Five Things: Housing Policy is Power

The intense housing debate is not actually about zoning regulations and building heights.

During a stint at Minyanville, a financial news and education media company, I was fortunate to work under the tutelage of a talented editor named Kevin Depew. Depew is now the deputy chief economist at consulting firm RSM, and wrote prolifically during the Great Financial Crisis, brilliantly capturing the mood of America during that trying time. His "Five Things You Need to Know" was required reading every week, and covered topics from high finance to macroeconomics to social trends. This series is an homage to "Pep," who once quipped "I majored in philosophy, but since none of the big philosophy firms were hiring, I went into finance."

1) Housing wars heating up again

With elections coming up later in the year, housing policy will be up for debate in hundreds of American cities. And even though rents have eased across the country in the past year, the term “housing crisis” is being shouted out at the local, state and national level.

These debates are nothing new in high cost coastal cities, but for regions which saw massive population influxes in recent years, especially those that boomed during the pandemic, these fights are new.

Source: Bloomberg

I mean, a decade ago, who would have thought that a bill to legalize the construction of tiny starter homes would have been a flashpoint in Phoenix?

So why do debates about seemingly arcane zoning regulations and building heights turn so intense? Because it’s not actually about zoning regulations and building heights.

Ask a person how they feel about building more housing and out pours their philosophy on just about everything from social organization to economic theory to racism, climate change, immigration and the meaning of home.

Housing policy is big money and big politics.

Housing policy is power.

2) IMBY-who?

Like most tense debates in American political life, the extremes have taken over the narrative, drowning out moderate voices who care about the nuance.

So the public debate over how and where to build new housing pits those worried about greedy developers ignoring environmental considerations and chasing profit at the expense of marginalized renters against local activists who want to build anything, anywhere, so long as it’s absolutely as tall as possible.

Let’s start with the NIMBYs.

NIMBY, which stands for "Not In My Back Yard," is a decades-old pejorative term for residents who oppose new developments near their homes. Their reasons range from the justified to the shamelessly self-serving.

Homeowners up in arms about a new factory spewing smoke upwind of the local playground, and a wealthy urbanite annoyed that the condo tower next door is going to block his ocean view could both be considered NIMBYs. These are not unreasonable complaints: No one wants to live next to a smokestack and it sucks to have a beautiful view replaced by a concrete wall.

But as US housing production stagnated 1990s and young professionals flocked to urban centers like New York and San Francisco, driving up rents, existing residents began to flex their political might to oppose new projects.

Source: Census Bureau data via jaberworking.com

Stark edifices interrupting the aesthetic of a neighborhood of period homes or a development paving over endangered habitats are reasonable justifications for the public to weigh in on what gets built in their backyards.

But as stories of disingenuous opposition to projects for what were clearly selfish aims began to trickle out, NIMBYs became painted as a bunch of grumpy Boomers suppressing housing production to prop up their own property values.

3) IMBY-what?

In response to growing opposition to the construction of new housing, YIMBY (“Yes In My Back Yard”) groups began organizing in the 1990s, and had by the mid-2010s had assumed a prominent role in the public debate.

Google Trends: NIMBY vs YIMBY

Helping to explain the movement's rapid ascent to prominence on the political scene, YIMBYs are an improbably collection of progressives, real estate developers and free-market political types. They also have basic economics on their side, pushing the radical notion that if you produce more of a thing, the cost of the thing goes down.

Ask a person how they feel about building more housing, for whom, where and what type, and out pours their philosophy on just about everything from social organization to economic theory to racism, climate change, immigration and the meaning of home.

YIMBYism has taken hold with particular fervor on the coasts, and there is now a national alliance of pro-growth local groups under the banner of yimbyalliance.org (the nimbyalliance.org domain is, surprisingly, still available).

4) One big shouting match

The NIMBY-YIMBY debate has gone nuclear, exposing the partisan flavor of the battle over the future of our built environment.

For example, the group Housing as a Human Right, which one would think would be supportive of more housing (remember that producing more of a thing makes it cheaper), demonizes YIMBYs as a bunch of tech bros and real estate developers building condos for their buddies rather than housing for the working poor or middle class.

In an extensive review of the history of this debate, tracing all the way back to the post World War II building boom, architecture site Arch Daily chronicled the decades-long battle between NIMBYs and YIMBYs, including noting some of the more colorful acronyms that have been developed over the years including BANANA (Build Absolutely Nothing Anywhere Near Anything) and CAVE (Citizens Against Virtually Everything).

Fierce battles have broken out at the extremes of either side, with fringy YIMBYs arguing for the paving over of historic zones in favor of glass towers, and loony NIMBYs suggesting that the law of supply and demand somehow does not apply to housing.

Yet while these heated debates rage online and do bleed into policy discussions, on the street level YIMBYs are making headway. Talk to most non-housing people and the notion that supply and demand will prevail seems to make sense.

5) What's driving this, anyway?

As noted above, the housing debate is often cover for more philosophical disagreements.

On one side are people who generally believe that the free market, despite its imperfections, should be the inevitable and desirable invisible hand to guide progress. Reasonable pro-growth, pro-building people concede that we need guardrails to protect the environment and urban assets, and argue that burdensome regulations are largely to blame for high housing costs.

On the other side, from Affordable housing zealots to Greenpeace, those opposing market-rate building tend to bristle at the notion of profit-seeking, especially profit-seeking in exchange for providing housing. Many argue that housing is a human right, and that government funding should heavily subsidize the construction of inexpensive units since the private market won’t do it on its own.

It’s no surprise that I generally come down on the side of the YIMBYs, although I disagree with the more extremist elements who seem to discount the importance of street-level urban dynamics and the aesthetics of home.

And don’t get me started about the sad irony that construction workers cannot afford to live within an hour of the downtown projects they help build because union price fixing drives up construction costs.

But that is a topic for another day.