The Housing Theory of Everything
62 comments
·March 1, 2025tptacek
acdha
I live in a very similar neighborhood with exactly the same problems (DC railroad suburb) and completely agree with your assessment.
Your observation that you start to sound like a crank really rings true, and it’s exacerbated by the stark generational gap where every interaction is painted as an attack on long-time residents, especially ones who don’t want to recognize that, say, taxes need to go up because infrastructure costs more to maintain or that traffic is worse because they, a retiree sitting on a $2M house, haven’t been able to downsize into an apartment and so the people who actually need to commute to work have to drive from a further out suburb and transit isn’t an option because guess who reliably votes against it? We had a positively surreal debate when the “preservationists” demanded that an apartment building literally next to a metro station have a huge parking garage even though the developer thought it was overkill. That made fewer, more expensive units and then they ended up renting out unused parking spaces as storage units because the people who choose to live next to transit are often trying not to pay for a car. Actuarially, most of the people who showed up at those meetings are probably dead by now but their decisions will still be visible in 2050.
hibikir
It is a very typical problem in the US, but it's not really the only issue. Go look at Spain, a country that has, historically, had little issue building housing: Very dense housing too by most standards.
After you liberalize housing, you still run into the trouble of economic forces trying to turn housing into a sensible investment: Buy an apartment, pay your mortgage for 20 years, and then you have a pile of leveraged money on top of the basic savings! But then you run into current housing in Spain: Said primary housing has huge tax savings over anything else. Taxes at sale time overwhelm property taxes (which are very good, yet seen as unfair by owners, so they stay low), so it's also better to keep the housing underused. So ultimately you end up with a situation where the building that before had an average of 5 or 6 occupants per flat in the 1980s, is now sitting at one and a half. So you end up having to massively overbuild, as to make sure nobody that bought in a good location does anything but make money on their "investment"
The US could build more, thanks to so many inner suburbs that should really be filled to the brim and 8 stories tall, but ultimately it's just kicking the can down the road until residential investment is not so important, and the price of housing lines up with its utility, not the ever-growing value of the land it sits on top of.
The Georgists that want to just LVT as the one tax in the world are going too far, but I don't see long term solutions to all the problems downstream from housing if, along of making it easy to build, we don't make sure that speculating on the value of the land is actually risky.
amluto
It sounds like both Spain and the US have tax systems that cause it to be expensive to sell a house and buy a less expensive house.
In the US, this takes the form of a nonsensical capital gains tax system: personal residences are not eligible for 1031 exchanges, so taxes on gains are due immediately, those taxes are not indexed to inflation, the exemption is too small to make much difference in any high-property-value area, and the basis step-up at death strongly incentivizes children to encourage their parents to keep their house until they die. California puts icing on the cake with Prop 13, so you can trade for a cheaper house and your property taxes increase. At least some recent changes in CA take baby steps toward improving this.
smallmancontrov
Yep. Housing can be affordable or it can be a good investment. Not both. Not for long.
Home owners are heavily incentivized to "not understand" this, so the cycle of abuse continues.
kiba
It's also true that people are also economically illiterate.
I don't think I am economically literate. I have only taken one semester of macroeconomic in high school.
csomar
Spain (since it's in Europe, though you could say the same about ME countries) is an example that housing does not drive growth. Growth can drive housing and housing shortages can hamper growth but housing on its own does not drive growth.
allturtles
What does SFZ mean?
tptacek
Single family zoning. A residential lot can only be used for a single, freestanding house; not a 2-flat.
pixl97
Probably single family housing zone
BenFranklin100
Even worse, our housing policy is corrosive to the fundamental social contract. When I was young, I was taught that if you worked hard and kept your head down, you could have a comfortable life. You may not be Bill Gates, but you could have a successful middle class existence.
Our housing policies have broken this social contract. Many younger people cannot afford to live in high opportunity but high priced cities. Those that can, often only do so because of help from family. [1]
NIMBYs dominate both sides of the political spectrum, especially among older people. It will take younger people getting involved in the YIMBY movement to effect change.
jldl805
Speak for yourself. I am 38, live in one of the top fastest growing cities in America for like 5 years running now (with a booming housing market), and own my own house outright as a result of my hard work.
