Why did cities freeze in the 1970s?

Home is where the cartel is” discusses a topic that you’ve seen referenced many times on this blog: “A case can be made that divisive hot-button issues like inequality and immigration ultimately derive from housing dysfunction.” Yet Waldman points out that the prescription many commentators, including this one, want—housing market rationalization—is unlikely to be attractive to the mass of existing owners/voters. The piece is not easily excerpted and should really be read in full before you continue, but here is one important point:

The libertarian “deregulatory” rhetoric by which market urbanists sometimes make their case is counterproductive. Telling people to think of their homes as a commodity upon which market forces should be brought to bear in order to ensure production of housing services at competitive prices is obtuse. People purchase property, rather than renting, largely to gain security and control, to escape the vicissitudes of the market.

In short, in my own discussions I’ve probably been framing the issue in the entirely wrong way if I actually want to persuade most people. Waldman’s is among the most interesting posts I’ve ever read on the topic, and I’ve been mulling it since I read it a couple days ago. I finally realized one of the things that bothered me: Extreme zoning seems to have really gotten started in the ’70s or early ’80s. One reason NYC is still so dense is that people from the seventeenth century up until the ’70s had a fairly easy time replacing existing buildings more or less when they felt like doing so.

One can see physical evidence of the housing freeze in places like Seattle. Both Capitol Hill and the U-District had, for decades, one twenty-something story building each, which were almost landmarks. They were built just before Seattle comprehensively banned most high-rises—a ban that lasted until the 2000s. Had the market been allowed to function normally, single family neighborhoods would’ve gradually transitioned into duplexes or townhouses, or small apartment buildings, and areas with small buildings would’ve gradually seen midrises and high rises grow. But Seattle basically froze the market. So did L.A. and many other locales. In 1970, L.A. was zoned for ten million people. In 2010, when our technology was vastly inferior to the 1970s, it was down to 4.3 million. That is odd and helps explain why L.A. used to be the  land of opportunity and is now the land of exclusion. So do parking requirements, which can increase housing costs in L.A. by as much as a third.

[Note to people who keep emailing me: that thing about technology today being inferior to the ’70s is a joke.]

What changed in urban planning and/or city politics in the ’70s? That to me is a key question and one I can’t really answer. The diffusion of Jane Jacobs’s ideas is one possible answer, but her answer still found fertile political and legal soil. Perhaps the backlash from the Robert Moses of the world was a part of the problem. “S” wonders if it was white flight.

Up until the Petaluma City Plan, growth was (relatively) unconstrained, especially in cities. After Petaluma, it wasn’t. In many parts of what we now think of as high-cost cities, the city feels frozen in time since… the ’70s.

Cities have always had rich neighborhoods and poor neighborhoods, but freezing cities seems to have occurred relatively recently. So has the most vociferous talk of “gentrification.”

I primarily bring this up because if parochial land-use policies were only adopted in the last couple decades, they may be more reversible and less a part of human or political nature than is sometimes assumed. But Waldman’s point about the politics of contemporary land-use controls remains and I don’t know how to overcome the dynamics he points out. Not all problems have solutions.

Jeff Fong has one excellent response and you should read it.

EDIT: Via Twitter, Dan Keshet suggests I read William Fischel’s Zoning Rules, which may answer the questions above. See also “When the Market Built Housing for the Low Income.”  That era was not long ago!

Fischel says that in the 1970s

the growth-control movement was born and spread almost as rapidly as zoning originally did [in the 1910s and 1920s], though its effects were regionally selective. I argue that a combination of modern forces induced this change, but the most important was the 1970s period of inflation, which helped transform housing from a consumer good to an investment and thus gave rise to a political class I have called “homevoters.” (163)

Homevoters ensure that “zoning can go too far and prevent economically desirable increases in density and hinder what many people regard as the desirable mixing of socioeconomic groups within communities” (164).

If you see anyone arguing about what happened in the 1970s without even engaging in Fischel’s ideas, you know they a) aren’t thinking in terms of comparative history, b) don’t understand the history of the period, and c) likely don’t know what they’re talking about.

