafayette in 2015 when she learned about a 1982 state law she’d never heard of before: the Housing Accountability Act.

The law said municipalities must approve a housing development as long as it is consistent with local zoning rules and general plan objectives, would not create a public health hazard or take water from neighboring farms, and would meet state environmental standards…

The California Renters Legal Advocacy Fund, or CaRLA — a group Trauss and her YIMBY allies formed in 2015 — is waging the sue-the-suburbs campaign. CaRLA has used the Housing Accountability Act to sue on behalf of developers in Sausalito, Berkeley, San Mateo, Sonoma, Dublin and Lafayette…

While the lawsuits will eventually result in some increase in the Bay Area’s housing stock — none of the projects in question have opened yet — the bigger impact so far has been to make municipal officials aware that violations of the Housing Accountability Act could result in expensive litigation.

How long until California changes the law to give communities more say over these matters? Not surprisingly, the end of the article mentions a counter group that a co-founder says is “not NIMBYs or anti-housing; for us the issue goes back to democracy and local control.” Suburbanites do like their local control.

This certainly would not be the first time the courts have been used to allow new housing construction in wealthier suburbs. It may be the only way to force compliance from suburbs that would rather not have cheaper housing and different kinds of residents. Unfortunately, it can be a very slow process within specific cases and overall progress is limited. Perhaps the threat of lawsuits and several successful cases in the past could force suburbs to move more quickly but I would guess some would still aim to drag out the process as much as possible.

Final thought: it would be interesting to track what happens to these developments allowed by the courts over time. Do communities eventually accept the housing units and residents? Would a positive response to a new development than encourage the community to pursue other similar developments? Or, does a court victory lead to hardened resistance?

Are TV portrayals of NYC housing realistic? An (incomplete) analysis

Earlier this year, the Washington Post ran an interesting analysis of how realistically the housing for numerous New York City characters was portrayed:

TVhousinginNYCWashingtonPostApr17

The article has a detailed breakdown of the housing in Girls and then has summaries for everything else.

Although this does not include every major television show depicted in New York City (I could think of a number off the top of my head), there are two noticeable patterns in the shows discussed in this particular article:

  1. Three popular and influential shows from the 1990s, all ones that supposedly made the city attractive to new generations, showed unrealistically large apartments. The city may look like a fun place to be when everyone has plenty of space and cool stuff.
  2. The number of working class shows here is limited. Television does not do a great job in general portraying the working class – see the documentary Class Dismissed – and this article deals mostly with shows with higher class aspirations.

Additionally, it seems like it would be important to also discuss the field of housing prices within New York City over the last sixty years. Manhattan is one of the most expensive places in the world now but was it always this bad? Additionally, the fates of the boroughs have changed over time.