Golden Gates: Fighting for Housing in America is up there with The Rent Is Too Damn High, where it foregrounds what should be if not the top, then one of the top policy issues in the country. “Build Build Build Build Build Build Build Build Build Build Build Build Build Build: When California’s housing crisis slammed into a wealthy suburb, one public servant became a convert to a radically simple doctrine” is an excerpt that gives much of the book’s flavor. While I personally like books and papers that use abstract reasoning to make their points, most people don’t, and need stories to understand the world: “Build Build Build” uses Steve Falk’s story to explain why even liberty-shy Californians are sometimes coming around to letting the state change a bit. Most importantly, a baby boomer like him began to see that his own kids’s lives were being constricted by the odious zoning monster that almost all municipalities in California have fed:
Mr. Falk began his career on the local control side of that debate. But somewhere along the Deer Hill odyssey, he started to sympathize with his insurrectionist opponents. His son lived in San Francisco and paid a fortune to live with a pile of roommates. His daughter was a dancer in New York, where the housing crunch was just as bad. It was hard to watch his kids struggle with rent and not start to think that maybe Ms. Trauss had a point.
New York and San Francisco are strangling their young, and even their middle-aged, in ways that many local politicians aren’t adequately grappling with. Golden Gates expertly surfaces ideas about what is or should be “normal” and whether those things should be normal:
Patterned on the American mind, in ways we rarely stop to notice, are layers of zoning and land-use rules that say what can be built where. They are so central to how American cities look and operate that they have become a kind of geographic DNA that forms our opinion of what seems proper and right.
But what is perceived as normal—what is “patterned”—may not be “proper and right,” even if what’s regarded as “proper and right” gets unfairly mapped to normal. The “layers” of zoning and other rules occur at the neighborhood level, city level, sometimes the county level, and sometimes the state level: each veto point chokes off potential projects and creates a kind of suffocating conformity that has drained cities’s vitality, without many people noticing. Somehow, preventing anyone from doing much of anything almost anywhere is said to increase vitality: instead, we get suffocating rents, millennials who are now themselves reaching into middle age and yet often feel they can’t afford to have kids, because who’s going to pay the rent, let alone the health insurance and the student loans?
We need more freedom and greater liberalization—or at least that’s the framing that I’d choose, using the thinking behind George Lakoff’s work on the language of political ideas. Oddly, though, the most reactionary groups in local housing fights tend to frame themselves as preserving freedom—the freedom from having other people make any changes in their neighborhoods. The result, as Doherty writes, is that “In effect, we shattered urban regions into a constellation of smallish cities and reactionary single-family house neighborhoods whose influence over local land use decisions give them an astounding amount of control over how much shelter we build, where, and at what cost.” The problem goes back decades—”City planners started documenting the urban housing shortage in the 1970s, and in the decades since economists have shown that many of the country’s highest-income regions have become so expensive that they have all but gated out middle-class jobs and people”—but problems that compound enough over time become enormous and menacing.
Housing can’t be both a good investment and an affordable place to live. Preferring one goal intrinsically compromises the other. For the last five decades, we’ve tried to make housing an investment that yields above-market returns: consequently, it’s now incredibly expensive in many productive cities. Perhaps the biggest way we may see changes in this dynamic is through changes in the composition of renters versus owners. Invitation Homes is now one of the largest landlords in the country, and it specializes in buying single-family houses (or “oneplexes”) and renting them out. That’s it. The company has realized that the not-in-my-backyard (NIMBY) phenomenon is also a business opportunity. Airbnb exists in part because most cities forbid hoteliers from building sufficient hotel capacity—so renting private housing units is an arbitrage on those rules. Canvas Co-Living is a startup that is working to allow “facilitated shared homes.”
Golden Gates’s best story may be that of Sonja Truss, a woman who was tired of the Bay Area’s relentless housing cost increases—so she decided to do something about it:
But for a young adult with no obvious signs of intoxication to show up at a midday city meeting to say she was just generally in favor of housing because San Francisco didn’t have enough of it? That made no sense. Nobody attended eight-hour city meetings if they didn’t have to, and while the planning commission was a place of arguments and strange behavior, it was also a place where people at least knew where each other’s lanes were.
She decided to scramble the lanes, by arguing that the problem isn’t too much housing but too little. She finds herself in weird ideological waters, because many people who proclaim their progressive bonafides are more conservative, in many ways, than the current occupant of the White House. Labeling one’s opponents is a big deal in Bay Area politics: “Only in San Francisco would a gay man who opposed the death penalty and marched in the local BDSM festival in leather straps have to argue he was truly of the left.” There are lots of racial politics involved too: many of the kinds of people who want to proclaim themselves to be opposed to racism nonetheless support housing and development policies that are racist in practice and effect.
Another chapter discusses Factory_OS, a company that’s trying to do modular building. Housing is expensive for many reasons, with zoning at the top of the list—but the actual cost of construction is high, and, in many high-cost metros, the zoning drives up the cost of construction. Why? As zoning artificially restricts housing construction, the construction workers who build new housing have to pay more for existing housing, which means that they have to be paid more by anyone trying to build housing. One gets a kind of perverse ratchet that, again, ends with absurdities like San Francisco. Modular housing, like cross-laminated timber, promises to reduce the cost of building. Unfortunately, building a housing factory is expensive up front, and the returns are spread across many years—leaving a wide space for bankruptcy. Previous efforts at modular housing have tended to fail when the market turns and the maker goes out of business. Dougherty points out that a recession could doom Factory_OS and its competitors. As of this writing, we’re already likely in the worst recession since 2008, and that was the worst since the Great Depression. What happens with the COVID Recession remains to be seen (the recession is made worse by many laid-off people being stuck with expensive leases and mortgages, due to decades of failure to build enough housing). One of the best ways to be successful in business is to start while a rising economy naturally lifts your company. Many business geniuses are really people with lucky timing—which isn’t to knock them: I’d love to have lucky timing too. As of July 23 2020, it appears that Google has promised to invest more money in Factory_OS, so the company is still presumably alive. But it has an ominously small number of mentions in the media over the last year.
One major thing might break the zoning logjam: by now, intellectuals and investors know the single-family zoning racket and know that single-family zoning is designed to enrich property owners. It’s not hard to figure out how to profit from above-market returns, as Invitation Homes has: buy the asset. But as investment funds buy single-family properties, the composition of renters versus owners will change, and more renters will be part of the voting pool. If renters can figure out how supply and demand work—a big “if,” given anti-market bias—they’ll vote to expand the supply of housing. So far, we’ve not seen much of this dynamic, but, as the costs of housing continue to increase, we might see more of it as people go looking for answers. Voters can ineffectively blame landlords and “greedy” developers, or they can effectively look for solutions. Golden Gates is part of the solutions firmament, if enough people read it and change their behavior based on new knowledge. That’s a big “if,” however.
To me, it remains strange and interesting that many people who are superficially interested in lowering housing costs won’t believe that the obvious solution, known for centuries—since the time of Adam Smith—to high prices is greater supply. Any solution that is not “more supply” will entail shortages. We can’t legislate away supply and demand. Yet a common urban trope involves blaming the people attempting to respond to price signals with more product for being “greedy.” The ineffectiveness of this response is obvious, but until recently there’s been no organized political response to the problem. Dougherty is chronicling that response—and telling the stories of the people responding.
A review in an interesting venue. There should be bipartisan support for zoning reform.