Do millennials have a future in Seattle? Do millennials have a future in any superstar cities?

Over in the Seattle section of Reddit someone asked, “Millennials of Seattle: Do you believe that you have a future in this city?”* My answer started small but grew until it became an essay in and of itself, since “Seattle” is really a stand-in for numerous other cities (like NYC, LA, Denver, and Boston) that combine strong economies with parochial housing policies that cause the high rents that hurt younger and poorer people. Seattle is, like many dense liberal cities, becoming much more of a superstar city of the sort Edward Glaeser defines in The Triumph of the City. It has a densely urbanized core, strong education facilities, and intense research, development, and intellectual industries—along with strict land-use controls that artificially raise the cost of housing.

Innovation, in the sense Peter Thiel describes in Zero to One, plus the ability to sell to global markets leads to extremely high earning potential for some people with highly valuable skills. But, for reasons still somewhat opaque to me and rooted in psychology, politics, and law, (they’re somewhat discussed by Glaeser and by Tyler Cowen in Average is Over), liberal and superficially progressive cities like Seattle also tend to generate the aforementioned intense land-use controls and opposition to development. This strangles housing supply.

The combination of high incomes generated by innovation and selling to global markets, along with viciously limited housing supply, tends to price non-superstars out of the market. Various subsidy schemes generate much more noise than practical assistance for people, and markets are at best exceedingly hard to alter through government fiat. So one gets periodic journalistic accounts of supposed housing price “crises.” By contrast to Seattle, New York, or L.A., Sun Belt cities are growing so fast and so consistently because of real affordable housing. People move to them because housing is cheap. Maybe the quality of life isn’t as high in other ways, but affordability is arguably the biggest component of quality of life. Issues with superstar cities and housing affordability are well-known in the research community but those issues haven’t translated much into voters voting for greater housing supply—probably because existing owners hate anything that they perceive will harm them or their economic self-interests in any way.

Enlightenment_heathSomewhat oddly, too, large parts of the progressive community seem to not believe in or accept supply and demand. Without understanding that basic economic principle it’s difficult to have an intelligent discussion about housing costs. It’s like trying to discuss biology with someone who neither understands nor accepts evolution. In newspaper articles and forum threads, one sees over and over again elementary errors in understanding supply and demand. I used to correct them but now mostly don’t bother because those threads and articles are ruled by feelings rather than knowledge, per Heath’s argument in Enlightenment 2.0, and it’s mentally easier to demonize evil “developers” than it is to understand how supply and demand work.

Ignore the many bogeymen named in the media and focus on market fundamentals. Seattle is increasingly great for economic superstars. Most of them probably aren’t wasting time posting to or reading Reddit. If you are not a superstar Seattle is going to be very difficult to build a future in. This is a generalized problem. As I said earlier, voters don’t understand basic economics, and neither do reporters who should know better. Existing property owners prefer to exclude rivalrous uses. So we get too little supply and increasing demand—across a broad range of cities. Courts have largely permitted economic takings in the form of extreme land-use control.

Seattle is the most salient city for this discussions, but Seattle is also growing because San Francisco’s land-use politics are even worse than Seattle’s. While Seattle has been bad, San Francisco has been (and is) far worse. By some measures San Francisco is now the most expensive place in the country to live. For many Silicon Valley tech workers who drive San Francisco housing prices, moving to Seattle immediately increases real income enormously through the one-two punch of (relatively) lower housing prices and no income tax. Seattle is still a steal relative to San Francisco and still has many of the amenities tech nerds like. So Seattle is catching much of San Francisco’s spillover, for good reason, and in turn places like Houston and Austin are catching much of Seattle’s spillover.

See also this discussion and my discussion of Jane Jacobs and urban land politics. Ignore  comments that don’t cite actual research.

Furthermore, as Matt Yglesias points out in The Rent Is Too Damn High: What To Do About It, And Why It Matters More Than You Think, nominally free-market conservatives also tend to oppose development and support extensive land-use controls. But urban cities like Seattle almost always tilt leftward relative to suburbs and rural areas. Why this happens isn’t well understood.

