Be Less Surprised And More Excited By LA's 'Affordable Housing' Miracle
Taking the proper lessons from Executive Directive 1
My fellow Emergent Ventures grant winner
has a new piece about Los Angeles Mayor Karen Bass’s Executive Directive 1, which allows developers to build significantly lower-rent housing via a streamlined permitting process (60-day shot clock) and simplified yes-or-no approval criteria, plus a bunch of state-level bonus density sweeteners that remove, for example, a baffling requirement for trees on the roof of a new structure. The program has been a roaring success with more than 16,150 “affordable units” in the pipeline (under development). [Ben points out that none have been built yet, a reason to temper our expectations.]“Has LA cracked the code for building affordable housing?” asks Ben. Michael Moore, editor-in-chief of the new blog Resident Urbanist answers with a resounding yes, laying out ED1’s importance for affordable housing in LA and in general. Obviously Ben gets this too, and I share everyone’s excitement, but not the confusion that permeates the CalMatters article by reporter Ben Christopher that made the big splash about ED1. To be clear, I attribute the confusion only to the people Mr. Christopher interviewed. To the extent I am…perturbed, it is with those individuals.
(Read my friend
at Resident Urbanist! He sits on their board and is excited about the new venture.)Calling this “affordable housing” is semantically important, because that phrase usually means committed affordable housing, or capital-A Affordable Housing, which is subsidized. The homes being developed under ED1 are totally unsubsidized, serving residents who make less than $100,000 in the land of tiny dogs, tacos, and smog.
Ben is a lot more experienced and knowledgeable and accomplished than I am, so I would never criticize him. I take for granted that we generally agree about urbanist topics, based on our thoroughly pleasant conversations. He taught me a lot, including to be fully skeptical of self-driving cars as a complete replacement for human drivers, yet optimistic about self-driving taxis, which are being piloted nationwide.
So I do not want to seem like I am picking on Ben when I note his use of this line: “Government subsidy will always be required to provide decent housing to the people at the bottom of the income distribution.” Another version, which I hear so often from many people is along the lines of, ‘The private sector cannot provide housing affordable to our lowest-income residents.’ The sweeping sameness of this sentiment gives it, I must confess, some qualities of a Maoist slogan. I am a political realist, so I grant that we are going to have public subsidies for housing as long as I live. That is fine by me, even in an environment that most housing practitioners acknowledge is so supply-limited that subsidizing demand boosts the prices most people, including many low-income people, pay. Subsidies can be a powerful tool and the people who receive them are much better off. Keeping them in the mix is prudent. And I totally understand that the housing produced by ED1 will directly serve middle-income renters.
Yet I am unfazed by ED1’s success, and chafe at assertions that market actors cannot serve low-income renters, because most of us are so accustomed, like fish in water, to the onerous and ridiculous requirements placed around new housing—design standards, minimum off-street parking, roof trees, etc.—we find it remarkable when apartments with much less regulation are affordable to renters who have much less income. But of course they are! This is not “affordable housing,” it is simply housing, affordable to regular people, which we have comprehensively banned. As Ben says, a lesson from ED1 is that the middle-class housing crisis is completely self-inflicted. Ben also rightfully points out how bureaucratic and inefficient traditional, subsidized affordable housing is compared with letting private developers build cheaply with private financing. I know people in the committed affordable housing ecosystem too. They make real sacrifices to do important work, and are pretty open about the constraints they operate within.
Ben asks at the end of his piece whether restrictive housing policies incentivize affordable housing production. Private developers are embracing ED1 because building housing priced at the more typical market equilibrium faces onerous restrictions. My answer is an emphatic no, for the simple reason that ED1 housing is unsubsidized. It pencils out (makes financial sense to private investors) on its own merits, based on supply and demand. It shows the market can bear cheap housing. If those restrictions were removed entirely then yes, more expensive housing would be built initially, but eventually the supply would fill out and private developers would go further and further down-market. Some would specialize early in the lower end of the market, finding ways to create economies of scale. If we deregulated housing, I am confident we would get a lot more of everything, based on the diversity of housing types in old American neighborhoods like my beloved Highland Park.
Homelessness as we know it emerged no earlier than the 1970s. The apartments pictured up top were built in 1850. Pervasive housing insecurity is not a market phenomenon or technical challenge, nor the historical norm, it is a profound regulatory failure. If you let self-described greedy developers build affordable housing, they will. In a future essay, I hope to explore how private actors could serve the poorest of the poor, through SROs (single-room occupancy) and boarding houses.
I hope ED1 has three effects: actually producing a wave of new housing, lowering prevailing rents in a high-opportunity city; making the rhetoric around “affordable housing” less rigid; and challenging our shared assumptions about what the market is capable of when regulations are slashed.
I get the feeling that very few people grasp the full depth of housing regulations. We may have to remove these shackles to realize just how bruised and sore we are.
If you enjoy this blog or want to work together, please contact lucagattonicelli@substack.com. I would love to write about a topic suggested by a reader. Visit YIMBYs of Northern Virginia, the all-volunteer grassroots pro-housing organization I founded, at yimbysofnova.org.