Large actors in the US housing market and building more homes

Derek Thompson argues those interested in more housing in the United States should be more concerned with local NIMBY activity than private investment firms buying up homes to rent:

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Far worse than corporations taking a few thousand units off the market for owners are the governments and noisy NIMBYish residents taking millions of units off the market for owners and renters alike—by blocking construction projects in the past few decades. (California alone has an estimated shortage of 3 million housing units.) From New York to California, deep-blue cities and states have amassed a pitiful record of blocking housing construction and failing to meet rising demand with adequate supply. Many of the people tweeting about BlackRock are represented by city councils and state governments, or are surrounded by zoning laws and local ordinances that make home construction something between onerous and impossible.

One of the issues at play here is a numbers one: who exactly is acting within the US housing market and how much sway do they have. Concerns about corporations and housing can be placed in the larger context of how many housing units there are and how many are being built. Here are the numbers Thompson provides:

The U.S. has roughly 140 million housing units, a broad category that includes mansions, tiny townhouses, and apartments of all sizes. Of those 140 million units, about 80 million are stand-alone single-family homes. Of those 80 million, about 15 million are rental properties. Of those 15 million single-family rentals, institutional investors own about 300,000; most of the rest are owned by individual landlords. Of that 300,000, BlackRock—largely through its investment in the real-estate rental company Invitation Homes—owns about 80,000. (To clear up a common confusion: The investment firm Blackstone established Invitation Homes, in which BlackRock, a separate investment firm, is now an investor. Don’t yell at me; I didn’t name them.)

If I am calculating correctly, institutional investors currently own 2% of the single-family rentals. Of course, this number could grow if these firms find this to be a good investment.

Also of interest is the number of new homes being constructed. Thompson links to figures from the National Association of Home Builders that shows 6.8 million new single-family units were created in the 2010s. So, concerns about big investors buying homes could be considered alongside housing construction: if the investors are buying more quickly than new homes are being built, this could be an issue.

Thompson settles on local actors – governments and residents – as holding back housing construction. In this numbers game, restrictions on a local level collectively are holding back the construction of single-family housing. If these restrictions were lifted or lessened, concerns about institutional investors would presumably diminish because there is a larger supply of houses to choose from.

One problem I see with this among the larger numbers: while local actors might in the aggregate have oversight over millions of units, they individually have control over relatively few units. Let’s say a particular suburb in the Bay Area (and this NIMBY argument often comes back to California) is against building new single-family homes. Depending on the size of the community and the availability of land, this might affect just a few homes to several thousand. This is not many. Zoom out to the whole region and many suburbs doing this adds up to tens of thousands of potential homes. Do this across all of California’s metro areas and the numbers add up. Similarly, you could do this across all the metro areas in the United States.

However, convincing all these municipalities to act in the interests of the region, state, or country as a whole regarding housing is a difficult task. Housing is local and this makes legislation at the state or federal level very difficult. California’s recent efforts with SB 50 did not go through. Illinois just recently gave some teeth – but not all the teeth – to affordable housing guidelines for communities set almost two decades ago. Federal guidelines are met with the suggestions that the suburbs are going to be abolished. One reason Americans like suburbs in the first place is that local government, presumably more responsive to the needs of residents, has the power to exclude (particularly on race and social class) and protect the existing single-family homes.

All of this does not necessarily mean Thompson is wrong. Yet, to get to the numbers of new homes constructed that would make a significant difference – whether in reducing the need many metro areas have for more affordable housing or outweighing the actions of investment firms – would require a lot of change across many communities. State or federal legislation may or may not be successful and would be unpopular in many places without a significant public groundswell of support that this is an issue that all or even most communities need to address.

Together, municipal changes regarding zoning and NIMBY could add up. But, changes would need to come across communities to make a big difference.

Publication in Planning Theory & Practice: “Planning and Religious Pluralism, Community by Community”

It was an honor to be invited to contribute to a symposium titled “Rethinking Religion and Secularism in Urban Planning” in the journal Planning Theory & Practice. See all of the contributions here.