Overall, it’s telling that Seattlites generate a lot of rhetoric around affordable housing and being progressive while simultaneously attacking policies that would actually provide affordable housing and be actually progressive. Some of you may have heard the hot air around Piketty and his book Capital in the 21st Century. But it turns out that, if you properly account for housing and land-use controls, a surprisingly large amount of the supposed disparity between top earners and everyone else goes away. The somewhat dubious obsession that progressives have with wealth concentration is tied up with the other progressive policy of preventing normal housing development!

This is a problem that’s more serious than it looks because parochial land-use controls affect the environment (in the sense of global climate change and resource consumption), as well as the innovation environment (close proximity increases innovation). Let’s talk first about the environment. Sunbelt cities like Phoenix, Houston, Dallas, and Atlanta have minimal mass transit, few mid- and high-rise buildings, and lots and lots of far-flung sub-divisions with cars. This isn’t good for the amount of carbon in the atmosphere, or for the amount of driving that people have to do, but warped land-use controls have given them to us anyway, and the easiest way to get around those land-use controls is to move to the periphery of an urban area and build there. Instead of super energy efficient mid-rises in Seattle, we get fifty tract houses in Dallas.

Then there’s the innovation issue. The more general term for this is “economic geography,” and the striking thing is how industries seem to cluster more in the Internet age. It is not equally easy to start a startup anywhere; they seem to occur in major cities. It isn’t even equally easy to be, say, a rapper: Atlanta produces a way disproportionate number of rappers (See also here). California’s San Fernando Valley appears to be where anyone who does porn professional wants to go. New York still attracts writers, though now they’re exiled to distant parts of the boroughs. My own novels say, “Jake Seliger grew up near Seattle and lives in New York City” (though admittedly I haven’t found much of a literary community here, which is probably my own fault). And so on, for numerous industries, most of them too small to have made a blip on my radar.

These issues interest me both as an intellectual matter and because they play into my work as a grant writer. Many of the ills grant-funded programs are supposed to solve, like poverty and homelessness, are dramatically worsened by persistent, parochial local land-use policies. Few of the superficial progressives in places like Seattle connect land-use policies to larger progressive issues.

So we get large swaths of people priced out of those lucrative job markets altogether, which (most) progressives dislike in theory. Nominal progressives become extreme reactionaries in their own backyards, which ought to tell us something important about them. Still, grant-funded programs that are supposed to boost income and have other positive effects on people’s lives are fighting against the tide . Fighting the tide is at best exceedingly difficult and at worst impossible. I don’t like to think that I’m fighting futile battles or doing futile work, and I consider this post part of the education process.

Few readers have gotten this far, and if you have, congratulations! The essence of the issue is simple supply and demand, but one sees a lot of misunderstanding and misinformation in discussions of it.

In addition, I don’t expect to have much of an impact. Earlier in this essay I mentioned Joseph Heath’s Enlightenment 2.0: Restoring sanity to our politics, our economy, and our lives, and in that book he observes that rationalists tend to get drown out by immediate, emotional responses. In this essay I’m arguing from a position of deliberate reason, while emotional appeals tend to “win” most intuitive arguments.

By the way: In Seattle itself, as of 2015 about two-thirds of Seattle’s land mass is reserved for single-family, detached houses. That’s insane in almost any city, but it’s especially insane in a major global city. Much of Seattle’s affordability problem could be solved or ameliorated by something as simple as legalizing houses with adjoining walls and no setback requirements. The housing that many people would love is literally illegal to build.

Finally, one commonly hears some objections to any sort of change in cities:

* “It’s ugly / out of character for the neighborhood:” As “How Tasteless Suburbs Become Beloved Urban Neighborhoods” explains, it takes about 50 years for design trends to go from “ugly” or “tacky” to “historic.” It’s hard to rebut people saying “that is ugly!” except by saying “no it isn’t!”, but one can see that most new developments are initially seen as undesirable and are eventually seen as normal. “Character” arguments, when made by owners, are usually code for “Protect my property investment.” It’s also not possible to protect the “character” of neighborhoods.

