First, the obligatory disclaimers:
Nothing I'm about to say or have ever said about housing should be taken as a blanket condemnation of YIMBY ideas and proposals. I happen to agree with most of them, even the overly simplistic ones featured in The New York Times.
If this were just a question of being right — or at least being directionally right — the majority of the time, I wouldn't have wasted all this time writing a seemingly endless series of posts on the subject. Unfortunately there's more to it..
The housing discourse is embarrassingly dysfunctional even by the abysmal standards of the 2020s. The standard narrative is presented without question as absolute truth, despite being simplistic, often monocausal, heavily reliant on outliers and unrepresentative data, and unforgivably slow to acknowledge conflicting data even when it seriously threatens the major tenets of the arguments.
Case in point, the fixation on zoning along with hypocritical liberals as the primary big bads of the story. In case you think I'm misrepresenting their case.
Here's Krugman with an early and less shrill) version of the zoning argument. [Emphasis added.]
Many bubble deniers point to average prices for the country as a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone.
In Flatland, which occupies the middle of the country, it’s easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don’t really have traditional downtowns, just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can’t even get started.
But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions – hence “zoned” – makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up. And if people think that prices will continue to rise, they become willing to spend even more, driving prices still higher, and so on. In other words, the Zoned Zone is prone to housing bubbles.
Don't get me wrong, there are certainly some horrible zoning laws out there and there's no question that they make the housing crisis worse, perhaps much worse, but when you try to make tearing them down your panacea, you run into data like this.
A new real estate report confirms something that Houstonians pretty much already knew: The city of Houston saw a significant increase in housing prices among U.S. cities within the last decade, with median home prices skyrocketing up to 86 percent.
The report by online real estate database PropertyShark analyzed median home sale prices in 41 of the most populous U.S. cities and locales in 2014 and 2023. According to the study, the median sale price of a home in Houston in 2014 was $142,000. A decade later, median housing prices in the city nearly doubled, landing at $264,000 in 2023.
So is Houston one of those few heavily zoned red state cities? Not just "no," but "Hell, No."
Why doesn’t Houston have zoning?
Unlike other cities, Houston never successfully voted to put zoning restrictions in place.
“The lack of zoning started at the Big Bang, the creation of the universe,” joked Matthew Festa, South Houston College of Law professor and land use attorney. “…We’ve never had zoning, so it didn’t really start. It just never happened.”
The city charter requires a binding referendum vote from residents or a six-month waiting period for public comment and debate of a zoning ordinance. Houston officials brought it to the ballot in 1948, 1962 and 1993. Voters rejected it each time.
For Christian Menefee, the county attorney, the lack of zoning makes his work more difficult. Just this year, the Harris County Attorney’s Office – led by Menefee – sued the Texas Commission on Environmental Quality for approving a permit for a concrete batch plant across from a hospital in Kashmere Gardens. A move that would be far more difficult or impossible with zoning laws.
“We have numerous concrete batch plants in Fifth Ward and Near North Side,” said Menefee. “(No zoning) makes our lives fighting these situations difficult because then we have to go and try and seek every legal remedy at the state level.”
Just to reiterate, lots of zoning laws are bad. Just like lots of simplistic narratives about housing.
«So is Houston one of those few heavily zoned red state cities? Not just "no," but "Hell, No."»
ReplyDeleteActually Houston is heavily zoned, but only for the affluent and rich, and the zoning is done privately:
http://www.nakedcapitalism.com/2013/04/john-galt-kills-texans-in-massive-fertilizer-plant-explosion.html#comment-1227292
“Perhaps the issue’s been raised, but skimmed over by the Evelyn Wood Great Coast Socialists shocked by fertilizer proximities: Outside of a few cities, there ain’t no zoning in the grand land of Tejas. Oil fields next to middle schools, refineries next to residential cracker boxes.
Middle and upper classes know this and pay their premiums to become part of deed restricted communities, while the tired, huddled and poor get close-up views of the cracking stacks.
[...] Developers know only morons and moochers would live somewhere where there is no zoning. They make sure guv’mint stays off the backs of thems morons in the name o’ in-amiable rights, while being sure to peddle their de facto zoning (only petunias in the buffer zone) to the captive audience of above-average barely sensible homeowners.
[...] Moving from CA was quite an eye-opener; boil water notices for a month(private water), internet constantly down(private cable), two-hour log-jam commutes(toll roads and pay HOV lanes) – better services to be had in developing nations.”
«there are certainly some horrible zoning laws out there and there's no question that they make the housing crisis worse»
ReplyDeleteA lot of clever people keep directing attention at detail mechanisms, but those are mechanisms, not the root reason for the housing boom (which happens only in some areas, where others instead have had for decades a housing depression).
The root reason for the housing boom is that it is a political necessity to buy the votes of incumbent property owners, because it is the electoral basis of neoliberalism.
The question is: given that most voters work why would they vote for decades for the politics of lower wages and salaries, shrinking pensions, meaner social insurance, more job insecurity?
The reason is simple: many of them make far more in property profits redistributed from the lower classes than they lose on wages, salaries, pensions, social insurance, and they regard those property profits as more secure, as the Fed and Treasury backstop property but not work.
https://blissex.wordpress.com/wp-content/uploads/2023/07/dt19890418-1.gif
Anyhow the principal two mechanisms to achieve booming house prices are simple:
* House prices usually depend on proximity to areas with many good jobs.
* Concentrating the good jobs in just some areas makes prices and rents to boom.
* Expanding immigration means many immigrants will be attracted to areas where the good jobs have been concentrated ("human quantitative easing").
«the principal two mechanisms to achieve booming house prices are simple»
DeleteThose are the principal ones; zoning, credit expansion, restrictive regulation, convoluted processes, public investment in the preferred areas, all have a part as to achieving the political goal of ensuring that affluent property incumbent voters support the neoliberal politics that redistribute to them so much at the expense of the lower classes.