My small piece worked with two articles I have published in the last few years: the 2019 article “‘Would Prefer a Trailer Park to a Large [Religious] Structure’: Suburban Responses to Proposals for Religious Buildings” and the 2020 article “Religious Freedom and Local Conflict: Religious Buildings and Zoning Issues in the New York City region, 1992-2017.” I argue the aggregate of religion in the United States – interesting in itself given the particular history, legal structures, and social changes of the United States – and the community level religious experience are both important to reckon with because local officials and residents can respond to the wishes of local religious groups and residents.

For this particular symposium, all of the authors considered the role of urban planners amidst religion and secularism. Building on my findings, I suggest urban planners can play an important role in helping communities plan for future religious uses and, once a proposal is made, focus on welcoming groups and working with them and the community rather than allow the community to emphasize threats.

This will continue to be an issue in communities across the United States as both secularism and religion continue and change. For example, a recent survey suggesting 43% of millennials do not believe in God received a lot of attention in some quarters. But, it would be a mistake to focus on such a find just at the broader, abstract nation-state level; this has implications for communities.

Asking Americans where they live to determine what exactly a suburb is

A recent project asked over 55,000 Americans where they live and the researchers used this to classify what counts as a suburb:

aerial shot of buildings

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Kolko and his colleagues got a survey sample of 55,000 households to sound off about whether their neighborhoods were urban, rural or suburban. That let them build a model looking at which factors predict how respondents will answer.

Unsurprisingly, many people defined their neighborhoods in part by their population density. But a whole host of other factors also made the prediction more accurate. For example, areas with higher median incomes were more likely to be called suburban. Areas with older homes were more likely to be called urban. Areas with lots of senior citizens were more frequently called rural.

The researchers—Kolko, Shawn Bucholtz of the U.S. Department of Housing and Urban Development, and Emily Molfino of the U.S. Census Bureau—have released data online showing how their model classifies every neighborhood in the U.S., as well as an academic working paper detailing their methods and findings.

It’s a question that matters quite a bit because, by the researchers’ survey, more than half of American households identify as suburban: 52%, versus 21% rural and 27% urban.

A few thoughts based on this summary:

  1. This suggests defining places requires more than just political or geographic boundaries: how people perceive communities and neighborhoods matters. There is a cultural, meaning-making dimension to where people live that is often not picked up in these kinds of definitions.
  2. The next step after #1 is this: if residents of some places may technically live in a big city but they perceive it to be more suburban, they may act differently. Or, if they think of their suburban area as urban, they could lead different lives and favor different policies.
  3. I wonder how this overlaps with previous survey data suggesting Americans prefer small towns which could fit into suburban or rural settings. Here, the feel of a small town might be more important than the actual designation.
  4. The overall proportions of Americans living in different settings are not that different than what the Census Bureau calculates. What then makes this useful information is the ability to provide micro-level data about specific neighborhoods and communities.
  5. Without looking at the working paper, my guess is some of the discrepancies between this model and the Census definition is on the edges of areas: the fringes of big cities where residents could be suburban or urban and on the edges of suburbia where areas could be suburban or rural. These areas straddling municipal boundaries as well as lifestyles could be in flux for a long time.
  6. All of this points to an ongoing recognition of “complex suburbia.”

When local government meetings go past midnight

Suburbanites like smaller local government. But, local government meetings or hearings that go past midnight can be inconvenient. A recent example from an Illinois suburb discussing marijuana sales:

Angering residents who showed up in droves to oppose the sale of recreational marijuana in the village, Buffalo Grove trustees at about 1 a.m. Tuesday approved zoning regulations to allow it.

For 4½ hours, residents spoke passionately against recreational pot sales. But in the end, only one trustee, David Weidenfeld, voted against the regulations, which will allow recreational dispensaries as a special use in nonresidential areas — three business districts and the industrial district.