* “Foreigners and their money are buying everything up and making them more expensive:” Actually, real estate is, properly considered, an incredible export:

The key is to let more development happen in the in-demand, centrally located areas where the economic benefits are largest and the ecological costs the smallest, not just “transitional” neighborhoods and the exurban fringe. Take the existing stacks of apartments for rich people and replace them with taller stacks. Then watch the money roll in.

* “Gentrification is unfair:” Oddly, cities began to freeze in earnest, via zoning laws, in the 1970s. One can see this both from the link and from Google’s Ngram viewer, which sees virtually no references to gentrification until the late 70s, and the term really takes off later than that.

If gentrification is unfair—and maybe it is—the only real solution is to build as much housing as people want to consume, which will lower real prices towards the cost of construction. Few contemporary cities pursue this strategy, though. No other strategy will work.

EDIT: See also “How Seattle Killed Micro-Housing: One bad policy at a time, Seattle outlawed a smart, affordable housing option for thousands of its residents.” The city’s devotion to exclusionary housing policies is amazing. It’s not as bad as San Francisco, but compared to Texas it’s quite terrible.


* I’m reading “Millennials” as referring to people under age 30 who have no special status or insider connections. Few will have access to paid-off or rent-controlled housing in superstar cities. They’ll be clawing their way from the bottom without handouts. In cities like New York and San Francisco, a few older people have voted themselves into free stuff in the form of rent control. Most Millennials won’t have that.

Hipsters haven’t ruined Paris; Parisian voters have

Last week’s New York Times has a somewhat dumb article by Thomas Chatterton Williams called “How Hipsters Ruined Paris,” which describes how Paris is changing:

Today, the neighborhood has been rechristened “South Pigalle” or, in a disheartening aping of New York, SoPi. Organic grocers, tasteful bistros and an influx of upscale American cocktail bars are quietly displacing the pharmacies, dry cleaners and scores of seedy bar à hôtesses that for decades have defined the neighborhood.

Elsewhere, the usual complaints appear: “Our neighborhood, though safe and well on its way to gentrification…” But demand to live in Paris is rising while the supply of housing remains constant, or close to constant—which means prices rise, and richer people move into once-poorer neighborhoods, and bring with them their predilections for high-end coffee and fancy bars and all the similar stuff I and my ilk like. If you want more diverse neighborhoods, you have to get lower rents, and the only effective way to accomplish that is through taller buildings—which, quelle horreur, destroy the character of the neighborhood!

Matt Yglesias wrote about this basic problem in The Rent is Too Damn High, which continues to go unread and uncited by people writing about neighborhoods, whose work would be improved by knowledge.

Links: Doctors, free stuff, broadband, ebooks, density, cancer vaccine, and more!

* Someone found this blog by searching for “Can doctors have hobbies”? The answer is yes. The more interesting thing is that few do.

* L.A. to unleash city-wide gigabit broadband. Awesome.

* Woman from MTV demands free stuff.

* Peak ebook already?

* Does bitchiness serve any useful scholarly purpose? Probably.

* Density is the driver of Seattle’s innovation.

* A reinvented skillet.

* Game, the Art of Archery, and the Business of Selling.

* “The Cancer Vaccine: Only one in three American girls is vaccinated against HPV. That will mean thousands of gratuitous cancer deaths. Why?

* “What are some of the biggest problems with a guaranteed annual income?

Why would you want to own a car if you could avoid it?

My Dad sent “Who’s Buying ‘Youth’ Cars? Seniors Aging Boomers Are Prime Buyers for Small Vehicles That Auto Makers Target at Hipsters,” because he bought a Mini Cooper a few years ago, which is probably targeted at “young” people. But I replied with a larger point:

Why would you want a car if you could avoid having one?

Young people don’t care about cars. They care about smartphones. See here for more:

Why are younger Americans driving less?

Brad Plumer considers several good hypotheses, including the recession, gas prices, student debt, tougher legal requirements, and a stronger desire to live in places such as Brooklyn. I would add one other factor to his list: because they are working less. A more speculative additional hypothesis would be “because it is easier to have sex without driving to get it.”

Ugh

Ugh

A nice car is still a status symbol but a much less important status symbol than it used to be. Cars are expensive, dirty, and cause a lot of traffic. Old people like you (wrongly) associate cars with freedom and the open road, because when you grew up the roads were relatively empty.