Just because someone taught you something doesn't make it so. And even then, it might be true but your own choices (and failures) may be the reason you have not met your goals - rather than "housing policy".
Try on some personal accountability for size - it'll probably help you achieve those unachievable milestones you are yearning for, also.
tptacek
I think YIMBYs really like to cast NIMBYs as their evil adversaries, but the problem is systemic. Any policy change, be it "what can be built on this lot", or "what social services do we fund", or, in particular for my muni, "how do we deal with leaf collection in Autumn" will generate three cohorts of people:
(i) People who don't like the change
(ii) People who don't care about the change (most people)
(iii) People who do like the change
People who don't like the change (i), regardless of the amplitude of their dislike, will turn out and give public comment and put up yard signs.
People who like the change (iii) will turn out and give public comment only if they are weirdos like me, with off-the-charts amplitude for their feelings.
The net result is that the only public opinion that is legible to staff and electeds is opposite. Again: regardless of what the change is.
floodfx
Insightful!
Makes me think a bit about how negative content engages more people. Is this the same with people who don't like change? Not liking change activates people more than people who do like change?
freen
The difference here is whether or not folks are actually pro-social.
Do you care about other people’s wellbeing or not?
Most folks who are “against” things are against them because they perceive change as “bad for them”, and perhaps “good for people I dislike for historical and tribal reasons”
Civilization is a an endless series of Tradeoffs. Compromises. Loss of something in the short term in exchange for something better in the long term. If you aren’t willing to suffer in any meaningful way for your fellow human, eventually the entire bargain falls apart.
BenFranklin100
I don’t know what YIMBYs like to cast people who oppose housing. I am pointing out an effect of the lack of new housing.
I reccommend you read, if you haven’t already, Katherine Einstein’s book ‘Neighborhood Defenders.’ It accurately describes the housing politics in Massachusetts.
Any housing analysis is incomplete without taking into the geographical effect: The only people who care strongly one way or the other about new homes are the people who live near the proposed construction. Almost invariably, people who live nearby are against the change. Those who live far away are actually fine with new construction, at least in the abstract. The very same people who show up to protest nearby construction are also typically fine with housing on other side of the city. People just don’t want new housing in their neighborhood.
This has a practical lesson: control of housing policy, particularly, density, must be ripped from local city councils, where it now rests. Local city councils are beholden to their NIMBY homeowners, as homeowners are the only one who typically vote in city elections. The states thus need to reclaim their legal right to set housing a policy, a right they have ceded to municipalities.
Klaus23
It seems paradoxical to me that the only "solution" to housing shortages, which exist because the area is too attractive in large part because of the availability of jobs, is to build more houses and thus make the area more attractive to businesses because of the increased availability of workers. It looks like a battle against windmills that is bound to get out of hand. Efforts to alleviate the problem only exacerbate it.
It would be interesting to see if the shortage could be reduced by taking a different approach and making the area less attractive. For example, you could tax businesses much more if they are located in very dense areas, or even just limit the total revenue of all businesses in a certain area. Such things would have their own problems and challenges, of course, but there are few economic problems as bad as the housing crisis, and there is more than enough land to go around.
juanjmanfredi
That first scenario you portray is economic growth. Any city in the country would be thrilled to have to deal with the "problem" of being too attractive to both businesses and people.
majormajor
Yes. The city is thrilled. Jobs! Tax dollars! Wooo!
The people who live there? Maybe not so much.
Is infinite growth desirable? Should we make policy decisions to distribute things more instead?
Compare Dallas with LA. The denser one is much more expensive. Maybe get denser, like Manhattan? Oops, still expensive. Manhattan just needed to build that much more and get even denser? Where exactly is it believed it would stop? That the growth machine would say 'ok, that's enough, now we will just start lowering prices!'?
Yet Dallas-the-city wants to get those businesses - and will crow for days about being more "business friendly" or brag about this or that company moving to Dallas - but Dallas-the-incumbent-residents don't like the influx of people who can out-spend them for housing.
