Interesting read on your experiences in the political sphere of this discussion.
I think the tension in this topic comes a bit from a lack of transparency on what these policies do and splitting the housing issue into two - affordability and desnification/output. Cities are typically more productive, and agglomerative forces make them even more productive. Thus, for the economy and overall output it is better when cities densify and more people are able to live there. This is what upzoning and other polices assist with.
However, research shows that, unfortunately, these policies do not really alter the affordability issue. One of the best recent studies on impacts of upzoning on house prices, showed that even with large upzoning prices fell by 0.5%. (the paper - https://www.nber.org/papers/w29440, my deep dive into it - https://www.nominalnews.com/p/housing-will-deregulation-fix-everything ). The reason for this 'unintuitive' result appears to be a form of arbitrage. That is, a city typically offers very high wages (for the same skill level, job etc) in comparison to the rest of the country. Thus, if housing was as cheap as the rest of the country, people would have much larger consumption in the city. This means people would want to move into the city and thus bid up land/house prices. Since the number of people living outside of cities is much larger than city sizes, we end up with a situation with infinite city demand - meaning there's always someone ready step in to the city with any new housing and pay the high price. So new houses densify, which is a good outcome, but do not impact affordability, as the price of the house remains the same.
Allowing cities to grow and densify would make them a lot bigger, giving more people access to economic opportunity in a basic sense. I remain confident based on a variety of different types of evidence, from empirical work to my own intuition, that densification does ultimately make housing more affordable by using a scarce resource, land, more efficiently.
Regarding affordability, that is a purely empirical question. The Sao Paulo study analyzed a 36% upzoning policy in a very large city and found prices dropped 0.5%. So technically it did improve affordability, but that percentage won't change the affordability issue that is being discussed publicly. So from this result, arises the question why did zoning reform have such a small effect on prices, which as you point out, does not fit with intuition. My current theory is based on equating of financial outcomes (conditioned on risk, skills etc) between areas. There shouldn't be extra economic profits from living in a city vs not living in a city (again, conditioning on some important observables).
We both agree on one assumption - agglomeration has increasing returns to scale (as of today) or at least constant returns to scale. Thus, having more people in a particular area will result in overall (nation-wide) greater economic activity. But we should be honest about what solutions will and won't do, because it will lead to disappointment from the public if certain things do not materialize.
Personally, I think the key to affordability is remote work (de-linking job opportunities from physical areas) making the agglomeration force 'virtual' rather than physical and significant growth in public transit (especially into undeveloped areas).
I want to believe on some level that agglomeration can be virtualized, but I just don't think that's how human beings work on the most basic level. People will always want to be around each other, whether they want to admit it or not (yes, this is a reference to people who want to live near a city but wall off their neighborhoods).
I don't want to turn this into an endless back and forth, and I'm not trying to get the last word, but the evidence you are citing is pretty narrow. What about Tokyo being more affordable than many American rust belt cities? Or the results we have seen in Minneapolis? There is a big world out there.
Re 1: I'm always happy to get new data and see updated research as examples roll in. That's why I love economics!
Re 2: Yup - no guarantee remote work is the solution, but I feel we're in its infancy and whether it is virtual, or some form of hybrid, it could open many possibilities.
Re 3: Yes - since I've been asked about it before, based on my cursory research on that topic, it appears Tokyo spends about 30% of local income on housing (basically comparable to NYC - separately, interesting fact which I discussed recently - NYC is one of the most affordable cities in the US once we factor in transportation costs). From what I also saw, house prices have not grown much in Tokyo - but, at the same time neither has GDP or income, due to their stagnation, suggesting the local income-house cost link is present. The 30% ratio appears to be quite consistent as shown in the chart of one of my posts where Minneapolis affordability is on par with NYC (and worse for low income individuals) - https://www.nominalnews.com/p/housing-supply-side-and-affordability (that's why I'm strong advocate for public transport, as its benefit are immense). Additionally, affordability should be differentiated from location affordability. Often, in densification, we imply that places are affordable if we just make them smaller. But that's a more location affordability - i.e. I can afford to live in this city. Agreeing to a smaller place is then a trade off between the benefits you get of being in a location vs size of house. To me, affordability should be focusing on how to make the same house cheaper - or lowering the price per sq foot. That'd be true affordability.
I definitely agree that we agree on the major ideas! The discussion is also a pleasant one :)
The good news is that most people are not political and, if they have any views on housing, those views are informed mostly by their personal experiences; so educating this group can go a long way toward expanding the YIMBY coalition, or at least broadening public support. And I definitely agree with not making it about the opponents. People watching from the sidelines see how those in the fray comport themselves, and bad behavior including ad hominem attacks can be a huge turnoff, even if your ideas are good. Nobody likes an asshole.
Well said. I was very deliberate about committing to civility from the beginning. It is the right thing to do, but there are also many practical benefits. A few people told me that staying positive in Arlington was a big part of our success.
Interesting read on your experiences in the political sphere of this discussion.