There are two issues at work here. The first is this: the article suggests there was a vocal set of residents opposed to marijuana sales who were not happy with the results. Local residents can become active if they perceive a change in the community will negatively affect their quality of life and/or property values (see recent suburban cases in Glen Ellyn, Wheaton, and Itasca). If the decision does not go their way – and there are plenty of cases where there are vocal residents and leaders on both sides – then resentment and long-term conflict can develop.

But, the second issue is what I want to focus on here: how late the meeting ran. How many residents, even if they are energized by a particular cause, can afford to stay out past midnight at a public meeting or hearing? Staying up that late can put a severe damper on the next day’s activities, particularly depending on jobs, family situations, and health. Residents may feel they need to stay to the end of a meeting to be heard but that comes at a cost.

Local officials may also be in a bind regarding time. Many municipalities already have rules in place so that individual speakers do not run too long and that plenty of people get a chance to speak. There is other business that needs to be conducted at many local meetings, including considering a variety of proposals, approving payments, and considering reports from other staff or committees. The meeting can only start so early as residents and leaders may be coming from jobs, dinner, and other responsibilities. Stretching meetings over multiple days may not be optimal though multiple meetings or hearings can happen if leaders want to provide more opportunities for people to voice their opinions.

In the particular case above, it looks like the public had a chance to speak – 4.5 hours – and therefore the approval could not come until later (and the approval was overwhelming). The late ending may have only rubbed salt in the wounds of those opposed to pot sales. But, as best practice, local officials should work to avoid concluding meetings in the wee hours in the morning.

Resistance to 5G: technological progress versus local zoning and control

Americans like local control and they like technological progress. So what will happen when municipalities refuse to install or significantly slow down the installation of 5G units the federal government has approved?

If someone is tracking all of these cases, it would be interesting to know how many communities are resisting this because of (1) alleged health threats or (2) resistance to being told that they must install these or (3) that some of these boxes are located near homes. Of course, it could be a combination of the three in some places but even then, I wonder what is the more convincing argument at (1) the local level and (2) at higher levels.

In the long run, I assume federal requirements would supersede local land use restrictions. But, what if there are scores of communities that resist? Or, what if the resisters are more powerful communities and residents? Infrastructure is a pretty important feature of modern society and allowing some communities to opt out may not be optimal. There is always some cynicism that wealthier communities can resist land use changes better because their resources allow them to challenge change. Would 5G installations then go in places that cannot as easily resist? Does this foreshadow a technological landscape where resources and ideology lead to more uneven distribution of basic technological infrastructure?

One possible compromise in many communities: ceding that the federal government has approved this but then refusing to install them in residential areas. I do not know how this would affect 5G coverage but I imagine moving the units out of sight of homes and residential units could do a lot of good.

Ordinances and zoning against dollar stores

With evidence that dollar stores provide poor quality food options and limited jobs, some communities have used certain tools to restrict their presence:

While some local governments continue to lure dollar stores to town with tax subsidies and incentives, others are doing the opposite. A dollar store NIMBY movement has been gaining traction.

In Chester, Vermont, for example, residents argued in 2012 that allowing dollar stores to come to town “will be the beginning of the end for what might best be described as Chester’s Vermontiness,” per the New York Times—a statement that itself perhaps signals the class and race associations dollar stores have come to embody. In Buhler, Kansas, the mayor saw what happened to surrounding grocery stores in neighboring Haven and rejected the dollar store chain, also citing a threat to the town’s character.

“It was about retaining the soul of the community,” he told The Guardian. “It was about, what kind of town do we want?”

More recent efforts have used zoning tweaks to limit dollar stores, whose small footprint usually lets them breeze past restrictions big-box stores cannot. In Mendocino County, California, dollar store foes passed legislation restricting chain store development writ large. And in April, the Tulsa City Council passed an ordinance that requires dollars stores to be built at least one mile away from each other in North Tulsa. It also tacks on incentives for healthy grocers and supermarkets providing healthy food to locate in that area. “I don’t think it’s an accident they proliferate in low socio-economic and African American communities,” Vanessa Hall-Harper, a city councillor who grew up in North Tulsa and shepherded the ordinance, told ILSR. Since then, Mesquite, Texas, has followed suit with a similar move.