Young people today associate cars with traffic and their parents and death. Cars are like jails. In ye olde days getting laid meant cruising to drive-ins or malls or whatever. Today getting laid means texting, Facebook, and OKCupid. Former students have talked about Tinder (sp?), which is Grindr for straight people. Going back to the status symbol point, is it more useful for a guy looking to get laid to work his ass off for a BMW or to learn guitar and get a YouTube channel? For someone with no financial constraints the obvious answer is “both,” but for someone choosing between them I suspect guitar + YouTube would win.

An iPhone is much cheaper than a car. Even an iPhone, iPad, and laptop together are much cheaper than a car. See also Philip Greenspun on this.

DUI laws are also now heavily enforced and draconian (A BAC of .1 is much more reasonable than .08) and everyone knows someone who’s had ten thousand dollars or more in court costs and hassles related to DUI. Even so, a cop can ruin your night and next day for pretty much any reason if he suspects you’ve had anything to drink. Gas is much more expensive in real terms than it was even in the late 90s / early 2000s.

No one with half a brain would want to drive more than they absolutely must, so I am skeptical that any “youth-oriented pitches” will succeed because really who cares? Driving sucks. Part of selling is having something to sell that people want. And, as you yourself pointed out, you spent much of your working life in high school and college trying to keep a car in working order. AAA estimates that the average car costs $10,000 TCO, or about one quarter of median income. Even knocking $2000 off for a cheaper car, I suspect a lot of people could allocate $2000 to transit / bikes / Zipcar / etc. and come out way ahead.

Almost anyone who can avoid commuting by car is better off ditching their wheels. Even you, Dad, would be much more financially secure by selling your car, renting your parking spaces, and getting a Zipcar subscription.

[Note: My Dad doesn’t have to drive to his office.]

Links: John le Carre, the writer’s temperament, condoms, slut shaming, desire, transport, and more!

* John le Carre’s complete works discussed; I am most of the way through Tinker, Tailor, Soldier, Spy and am amazed at how good it is, and how taunt even repeated stories feel. I have started and sometimes completed le Carre’s novels from the last fifteen years but seldom liked them, even when I wanted to. There may be a fuller post here.

* David Brooks: “Engaged or detached?” “Writers who are at the classic engaged position believe that social change is usually initiated by political parties [. . .] the detached writer wants to be a few steps away from the partisans. [. . . ] She fears the team mentality will blinker her views.” Read the whole thing because the context is important, but as a writer I lean heavily towards the “detached” point of view.

* How ‘Slut Shaming’ Has Been Written Into School Dress Codes Across The Country, which should be obvious yet isn’t.

* “Why still so few use condoms;” spoiler: because it doesn’t feel as good.

* “What do you desire?, possibly NSFW.

* “Nobody Walks in L.A.: The Rise of Cars and the Monorails That Never Were” but should have been. L.A., Seattle, and other places have begun to recognize the obvious about the limits of car-based transport.

* “Who Killed The Deep Space Climate Observatory?” This story, along with pathetic “Superconducting Super Collider” debacle, is the sort of thing that, if the U.S. really does take an intellectual and cultural backseat to the rest of the world, will be cited by future historians as examples of how the U.S. turned away from the very traits and behaviors that made it successful in the first place. “Who Killed the Deep Space Climate Observatory?” is also an example of how the real news is very seldom the news you read in the headlines.

* “Documentary ‘Aroused’ explores what makes women turn to porn careers.”

* “[A]rtists and writers love to cast gigantic stores as misbegotten cathedrals.” I’m guilty.

* Frank Bruni on Amanda Knox and pervasive sexual double standards, with the somewhat stupid title “Sexism and the Single Murderess.”

* Why many streets are ridiculously wide.

* The role of a dictionary. People (most often students) often refer to me as a walking dictionary and say that I must not need one, and I usually say the opposite: I often use dictionaries, and in my experience most people who work with words do.