I think the tension in this topic comes a bit from a lack of transparency on what these policies do and splitting the housing issue into two - affordability and desnification/output. Cities are typically more productive, and agglomerative forces make them even more productive. Thus, for the economy and overall output it is better when cities densify and more people are able to live there. This is what upzoning and other polices assist with.
However, research shows that, unfortunately, these policies do not really alter the affordability issue. One of the best recent studies on impacts of upzoning on house prices, showed that even with large upzoning prices fell by 0.5%. (the paper - https://www.nber.org/papers/w29440, my deep dive into it - https://www.nominalnews.com/p/housing-will-deregulation-fix-everything ). The reason for this 'unintuitive' result appears to be a form of arbitrage. That is, a city typically offers very high wages (for the same skill level, job etc) in comparison to the rest of the country. Thus, if housing was as cheap as the rest of the country, people would have much larger consumption in the city. This means people would want to move into the city and thus bid up land/house prices. Since the number of people living outside of cities is much larger than city sizes, we end up with a situation with infinite city demand - meaning there's always someone ready step in to the city with any new housing and pay the high price. So new houses densify, which is a good outcome, but do not impact affordability, as the price of the house remains the same.
I address some of your points in this piece:
https://open.substack.com/pub/thedeletedscenes/p/thinking-bigger-about-the-housing
Allowing cities to grow and densify would make them a lot bigger, giving more people access to economic opportunity in a basic sense. I remain confident based on a variety of different types of evidence, from empirical work to my own intuition, that densification does ultimately make housing more affordable by using a scarce resource, land, more efficiently.
Regarding affordability, that is a purely empirical question. The Sao Paulo study analyzed a 36% upzoning policy in a very large city and found prices dropped 0.5%. So technically it did improve affordability, but that percentage won't change the affordability issue that is being discussed publicly. So from this result, arises the question why did zoning reform have such a small effect on prices, which as you point out, does not fit with intuition. My current theory is based on equating of financial outcomes (conditioned on risk, skills etc) between areas. There shouldn't be extra economic profits from living in a city vs not living in a city (again, conditioning on some important observables).
We both agree on one assumption - agglomeration has increasing returns to scale (as of today) or at least constant returns to scale. Thus, having more people in a particular area will result in overall (nation-wide) greater economic activity. But we should be honest about what solutions will and won't do, because it will lead to disappointment from the public if certain things do not materialize.
Personally, I think the key to affordability is remote work (de-linking job opportunities from physical areas) making the agglomeration force 'virtual' rather than physical and significant growth in public transit (especially into undeveloped areas).
I think we agree more than we disagree and if our preferred policies were implemented, you might be pleasantly surprised.
I want to believe on some level that agglomeration can be virtualized, but I just don't think that's how human beings work on the most basic level. People will always want to be around each other, whether they want to admit it or not (yes, this is a reference to people who want to live near a city but wall off their neighborhoods).
I don't want to turn this into an endless back and forth, and I'm not trying to get the last word, but the evidence you are citing is pretty narrow. What about Tokyo being more affordable than many American rust belt cities? Or the results we have seen in Minneapolis? There is a big world out there.
Re 1: I'm always happy to get new data and see updated research as examples roll in. That's why I love economics!
Re 2: Yup - no guarantee remote work is the solution, but I feel we're in its infancy and whether it is virtual, or some form of hybrid, it could open many possibilities.
Re 3: Yes - since I've been asked about it before, based on my cursory research on that topic, it appears Tokyo spends about 30% of local income on housing (basically comparable to NYC - separately, interesting fact which I discussed recently - NYC is one of the most affordable cities in the US once we factor in transportation costs). From what I also saw, house prices have not grown much in Tokyo - but, at the same time neither has GDP or income, due to their stagnation, suggesting the local income-house cost link is present. The 30% ratio appears to be quite consistent as shown in the chart of one of my posts where Minneapolis affordability is on par with NYC (and worse for low income individuals) - https://www.nominalnews.com/p/housing-supply-side-and-affordability (that's why I'm strong advocate for public transport, as its benefit are immense). Additionally, affordability should be differentiated from location affordability. Often, in densification, we imply that places are affordable if we just make them smaller. But that's a more location affordability - i.e. I can afford to live in this city. Agreeing to a smaller place is then a trade off between the benefits you get of being in a location vs size of house. To me, affordability should be focusing on how to make the same house cheaper - or lowering the price per sq foot. That'd be true affordability.
I definitely agree that we agree on the major ideas! The discussion is also a pleasant one :)
None of this justifies maintaining the status quo of inflexible zoning, which is good enough for me.
The good news is that most people are not political and, if they have any views on housing, those views are informed mostly by their personal experiences; so educating this group can go a long way toward expanding the YIMBY coalition, or at least broadening public support. And I definitely agree with not making it about the opponents. People watching from the sidelines see how those in the fray comport themselves, and bad behavior including ad hominem attacks can be a huge turnoff, even if your ideas are good. Nobody likes an asshole.
Well said. I was very deliberate about committing to civility from the beginning. It is the right thing to do, but there are also many practical benefits. A few people told me that staying positive in Arlington was a big part of our success.