There are a few places that understand the less-direct effect of feeding the infinite-economic-growth-business-machine, that zone for overall stability, to prevent big industrial/corporate development, not just to prevent housing. But for that to work they generally need to have something well-established to rest their hat on instead, to avoid drying up and drying out.
klipt
Henry George wrote about this a hundred years ago in Progress and Poverty! His solution: a tax on land (not buildings) to encourage building up. Economists say it's one of the most efficient taxes possible.
hliyan
Thought experiment: if all habitable land on the planet is surveyed and transferred to private ownership, all subsequent generations that are born from that point on, will be doomed to rent-based servitude. Forgetting all political theory, it seems that planet-bound species with a positive population growth rate must not rely on socioeconomic systems that exclusively (or heavily) favour private ownership of land.
sooheon
> Give me the private ownership of all the land, and will I move the earth? No; but I will do more. I will undertake to make slaves of all the human beings on the face of it.
From "Archimedes", by Mark Twain, 1889
amazingamazing
Developers already want to build. The problem is the law.
tptacek
The Georgists agree!
analog31
Indeed, my state's constitution severely restricts how cities can tax themselves.
greenie_beans
how does that work with agriculture or other land uses that don't build? do those people get taxed higher because they don't build?
hibikir
Agricultural land is far from large population centers, so the value is relatively constrained. The real losers on an LVT is not those owning rural land, but the operators of a surface lot near a stadium, or people living in mansions in the innermost suburb ring.
fknorangesite
i.e., people for whom my violin is very tiny.
xvedejas
Land that is far away from developed land will tend to have lower land values, so farmland would not be so highly taxed under LVT. It's mostly land that benefits from being close to development that would be taxed higher.
aqueueaqueue
Australia values every single lot of land for rates (aka council tax). So it is possible with some good stats nerds to figure it out.
But these values take into consideration zoning. So if you are ona residential block it is valued as such. But it would not be hard to figure out what it would be worth as high density. So the valuation problem is easily doable.
Also in Australia each state does it independently.
dmoy
> Also in Australia each state does it independently.
In the US this is typically done at the county level (3000+ individual counties, all doing it independently)
01HNNWZ0MV43FF
No, but they're also not punished if they do build
scythe
I thought of a slightly milder version of the tax, which I call a land wealth tax. Fix a certain maximum value of land owned by a single person which would not be taxed. In theory this might be some quantile, like the 80th percentile of land value owned per person. (I'm pretty sure you would still be taxing the majority of land using this threshold! At least at first.) Then everything owned above that is taxed by value. This avoids a rebellion of the most vulnerable and sympathetic homeowners. Of course land owned through opaque ownership structures must be assumed to be above the limit. Corporations with transparent ownership structures might see their land divided up (a likely intractable math problem if you included publicly traded companies) or some approximation applied, or the land simply taxed.
One advantage of taxing land wealth versus wealth in general (a la Piketty) is that land — "real" property — is much harder to hide in offshore corporate holdings than general wealth. It is all documented by necessity.
I have no expectation, unlike George, that taxes on land could fully satisfy the general fund. But they could certainly play a significant part. A significant difficulty with land value taxes in general is the assessment of land value, which is a difficult problem and has caused controversy in the past due to fluctuations and apparent inconsistencies. My preferred approach in the United States would be a Constitutional Amendment, which would allow centralizing the necessary expertise with the resources of the federal government.
notepad0x90
There is no shortage of land, there is a shortage of efficient transportation. All this talk of building up and creative ideas around housing is great but the ultimate problem is transportation. To solve the problem of housing in LA, a person should be able to live in Reno,Nevada and work somewhere in Santa Monica, CA. I'm not saying I have a solution, I'm just pointing out the problem domain.
The US does not have modern transportation infrastructure like similarly sized countries like China. Generally speaking, housing is built near bodies of water or alongside transportation towards bodies of water. Even issues like NIMBYism can be resolved by constructing underground bullet trains that won't affect appearances. This is a hard problem, but not an unsolvable problem. It isn't just economies of scale, government investment, clever economic strategies,etc.. that are needed but actual revolutions in construction technology and transportation. Timelines for construction that are only few years not decades. But alas, I fear the politics of these days would not allow for this.
01HNNWZ0MV43FF
Subways are too expensive per mile for a lot of cities. Density makes transit cheaper
resonantjacket5
Or allow building higher than one story? Like most cities around the world
CalRobert
LA has good public transport but then builds low density around it
tokioyoyo
Good coverage, but it’s absolutely abysmal in terms of reliability, convenience, speed and cleanliness. I tried to survive a week without Uber/driving in LA, and gave up after 3rd day.
If your public transport is mostly used by low income residents, you’ve already failed. It just shows that it’s not good enough for anyone else and alternative methods are superior if you have money.
ty6853
Trades licensing, tightening codes, inspections,zoning, inspection, planning, environmental regulation, and water/well shenanigans are the reason for unaffordable housing. Plenty of cheap land near jobs, land not a meaningful constraint.
By bypassing most all these and DIYing a house I was able to build a house for well under 100/sqft.
ok_dad
Where I live, land is a very meaningful constraint, there’s no cheap land near anything meaningful. We’re about at our limit in terms of transportation infrastructure, too, so additional housing has to be apartments right in town or our horrible traffic will become even worse. Unfortunately, everything they are building is tight single family homes.
tptacek
There is not in fact plenty of cheap land near jobs in major urban centers.
kasey_junk
I can show you a fair bit in Chicago if you want.
tptacek
Say more (here, or next time I see you).
__float
How many of those can you realistically bypass by DIYing? I understand it saves a bit on taxes and you don't need a license yourself, but the rest?
Apreche
I would tell the same story, but the root issue is cars. Housing density would have remained high if not for car dominance.
flyingaspi
Quite a good article, I like the ‘hyper local democracy’ suggestion.
But it’s weird how every discussion of housing seems to jump to increase supply and density.
Never a mention of: - immigration driven demand - historically low interest rates inflating all asset prices - occupancy per home
The macro trends that have driven these for the last 50 years are now reversing, at least in places like the SF Bay Area which will have a huge impact.
Also the population pyramid of the US will (sadly) drive down demand in the next couple of decades.
Also I’ve read studies that suggest that dense housing is less likely to promote family formation e.g. Japan’s high density and laissez-faire zoning hasn’t helped with their fertility crisis.
4fterd4rk
The NIMBY people know what they're doing. They know that restricting the supply of housing is bad for society. They don't care because it is good for their own personal financial position.
I'm sick of these posts thinking that these people are stupid and if we could just explain to them the consequences of their actions this would all be fixed. No. They KNOW. It is intentional.
ty6853
This is exactly it. Notice for instance how homeowners will vote to allow ADUs but not to allow splitting off the ADU as a separate deed that would allow someone else a piece of competing ownership. They want all the upside of additional landlord opportunities but not the filthy peasant to own the Adu they live in.
flakiness
[2021]
freen
The “screw you, I got mine” culture is killing us.
People who bought houses enabled by zoning changes refuse to allow zoning changes that will increase the price of their own home because why?
Racism and a fundamental failure to understand economics.
raziel2p
I think it's more projection - assuming anything that benefits you benefits society as a whole.
House owners assume everyone else is also a house owner, so increasing values will benefit everyone.
mlsu
The key is to not focus on the money. The money flows in one direction, but the economy (things that people choose to do; where they spend their time, how they get around, etc) flows in the other direction. In some sense, money is a symbol which represents real economic activity.
From there. Looking at just the real life things that are happening and deliberately leaving out any mention of money:
- there aren't enough places for people to live near jobs. Employers have a hard time finding workers, because workers can't afford to live nearby. Productivity suffers.
- people have to spend a long time commuting to their job, which means they spend a lot of time in their cars. Big waste of time!
- the housing that is out there, is very old and not suitable for many people. People who should be living alone in a small studio take roommates and live in a single family home, because there is no inventory of studios for them. People's lives are worse because of this, their built environment isn't what they want it to be.
- people who want to start a family and live in a small house on their own, can't. the only houses they build are too large for what new families need. So people delay starting a family, because the housing that should be there isn't there for them. Fewer kids.
- because it's hard to find places to live, people are less mobile. when they find a place, they hold onto it longer, even if it's suboptimal for their situation. So people stick around even if it sucks, because there's nothing better out there.
- places that have prestige jobs see the bottom % pushed out because there's only room for top % employees. Those places get "hollowed out" with the bottom % taking long commutes or living in suboptimal conditions to be near the top %. Social segregation, which leads to cultural disconnects.
- parents don't have a place to go once their children are grown up and have moved out. Our built infrastructure doesn't suit them. So they stay put and get lonely.
- because everyone has to drive to work and can't walk, small businesses that depend on foot traffic don't work any more. Big businesses with office parks and the money to build parking lots in suburbs have the commercial advantage, so they prevail.
etc etc.
Completely removing the whole concept of "money" from the conversation, makes it abundantly clear that we are making bad choices about our built infrastructure, over and over again, to all society's detriment.
jmyeet
These problems stem from private property. That is, we allow the hoarding of a basic necessity (ie shelter) and we treat housing as an investment vehicle. This incentivizes every aspect of society and government to do what they can to increase property prices. Homeowners think it's good for them. Investors love it. How do we do that? By limiting supply.
In most of the US it's illegal to build anything other than single-family houses. We build our cities around cars. We make it impossible to build any form of public transit because that might let undesirables into our nice clean neighborhoods.
The single biggest factor in homelessness is being priced out of housing.
Expensive housing is an input into everything. It means wages need to be higher. It makes everything you buy from a business more expensive. It's why that $2 coffee 30 years ago is $8 now.
What's the alternatie? Personal property and social housing. Personal property (as distinct from private property) is that you can still own property you personally use. You simply can't hoard housing. Social housing means the government provides affordable quality housing to anyone who wants it. The poster child for this is Vienna, where over 60% of the housing is soial housing.
If you buy a house for $300k and it goes up to $800k. You haven't made $500k. You think you have but you haven't. Why? Because what would you do if you sold it? You'd still have to live somewhere. And if every other house is also $800k, you still only have one housing unit of wealth.
Expensive housing is simply stealing from the next generation. It's also a way to keep you in debt, to coerce you into working with the threat of violence (eviction is violence) hanging over you.
Landlords are parasites.
tptacek
I couldn't have less bandwidth for people who want to villainize landlords. Want to reduce the influence of landlords? Let more people build multifamily housing. Who's keeping that from happening? It's not the landlords. It's the people who live in freestanding single-family housing.
Social housing is what people who own houses say they want, because they know it's never going to happen. It's a safe way to genuflect to a totalizing class conflict without staking anything on it.
Every landlord I've ever met is a lower-middle class Black person who owns an apartment building, that they also live in, in Lawndale or Austin. Miss me with this stuff.
These are the macro effects of housing. I buy all of them. I'm a housing activist involved in local politics in Oak Park, IL (one of Chicago's two equivalents of Berkeley or Brooklyn, the suburb of Evanston being the other). Some micro/local impacts of housing restriction:
* Retail business stagnation; retail is dependent on foot traffic, and SFZ residents do not understand what it takes to support the kinds of businesses (yoga studies, coffee shops, art galleries, bookshops) that they actually want to see sited near them. The result is that city plans for commercial corridors create near-blighted streets with gas stations, vacant lots, and the occasional nail salon or Domino's Pizza.
* Public safety issues; those same underutilized commercial drags are dead once the sun goes down; without people walking on the streets, nobody's watching, and you can see on a map clearly where crime gravitates.
* Escalating property taxes; lots of people want to retire in the same community they spent their adult lives in, but in an overwhelmingly SFZ muni with good schools, the top bidder on any residential lot is a family with school-aged children. Schools make up over half (in our case, 2/3) of the property tax burden, and it gets worse as the demographics shift more and more to school-aged families who move out when their kids graduate high school; housing diversity could give retirees an economically rational place to move (and remain in the tax base), but we outlaw it.
The problem with all this stuff is you start to sound like a crank, because almost every problem a typical urban muni faces will probably stem from many generations of outlawing housing.