Communities have fairly broad powers to encourage or limit the presence of certain kinds of development. If they do not desire the building or the opening of a dollar store, then they can limit or eliminate the possibilities for a dollar store in that community.

Of course, the dollar stores can respond with their own tactics. Here are a few I could imagine (drawing from similar cases involving other businesses):

  1. Building just outside the jurisdiction of the municipality.
  2. Working with a neighboring community who is willing to have them.
  3. Mounting a public campaign against the community to tout the advantages of their business.

While the third option might be more of a nuclear option, the first two mean that another municipality could benefit from sales tax and property tax revenues, the limited number of jobs, and easier access for nearby residents.

Why do communities allow charities to collect money by standing at intersections?

I live near a suburban intersection that regularly has people from charities standing at the stop signs to collect money. I suspect the suburb is willing to let this happen for two reasons:

  1. It is good for the city to allow local charities to be out in the community. This helps build good relationships between everyone. The charities then help people in the community.
  2. The strategy is effective. The people collecting money are in direct eye contact with possible donors. As people come to a stop, they feel obligated to drop some change into the bucket or jug. While this method likely does not lead to large sums of money being donated by a single person, it can add up quickly.

On the other hand, this is an odd way to collect money for a few reasons:

  1. Suburban drivers just want to get through the intersection, not be slowed down. Even if they do not give money and have an interaction with the person standing there, they have to be more careful with a person in the roadway.
  2. Many drivers would respond much more negatively if another party was collecting money or soliciting people at this same spot. Many communities have homeless or jobless people sitting at intersections looking for help or people selling items or services (like squeegeing a windshield without the driver asking for it).
  3. Having people stand in the roadway is generally not a good idea given the lack of attention paid to pedestrians.

Perhaps communities try to balance these two sides by only offering limited numbers of opportunities for charities to do this (it can’t happen every week, for example) or limiting activity to certain intersections where drivers are going slower and traffic is not impeded as much.

On the whole, this particular method is unusual and maybe only certain charities can get away with it with limited exposure to drivers.

When American communities try to limit the number of churches in city limits

This is a fascinating look at how American municipalities deal with the “problem” of too many churches. For example, here is the experience of Stafford, Texas which did not have a property tax and was located near highways outside Houston:

By 2006, there were 51 religious facilities in Stafford’s 7 square miles, according to city filings. And, at that time, the city had just a little over 300 acres that remained undeveloped.The costs in Stafford’s case were starting to outweigh the benefits…

Scarcella and city officials spent years poring through legal filings and spent a good dose of cash on attorneys to successfully craft a land use ordinance that would require a public hearing and process for new “places of assembly” — such as bowling alleys, dance halls, museums and religious facilities.To obtain a specific use permit under the regulation, applicants would have to address and adhere to a list of requirements related to elements such as acreage, parking and traffic mitigation.

The pushback was tremendous, Scarcella said, noting the town attracted national media and plenty of negative attention…

“I’m held in a fairly decent regard within my church, and I have a deep belief in Christ, and I believe in people’s right to worship, and I admire them for doing that,” he said. “But I also recognize that there needs to be a balance.”

 

Too many religious facilities that don’t pay property tax means that a community may not have a sufficient tax base to maintain all the infrastructure that religious facilities would use. One sociologist estimated that $71 billion in taxes is left on the table by religious institutions. Additionally, there is an opportunity cost involved where the land might have been used for purposes that would pay property taxes and perhaps even add sales tax revenues.

All of this could lead to a humorous situation: how about a suburban community near the nexus of multiple highways that zoned solely for industrial parks and churches/religious facilities? Given that many churches today have a tenuous connection to the community in which they are located, attendees don’t mind church shopping via car, and large churches want plenty of land and interior space for their campuses, this could minimize the pain for a number of other nearby communities.

Local fire department plans for a potential fire at a 30,000 square foot home

How exactly does a fire department plan for a new 30,000 square foot home in the community?

A planned 30,000-square-foot home off Lake Norman would take an estimated 10,000 gallons of water per minute and dozens of firefighters on the scene if it were to go up in flames…

Modern homes of all sizes offer new threats now that open floor plans are more desirable to compartmentalized rooms, which would keep the fire more contained in years past, said Charlotte Fire Department Deputy Fire Marshal Jonathan Leonard of Davidson. What once could have stayed in the kitchen, now quickly passes through much of the first floor before moving upstairs if there is nothing to stop it.

Furniture, once only constructed of cotton, wood and metal, is now plastic, vinyl and foam that is more flammable, burning hotter and faster. Those two elements cut the estimated time for a home’s flashover point to occur from the 18 minutes firefighters had 20 years ago, to just over four, Leonard said.

That’s four minutes for families to have a smoke detector go off, call 911 and get out…

A simple solution that would be a safety net for both residents and firefighters is a sprinkler system.

I wonder if some communities would tell owners of extra-large homes that they would do all that they could to put out a fire but the municipality wouldn’t incur extra costs to adjust just for these extra-large houses. How much should a fire department adjust for a few homes? While this article suggests McMansions have these fire problems, a 30,000 square foot home is way out of McMansion league and probably does require its own planning. At 30,000 square feet, sprinklers sound like a good option.

Now that I’ve seen a few articles about this issue, I wonder if this comes up in the planning and zoning process in communities. While building homes may seem like a source of revenue for communities, they also require services including water, sewer, roads, fire and police, and schools. Could you add a special fire tax that only hits huge homes?

Cities rethink privatization efforts

Leading with the example of Chicago’s 75 year parking meter lease, here is a look at how some communities are rethinking privatization of local services and amenities:

In states and cities across the country, lawmakers are expressing new skepticism about privatization, imposing new conditions on government contracting, and demanding more oversight. Laws to rein in contractors have been introduced in 18 states this year, and three—Maryland, Oregon, and Nebraska—have passed legislation, according to In the Public Interest, a group that advocates what it calls “responsible contracting.”

“We’re not against contracting, but it needs to be done right,” said the group’s executive director, a former AFL-CIO official named Donald Cohen. “It needs to be accountable, transparent, and held to high standards for quality of work and quality of service.” Cohen’s organization, a national clearinghouse exclusively devoted to privatization issues, is the first advocacy group of its kind…

Donahue, who has studied the issue since 1988, sees privatization as inherently neither good nor bad. Academic studies paint a mixed picture, he said. The private sector can deliver efficiencies when the task being sought is well defined, easy to measure, and subject to competition—mowing public parks, perhaps, or collecting trash.

But when the goals are fuzzier or competition is lacking, the picture gets cloudier. Is the purpose of municipal parking meters to maximize revenue, or is it to provide a low-cost amenity to citizens and the businesses they patronize? How do you value the various objectives of a prison system—justice, rehabilitation, social order—when the financial incentive is to lock more people up? In many cases, Donahue said, privatization and contracting save governments money not through increased efficiency but by undercutting public-sector wages and pensions or, as in the case of the parking meters, by effectively robbing the future to pay for the needs of the present. (By mid-2011, the city had spent all but $125 million of the $1.2 billion parking-meter payment.)

Three things seem fairly clear (to me):

1. One big mistake is privatization contracts that are way too long. Seventy-five years is a long time deal, particularly given how conditions can change. If the deal goes sour quickly or the public turns on it, this is a long time to wait for the contract to expire.

2. Not having enough time to read through contracts and then debate the particulars is a problem. Deals shouldn’t be entered into quickly, particularly when the public interest is at stake.

3. A lot of the public discussion of privatization seems more ideological rather than looking at research (some referenced in this article). Government vs. the private sector is a pretty large debate to have and there may be areas where each could perform better or might better protect the interests of residents.

Even if skepticism about privatization is increasing, this issue will continue to be important as numerous cities and communities seek to squeeze out more revenue from stagnant or limited resources.