Connecting the dots between beliefs: an example from density and housing policy

In “New York City, NIMBY Paradise: New Yorkers genuinely believe that their housing restrictions are normal” Megan McArdle points out that “a combination of zoning ordinances, building permits, and local NIMBY opposition had made New York distinctly unfriendly to new development, and that it would be rational to build far more units than the city currently allows” but that “I am constantly surprised by the extent to which New Yorkers regard all this not only laudatory, but normal–even as they bemoan the high cost of housing.”

I too am surprised. It’s at least intellectual coherent to complain that prices are high or to argue that development should be limited, but the two together is bizarre. I’m living in Manhattan and occasionally lament to friends or people in bars or whatever that we don’t get more housing built,* which would reduce rents (or at least rent increases), and they inevitably look at me like I’m from Mars. Then they say, “But there’s construction all over the city!” Which is (sort of) true, in the sense that walking around the East Village and LES reveals a fair number of projects—but almost all of them are short. When I mention supply and demand, I get funnier looks, like I’ve just revealed I’m a community, Christian, libertarian, or some other suspicious outsider.

I just don’t think most people connect difficulty in building, or how supply affects demand.

IMG_2181The other day I was wasting time on Reddit and spent time responding to people in this thread about housing in Seattle, which is another place where it’s hard to build and rents are rising, and a lot of people on the thread manifest the kind of difficulty in connecting supply and demand you’re talking about in your post and that I’ve noticed out and about. If I were being mean / direct, I would posit that most people like to complain and don’t understand, or choose not to understand, simple economics.

If I’m being less mean, I’d argue that most people just lunge at a random opinion, hold it, and don’t really think anything more about it; that’s one of Jonathan Hadit’s important points in The Righteous Mind. Still, I never hear, “Extensive housing regulation leads to high prices and that’s a desirable trade-off,” or “We should accept high prices as a reasonable consequence of limiting construction.” Those are normative statements and closer to morality or philosophy, and they’re at least reasonable.

Most people, however, have only a vague sense of the link between public policy and their living arrangements. My Dad, when I told him about this, mentioned that he used to work for cities and had to listen to people express their opinions, most of which were incoherent. Apparently little has changed, except that the incoherent can organize through the Internet.

Anyway, Matt Yglesias has pointed out in many contexts that “Gentrification can’t be stopped by halting construction—to have a chance you need even more construction.” People with money will simply outbid people with less for scarce real estate resources, and various legislative efforts to prevent this basic dynamic have failed and always will fail because people are cleverer than legislatures and markets want to clear. It’s also common for people in hot urban areas like New York and Seattle to lament gentrification, high rents, and developer avariciousness.

If this were limited only to random idiots in bars and coffeeshops, that would be okay, but many reporters are economically illiterate too. One recent random but representative example is Lynn Thompson’s Seattle Times story “Would new rules leave loopholes for big houses on small lots?,” which spends 900 words discussing housing issues but doesn’t include supply or demand.

I sent a letter to the editor of the Seattle Times and to Thompson pointing this out, and I got a nice note back from Thompson saying that “I did another story about a month ago that found that we have enough growth through 2040 under current zoning [. . . .]” But what does “enough” mean? It too is a basically incoherent concept, at least in economic terms, because particular individuals don’t know what “enough” means. That’s why we have markets. Moreover, she didn’t mention price, or the pricing issues

Her colleague Sanjay Bhatt, however, reported that Single-family home prices rose by 20% from 2012 – 2013, and rents in Seattle and environs have been rising faster than inflation for a decade or more.

Why don’t reporters working in this field understand econ 101? And why do editors let them get away with it? The omission is glaring, and it works to undermine the confidence of anyone with any reasonable amount of knowledge in the Seattle Times (and other papers, which routinely make the same kinds of errors). I don’t mean to pick on Thompson or the Seattle Times in particular, since they just happen to be salient examples and the general problems I’m describing here are widespread.


* Are or sex chat are more fun and was the norm is college, but not everyone is ready for the latter five minutes after meeting. A shame, really, but I learned many things from Martha McPhee’s wonderful novel Dear Money, and one is that people above the age of 30 often regard real estate and wealth as a sort of sexual sport.

%d bloggers like this: