Great analysis. A few quick additions from a DFW city planner:
1) Minimum lot sizes are a major issue. Yes, they drive up housing costs by requiring more land and encouraging larger homes. They also spread out infrastructure and service delivery, which increases long-term costs for both cities and homeowners. Similarly, on average lower-density development has lower valuations and therefore a smaller tax base to cover those costs. But the recent state law that overrides local rules only targets big cities—which aren’t building many subdivisions because they don't have a lot of vacant land for new single-family development. The real problem, unaddressed by the legislature, is low-density development in fast-growing exurbs like Anna, Melissa, Forney, Mansfield, and Celina.*
2) Pandemic-era price hikes weren’t just about supply. Demand surged from coastal buyers relocating to Texas. Someone selling a $1M home in LA can easily overpay in DFW, upgrade, or outbid locals thanks to their cash advantage.
3) Water is the biggest looming challenge. Many cities are hesitant to issue permits due to limited supply. The state is slow-walking new reservoir approvals while encouraging privatized transport of scarce aquifer water—raising major long-term concerns for growth.
4) Investors are skewing the market with cash offers and fast closings. It's hard to quantify the impact but the build-to-rent and private equity homebuying sectors are directly competing with, and therefore raising prices for, traditional homeowners.
*Sidebar here - the model is also shifting to put more costs directly on homeowners, with Municipal Utility Districts (MUDs), Municipal Management Districts (MMDs) and other financial vehicles beyond the traditional HOA that allows developers and cities to shift infrastructure costs off to buyers, who are then responsible for debt incurred to build their communities and the considerable maintenance costs that follow for roads, water, stormwater and other infrastructure. This is especially pervasive in the Houston area but is creeping to DFW's exurbs as well. The costs of owning a home, like insurance and traditional maintenance, will only be supercharged with the burden of these additional costs.
It's good that the cost of new construction should include the cost of utilities to service construction
We don't want new construction prices to be artificially inflated.Due to burdensome zoning, regulations or fees
But at the same time, we don't want them artificially reduced, because they're not representing the full cost of new infrastructure needed
Not to mention people that are already, there are much less likely to approve new construction.If they have to pay for the fees to service that new construction
How much of this supply can be attributed to Dallas (or DFW metro) having lots of space to expand and build new housing? I don't have the data, but I'd wager that fully-developed, space-constrained neighborhoods like the Park Cities and Preston Hollow have seen prices rise much faster than the national average. The logical step being that the Northeast as a whole is already more densely developed, so one can't really engage in the "urban sprawl-style" housing development that you can in Dallas or Houston. If my assumptions are directionally correct, then your flavor of YIMBY becomes densification, which seems like a much harder sell than "Yes D.R. Horton, you can build 500 homes on the prairie 50 mins outside of downtown Dallas."
Yes, this is my point. One can argue that Dallas & Houston are a decent model for increasing housing supply in a major metro but how they're doing that is not feasible for many metros where housing is tightest (b/c of geography or people having already built things there).
The biggest housing problem is the speed with which buyers have to act because of all cash offers from investors. The desire for "volume" in a market like housing creates a whole lot of stress for people on both ends while benefiting everybody in the middle.
The biggest factor in increasing housing prices is the fact that everybody wants to buy for more than they sold. If a lot of people are moving in and out of an area, that will push prices up more than anything else because each seller needs to make money to pay off their loan. So, the best way to keep prices down is to encourage people to not look at their house as a financial instrument and look at it as a home instead.
I think a few more things would help:
1. Houses should be owned by people, not businesses. People buying houses to rent themselves is obviously ok and totally different than investors coming in with 10's of millions of $ and setting up shop.
2. Instead of having massive plots of land and arguing over the dimensions of each plot, a city should buy the land and divide it up into a more standard setup. Then, if you want to build a house with a bigger yard, you could just buy more plots next to where you want to live. If you want a smaller lot, you can work with the city to downsize it. In other words, leave the decision about what kind of yard to have with the buyer instead of the builder.
3. The idea that large homebuilders won't eventually use their scale to squeeze either the buyer or the suppliers is dumb. Wall street is investing because they know that, eventually, the payoff will come.
What % of Dallas homes were purchased by institutional investors -- or non-resident foreign investors -- over the past five years? And what % of new supply has been listed on Airbnb and short-term rental platforms?
I'm not completely fluent in these metrics, but I think this FRED chart (https://fred.stlouisfed.org/series/HOWNRATEACS048113) tracks something like that through 2023. It plots homeownership rate (population occupying a unit that they own [including ongoing mortgages] as a full-time residence, divided by total population). According to that chart, Dallas homeownership rate has ticked up a couple of points since 2019.
The same chart at a national level is a bit different (https://fred.stlouisfed.org/series/RHORUSQ156N#). Homeownership rate has fallen a few points since 2020, but that's maybe a weird year to take as a baseline. It's about the same as 2019.
Maybe I'm looking at the wrong thing, but these appear to suggest that investor-owned housing isn't meaningfully affecting the fraction of housing owned by people who live there.
I have confronted this before, but I'll do it again (sigh).
What is NIMBY? I know what the letters stand for, but what does it mean?
Is it a complimentary term or a put-down term used by progressives?
Is it a term that shows the person using it believes they are of higher moral standing than people who don't want condensed housing in their neighborhoods? In other words, is it a term that signifies bad motives for many people?
There is a parallel to NIMBY: Defunding the police.
The defunders also believe that they are taking a higher moral ground (i.e., are "better people") than those who want policing. And, yet, most of those progressives arguing for defunding live in neighborhoods that have virtually no crime. With defunding, it will hurt poor people and minorities, but not them.
Will condensed housing hurt writers and advocates who generally have more money than the rest of us and so can live in places where their advocacy doesn't really change their lives or damage their only retirement investment (i.e., their home)?
Who "pays" for the loss of one's neighborhood for condensed housing? People who advocate for condensed housing or the rest of us? Any data please. (i.e., not just your story---data; facts).
Your house is your property. Your neighborhood isnt.
Government should not optimize policy to create windfall for people with existing wealth. Government should optimize for maximizing economic benefit.
You can twist morality and reframe reality in whatever way you want, but the positive effects of pro housing policy are clear. And your views dont represent "the rest of us".
Highly confident that any response from that lot can be summed up as “herpaderp, this is why Dems lost, because they didn’t cater to my provincial derangements”.
Tell us, please, how many people "your views" apply to. We know, for example, from ample surveys that progressive ideas are not favored by most Americans. They have been slaughtered by public opinion, although progressives continue to tell each other that they are in the "moral correctness" mode.
Plus, you are wrong. I pay for my neighborhood, in city taxes. That gives me a right to have a say in it. We recently owned a house that had an easement through it---a road! Neighbors could use our property without having to pay a cent in property taxes. They had that right over our property, and we didn't even think to protest that.
Your attitude toward government sounds very socialist. "Government should optimize for maximizing economic benefit." Good heavens. You really think "Government" can do this without creating awful messes?
"the positive effects of pro housing policy are clear" This is your value judgment that you are framing as "truth." If you want to assert this statement as proof, then provide data, evidence, facts.
> Your attitude toward government sounds very socialist. "Government should optimize for maximizing economic benefit." Good heavens. You really think "Government" can do this without creating awful messes?
The status quo is "Government should optimize to keep existing home owners happy, future home owners be damned". It is socialism that distributes upwards, which is still socialism, but just even more perverse.
Our daughter and husband just bought a home for a VERY low price....in Iowa.
There are inexpensive homes out there, everywhere. But maybe not in places where there are Vietnamese Restaurants.
How is the "Government" optimizing keeping us happy, and what, pray tell, is wrong with that. Aren't you saying that "Government" should optimize making us unhappy? How do we decide that kind of thing in a Democracy?
Answer: by voting
We DON'T do it by having people impose their values on the rest of us, as progressives are so wont to do.
And my major point to you is that your advocacy is a losing proposition, just as all progressive propositions have been. The voting public has rejected them, soundly.
So continue advocating that you have a right to change my neighborhood in any way except through Democratic voting is going to lead to a resistance to helping people out at all!
Learn from the election. Another example: Trans advocates pushed too far, way past the scientific evidence. So, Trump won, and states now restrict trans care. And that hurts those few people who truly, through careful assessment, were trans. Thanks for nothing trans advocates who were convinced of their "higher morality."
Pushing too hard against public opinion comes back to bite you, progressives. That's why we Democrats got so much done. And why progressives haven't, except to set the country back by electing Trump TWICE.
And I'll say this again: Use of the term NIMBY results in blowback. It changes no one's opinion in the direction you want because it so clearly falls into the progressive idea of their moral superiority and of the idea that anybody who disagrees with them has bad motives.
It's an insult, pure and simple. Find me a single example in history of when insults were persuasive.
This stranglehold of nimby's to use the state's power to override property rights will end as well, it's just a matter of how many generations this current regime ruins before it is cast aside.
The problem with pushing people to far flung parts of Iowa is that people are not drawn there by opportunity, but rather by artificially created scarcity in places where people actually want to live.
It isn't the fault of young people today that the economy has gone into a more service and specialized labor direction, but it has, and those sorts of jobs are found primarily in larger metros. Keeping people out of them by exorbitant prices depresses the economy, and sells out the prospects of the upcoming generations for pennies on the dollar in terms of benefits it accrues to the older generations.
Plus, there is a special resentment one gets when they have to move to a downwardly mobile location, away from good job prospects, and away from any form of social network they have elsewhere. Older generations should consider this, as this breeds intergenerational strife.
There is "opportunity" working in a mini-mart in Seattle that's better than the opportunity of working and owning your own home in Iowa?
splain that! Lucy.
You are continuing to assert that yours is a higher moral value....as evidenced by your continual use of the put-down term NIMBY.
You absolutely refuse to admit that people who are resisting condensed housing may have some very valid points.
Keep thinking that way. Keep thinking that the only position that is "morally right" is yours. And you will, as progressives have been finding out, find that you continue to lose.....and will be baffaled as to why since your position is so clearly the only "right" one.
So, tell us what implication these strategies will have for you personally. I've described mine. Will your suburban house have a big apartment built next to it? Will your home lose value...the home which is your retirement nest age?
In other words, what effect will this have on your neighborhood that will decrease the pleasure of living there?
Everybody pays taxes buddy. So do the allegedly rich writers and advocates. But here you tacitly admit to being well off because you think your taxes make you special. Surely you wouldnt think that if you werent at least moderately wealthy. You've confirmed you are a homeowner anyway. So dont pull the "oh, you should think of the working class" or whatever it is that you were trying to say/imply.
Deregulation is the polar opposite of socialism. Maximizing economic benefit is letting the free market function without intetest groups, such as yourself, getting in the way. Giving you a windfall by having prices artificially raised through overregulation is much closer to socialism. I think you should interrogate your own positions more often so that you dont come to the incoherent conclusions in your post.
"buddy" "make you special" I'm a "special interest group"
I'll let you fill in the rest. It's the same tone as NIMBY is. And it persuades people to move in the opposite direction you are wanting.
Progressives need a psychological consultant. They just don't get how superior they come across and how that attitude (expressed OFTEN in articles and in comments to articles) moves everything backward.
So, now we have Trump, and people like Mamdani who have moved in even a more progressive direction and progressives are on another sugar high (even though he got less than 9% of eligible voters in NYC).
If you bought a property with an easement, then you have no right to complain about people using the easement as allowed. Your choice is only whether or not you buy the property at all. You can attempt to buy off the users of the easement, but if it cuts off access to their own property then they will demand a larger price than you want to pay.
Just because a person pays property taxes, that doesn’t give them the right to tell others in the neighborhood what they can or can’t do with their property. The property taxes also don’t pay for the neighborhood, the neighbors do. The taxes pay for the roads, and maybe garbage collection, fire protection or police patrols, and maybe some schools and parks. And if the amount of taxes paid determines who makes the rules, then the apartment complex with lots of units has more say than a single homeowner.
"Just because a person pays property taxes, that doesn’t give them the right to tell others in the neighborhood what they can or can’t do with their property."
Really? So I can finally open that porn shop next to a school? I can get rid of the sidewalks on my property? Can I start a junk yard in my suburban neighborhood? It's a free for all! Want no noise ordinances in your neighborhood? (they happen all of the time). Can I play amplified music on my lawn at 2:00 a.m.?
Tell us about how this idea of condensed housing will affect you yourself. Will it lower the value of your home/retirement?
And you can yell about it all you want, but my point is that the moral superiority of the people who yell NIMBY will turn voters against you, and already have. It may feel good to believe you are morally superior, but it is the opposite of being persuasive.
Sorry, but it does. People control other peoples' property all of the time, by law. And besides, all your approach does is make me advocate more to resist condensed housing.
So, tell us, will condensed housing reduce the value of your suburban home? Do you own a home?
It sounds like YOU are a NIMBY - someone who seeks to preserve the status quo, which benefits them, at the expense of others, generally by advocating for legal mechanisms that limit their neighbors' property rights.
Exactly my point. Yet you, and other progressives, believe that using that kind of moral put-down will result in more housing instead of resistance from people who believe they and their concerns are not being taken serious.
So, tell me, what will be the implications for your home and neighborhood with adding a lot of condensed housing?
Morality and economics clash quite heavily. What feels good to say is usually disastrous economics. I totally agree. I’d extend the same arguments to gentrification. Run down areas full of crime and poverty need all the help they can get… until they don’t anymore. Then the influx of capital, businesses and demand for being there (which typically are work towards making it a better place to be) increases prices and suddenly the exact thing that people wanted for years is made out to be some negative elitist infiltration of a marginalized culture that was doing fine on their own (thank you very much). These terms and concepts are all nuanced and I think people lean into the connotation of the labels and the “good” vs “bad” category they’ve categorized them as. And, perhaps like so many things, it’s just an issue of labeling and preconceived morality associated with them.
A NIMBY is someone who acknowledges that something needs to be built (for example new housing) but doesn't want it built anywhere near them. They advocate to get the government to make (or keep) that illegal so it has to be built somewhere else.
No, Harry. That is not what I mean by the "meaning" of NIMBY. It is, instead, a put-down by progressives of people who have legitimate reasons for not wanting their neighborhoods changed. It is a term that dismisses their concerns instead of taking them seriously and looking for solutions that can be bought into by everybody.
It's the attitude behind people who use NIMBY that I, as a life-long Democrat, object to. We Democrats took everyone seriously, which is why we have accomplished so much.
People who do not want condensed housing in their neighborhoods have real and legitimate concerns. Trying to dismiss them with name calling (i.e., NIMBY) is a losing strategy. TAKE THEM SERIOUSLY.
Good on you for continuing to point out this challenge — it’s important for us YIMBY’s to not be so flippant, quick, dismissive, and self-righteous. It’s important to acknowledge the genuine tradeoffs — indeed the sacrifice! Made by incumbents who cede their power for the benefit of the larger community.
The democrats I know who were NIMBYish then came around to YIMBY usually did so for one of two reasons:
1/ they felt cudgeled and shamed into it because it became progressive orthodoxy, much like they have with views they felt obliged to accept in polite company, but may continue to secretly disavow. [bad outcome!]
OR
2/ they came to think of it like paying higher taxes — as fundamentally a patriotic sacrifice they were making as the lucky few who have the power to make the future better for the many. [good outcome!]
YIMBY’s will continue to win folks over both ways, but obviously the second is much more preferable, and sustainable.
Curious if that second framing resonates with you? What if advocating for upzoning in your neighborhood became a badge of honor, not because if was recognized as you adopting the right beliefs — but because it was recognized as a sacrifice for the greater welfare of the younger or less fortunate?
Here is where I am: I'd gladly pay more taxes to help people out like this. Just as you said. I pay taxes, gladly. With taxes I buy civilization and a country I want to live in. It's part of my Christian belief system.
Two things I would like to see:
1. Are there other alternatives?
2. Data on what this would do to housing values which, for a huge percentage of people, is their retirement savings
3. Are there negative trade-offs that can be anticipated?
I sort of see the discussion about this problem as just starting, and would like to not assume that the first solution that comes along is the best one.
If someone acknowledges that something needs to be built but thinks that it shouldn't be allowed to be built near them, then they're saying that the government should prioritize their desires over the desires of other people.
Many people see that as selfish, which is why they use NIMBY as an insult.
And not just progressives. I, for example, am not a progressive. But I think I should be allowed to do whatever I damn please with my personal property. And when other lobby the government to make that illegal (especially if I want to build something important like housing on it) that's infringing on my private property rights.
This is why you see places like Dallas, Texas changing zoning laws to allow for denser housing even though the government there is far from progressive.
Who is saying they are prioritizing one over the other? That's our democracy. We vote!
As I have pointed out, we had an easement across our property. About 200 years of a dirt road build right through it. Do we have the right to "be allowed to do whatever I damn please with my personal property?" or are there laws that say that we voted for a system that allows easements, for the good of the neighborhood.
There are hundreds of examples of why you do not have total control over your property. We accept that, except here, by some people, who believe they should have total control over their property but also want control over other peoples' property. What's the difference.
Who gets to decide? You? Progressives? Voters? I thought we had a Democratic system.
plus, tell us about your living situation. Will dense housing affect your property values in your suburban home? Or just other peoples'?
Well obviously we live in a democracy. All of these laws are changed through the democratic process. The people who advocate for zoning changes are just advocating that people elect politicians who say that they are in favor of this sort of thing.
As for me, I don't live in a suburban home. I live in a condo in Tribeca, NYC. MY zip code (10013) has a population density of about 45k per square mile. I think it could house at least twice that many people (similar to some higher density neighborhoods on the UES) and consistently vote for politicians in favor of upzoning my neighborhood.
Then, if we live in a Democracy, then the question that all progressives have absolutely refused to look at is how one is persuasive.
In progressive circles, you are an evil person if you are a boomer, a male, a police officer, white and make a comfortable income.
And then they think that will change peoples' voting preferences.
NIMBY is just another one of those accusations, but progressives won't see it. It does NOT take people who object seriously so we can then start looking for compromises that more people can accept.
We sat and watched this high moral attitude elect Trump. We could see it happening 2 years before the election. But nothing will stop it because people are more attached to their opinions than they are to even their own children.
One theory that I'd be curious to see investigated more: have the outsized returns and increased ease of investing in stocks depressed real estate investment and multifamily starts in particular, even in the most deregulated localities?
Why go through the hassle of investing in real estate when you get pretty good returns from parking your money in the S&P?
This story would seem to track both with rising P/E ratios (less earnings needed to justify high stock valuations) and the case of Japan, where rents have remained comparatively affordable, but the local stock market has delivered much less growth than in the US.
The marginal investor in real estate almost certainly had stock market access already…I think the simpler story about Japan is that they are able to keep costs down and they have very very low population growth so demand is not rising the way it is in the US (which is also why they have experienced broad economic stagnation).
In Japan for the last few decades a house or apartment has been a depreciating asset, houses and large buildings go down in value and are thus not seen as an investment, but more so a place to live. There isn’t a large market for used houses, and most that are bought are torn down to be replaced by a new house. Construction standards of modern houses there reflect the average short lifespan of the buildings and thus have lower construction costs.
Thanks for this! It makes sense that these factors would reduce construction costs and it's certainly true that Americans see homes as investments more so than most other countries, but I'm referring more to the rental housing market here, which is necessarily run as a business.
My suspicion is that an overperforming stock market raises the returns that investors expect of any other asset class, including rental housing. What I'm not sure of is how big this effect is.
Yes, this is a very real thing and something not much discussed by YIMBYs. It's not, though, that before real estate investors couldn't easily invest in equities (they could), it's that financing conditions are hugely important and expected/'necessary' returns are hugely impactful on development (and even repositioning). We could have no zoning laws whatsoever, but if real estate investment consistently delivered a risk-adjusted levered yield below what one could expect in the equity market, nothing would get built. This is why real estate people love low rates... When a deal doesn't pencil, it doesn't mean that it loses money, it means that it doesn't generate a high enough return for the opportunity cost to be worth it.
Higher interest rates force investors to pay even closer attention to the opportunity cost of their investments.
If stocks are doing well in spite of high rates (and the money is going more so to NVIDIA than REITs), it's even tougher to attract enough investment in real estate to bring down prices.
Yes, more serious investors already had stock market access, but the rising % of net worth held in stocks over time (which I think is due to a variety of factors, including generational change and increased ease of access) could be a significant factor in raising stock market returns and P/E ratios which has consequently raised the bar in terms of how much return a real estate investment would have to generate in order to beat the opportunity cost of investing in stocks.
I see what you mean now. I agree that this could have an effect, but I think it would be small, for two reasons. First, it is also true that along with the stock market access comes the ability to invest in real estate (e.g. through buying REIT stocks). Second, I kind of have to imagine that demand shocks for stocks in the way you suggest are correlated with demand shocks that drive housing price increases directly (alongside the indirect channel you're suggesting).
(btw, what needs to happen is that stocks need a better return. While access increases demand, in theory this is a one-time shock, and shouldn't *necessarily* have an effect on returns, though there are certainly reasons it could)
This problem also happens in Houston to a smaller extent. Read up on the Ashby high rise to get an idea on how local residents try to impede building up.
Home prices haven’t increased at all. They are lower currently than in decades. The issue is that the dollar has had its value inflated away. When home prices per Case-Schiller are denominated in gold instead of dollars this becomes apparent. Something about increasing the money supply 40% in three years can do that. Compare: https://pricedingold.com/us-home-prices/
Secondly this article ambiguously conflates the City of Dallas with suburban cities. Dallas proper is fully built out north of I-30, so smaller lot sizes would require redevelopment and destroy historic neighborhoods. There is abundant available land and lots south of I-30 but those aren’t being sought for development for some odd reason.
As in so many areas of society and culture, technocrats are a massively destructive force that ignores human values. This worldview is rightly being rejected by more and more people who have seen the outcomes.
"The housing researcher Ed Pinto has said that if the first rule of real estate is “location, location, location,” the first rule of housing affordability should be “small lots, small lots, small lots.” If you want lower prices, you should want smaller lots."
But why can't people afford homes the same size as before? Why is it costlier to build them now in comparison to decades ago? I think that's one of the key issues here.
I’d like to read your take on the NIMBY problem from the perspective of existing homeowners who believe that changing the density rules will negatively reduce the value of their homes. Is it reasonable to expect them to suck up the loss for the sake of the community? Maybe the “Abundance” approach pencils out for cities, but not for individuals?
Generally, I think we underrate the fact that we have far fewer entrants into the mortgage market and mortgage credit seems far harder to access today than it did in say the 90s. All these cities build way fewer homes than they did 30 years ago and it feels strange that no one is asking why.
Sure the urban zoning problem is obvious, but we used to just plow over the ranch land for houses all the time, but that process seems to have slowed considerably even in small metros where commutes are not an issue.
Great analysis. A few quick additions from a DFW city planner:
1) Minimum lot sizes are a major issue. Yes, they drive up housing costs by requiring more land and encouraging larger homes. They also spread out infrastructure and service delivery, which increases long-term costs for both cities and homeowners. Similarly, on average lower-density development has lower valuations and therefore a smaller tax base to cover those costs. But the recent state law that overrides local rules only targets big cities—which aren’t building many subdivisions because they don't have a lot of vacant land for new single-family development. The real problem, unaddressed by the legislature, is low-density development in fast-growing exurbs like Anna, Melissa, Forney, Mansfield, and Celina.*
2) Pandemic-era price hikes weren’t just about supply. Demand surged from coastal buyers relocating to Texas. Someone selling a $1M home in LA can easily overpay in DFW, upgrade, or outbid locals thanks to their cash advantage.
3) Water is the biggest looming challenge. Many cities are hesitant to issue permits due to limited supply. The state is slow-walking new reservoir approvals while encouraging privatized transport of scarce aquifer water—raising major long-term concerns for growth.
4) Investors are skewing the market with cash offers and fast closings. It's hard to quantify the impact but the build-to-rent and private equity homebuying sectors are directly competing with, and therefore raising prices for, traditional homeowners.
*Sidebar here - the model is also shifting to put more costs directly on homeowners, with Municipal Utility Districts (MUDs), Municipal Management Districts (MMDs) and other financial vehicles beyond the traditional HOA that allows developers and cities to shift infrastructure costs off to buyers, who are then responsible for debt incurred to build their communities and the considerable maintenance costs that follow for roads, water, stormwater and other infrastructure. This is especially pervasive in the Houston area but is creeping to DFW's exurbs as well. The costs of owning a home, like insurance and traditional maintenance, will only be supercharged with the burden of these additional costs.
It's good that the cost of new construction should include the cost of utilities to service construction
We don't want new construction prices to be artificially inflated.Due to burdensome zoning, regulations or fees
But at the same time, we don't want them artificially reduced, because they're not representing the full cost of new infrastructure needed
Not to mention people that are already, there are much less likely to approve new construction.If they have to pay for the fees to service that new construction
I attribute the problem to Big D energy.
underrated comment
How much of this supply can be attributed to Dallas (or DFW metro) having lots of space to expand and build new housing? I don't have the data, but I'd wager that fully-developed, space-constrained neighborhoods like the Park Cities and Preston Hollow have seen prices rise much faster than the national average. The logical step being that the Northeast as a whole is already more densely developed, so one can't really engage in the "urban sprawl-style" housing development that you can in Dallas or Houston. If my assumptions are directionally correct, then your flavor of YIMBY becomes densification, which seems like a much harder sell than "Yes D.R. Horton, you can build 500 homes on the prairie 50 mins outside of downtown Dallas."
Dallas is unusual for a US city that can expand in every direction. Other cities usually have a body of water in the way.
Yes, this is my point. One can argue that Dallas & Houston are a decent model for increasing housing supply in a major metro but how they're doing that is not feasible for many metros where housing is tightest (b/c of geography or people having already built things there).
Great stuff as usual, Derek
This is all kind of dumb.
The biggest housing problem is the speed with which buyers have to act because of all cash offers from investors. The desire for "volume" in a market like housing creates a whole lot of stress for people on both ends while benefiting everybody in the middle.
The biggest factor in increasing housing prices is the fact that everybody wants to buy for more than they sold. If a lot of people are moving in and out of an area, that will push prices up more than anything else because each seller needs to make money to pay off their loan. So, the best way to keep prices down is to encourage people to not look at their house as a financial instrument and look at it as a home instead.
I think a few more things would help:
1. Houses should be owned by people, not businesses. People buying houses to rent themselves is obviously ok and totally different than investors coming in with 10's of millions of $ and setting up shop.
2. Instead of having massive plots of land and arguing over the dimensions of each plot, a city should buy the land and divide it up into a more standard setup. Then, if you want to build a house with a bigger yard, you could just buy more plots next to where you want to live. If you want a smaller lot, you can work with the city to downsize it. In other words, leave the decision about what kind of yard to have with the buyer instead of the builder.
3. The idea that large homebuilders won't eventually use their scale to squeeze either the buyer or the suppliers is dumb. Wall street is investing because they know that, eventually, the payoff will come.
This is just factually incorrect.
Price is determined by supply and demand
If a bunch of extra supply comes on the market and demand stays, constant than prices will go down
If demand goes up and supply stays constant, then prices will go up
Moreover housing does not always pay off
It is very possible to lose a bunch of money in housing as people that bought in 2006 found out
7500 sq ft is a small ranch?
Yeah, I lol'd at that
What % of Dallas homes were purchased by institutional investors -- or non-resident foreign investors -- over the past five years? And what % of new supply has been listed on Airbnb and short-term rental platforms?
I'm not completely fluent in these metrics, but I think this FRED chart (https://fred.stlouisfed.org/series/HOWNRATEACS048113) tracks something like that through 2023. It plots homeownership rate (population occupying a unit that they own [including ongoing mortgages] as a full-time residence, divided by total population). According to that chart, Dallas homeownership rate has ticked up a couple of points since 2019.
The same chart at a national level is a bit different (https://fred.stlouisfed.org/series/RHORUSQ156N#). Homeownership rate has fallen a few points since 2020, but that's maybe a weird year to take as a baseline. It's about the same as 2019.
Maybe I'm looking at the wrong thing, but these appear to suggest that investor-owned housing isn't meaningfully affecting the fraction of housing owned by people who live there.
My guess is very minimal on airbnb, not a lot of tourist demand.
You’d be surprised.
I have confronted this before, but I'll do it again (sigh).
What is NIMBY? I know what the letters stand for, but what does it mean?
Is it a complimentary term or a put-down term used by progressives?
Is it a term that shows the person using it believes they are of higher moral standing than people who don't want condensed housing in their neighborhoods? In other words, is it a term that signifies bad motives for many people?
There is a parallel to NIMBY: Defunding the police.
The defunders also believe that they are taking a higher moral ground (i.e., are "better people") than those who want policing. And, yet, most of those progressives arguing for defunding live in neighborhoods that have virtually no crime. With defunding, it will hurt poor people and minorities, but not them.
Will condensed housing hurt writers and advocates who generally have more money than the rest of us and so can live in places where their advocacy doesn't really change their lives or damage their only retirement investment (i.e., their home)?
Who "pays" for the loss of one's neighborhood for condensed housing? People who advocate for condensed housing or the rest of us? Any data please. (i.e., not just your story---data; facts).
Your house is your property. Your neighborhood isnt.
Government should not optimize policy to create windfall for people with existing wealth. Government should optimize for maximizing economic benefit.
You can twist morality and reframe reality in whatever way you want, but the positive effects of pro housing policy are clear. And your views dont represent "the rest of us".
Highly confident that any response from that lot can be summed up as “herpaderp, this is why Dems lost, because they didn’t cater to my provincial derangements”.
Tell us, please, how many people "your views" apply to. We know, for example, from ample surveys that progressive ideas are not favored by most Americans. They have been slaughtered by public opinion, although progressives continue to tell each other that they are in the "moral correctness" mode.
Plus, you are wrong. I pay for my neighborhood, in city taxes. That gives me a right to have a say in it. We recently owned a house that had an easement through it---a road! Neighbors could use our property without having to pay a cent in property taxes. They had that right over our property, and we didn't even think to protest that.
Your attitude toward government sounds very socialist. "Government should optimize for maximizing economic benefit." Good heavens. You really think "Government" can do this without creating awful messes?
"the positive effects of pro housing policy are clear" This is your value judgment that you are framing as "truth." If you want to assert this statement as proof, then provide data, evidence, facts.
> Your attitude toward government sounds very socialist. "Government should optimize for maximizing economic benefit." Good heavens. You really think "Government" can do this without creating awful messes?
The status quo is "Government should optimize to keep existing home owners happy, future home owners be damned". It is socialism that distributes upwards, which is still socialism, but just even more perverse.
Our daughter and husband just bought a home for a VERY low price....in Iowa.
There are inexpensive homes out there, everywhere. But maybe not in places where there are Vietnamese Restaurants.
How is the "Government" optimizing keeping us happy, and what, pray tell, is wrong with that. Aren't you saying that "Government" should optimize making us unhappy? How do we decide that kind of thing in a Democracy?
Answer: by voting
We DON'T do it by having people impose their values on the rest of us, as progressives are so wont to do.
And my major point to you is that your advocacy is a losing proposition, just as all progressive propositions have been. The voting public has rejected them, soundly.
So continue advocating that you have a right to change my neighborhood in any way except through Democratic voting is going to lead to a resistance to helping people out at all!
Learn from the election. Another example: Trans advocates pushed too far, way past the scientific evidence. So, Trump won, and states now restrict trans care. And that hurts those few people who truly, through careful assessment, were trans. Thanks for nothing trans advocates who were convinced of their "higher morality."
Pushing too hard against public opinion comes back to bite you, progressives. That's why we Democrats got so much done. And why progressives haven't, except to set the country back by electing Trump TWICE.
And I'll say this again: Use of the term NIMBY results in blowback. It changes no one's opinion in the direction you want because it so clearly falls into the progressive idea of their moral superiority and of the idea that anybody who disagrees with them has bad motives.
It's an insult, pure and simple. Find me a single example in history of when insults were persuasive.
This stranglehold of nimby's to use the state's power to override property rights will end as well, it's just a matter of how many generations this current regime ruins before it is cast aside.
The problem with pushing people to far flung parts of Iowa is that people are not drawn there by opportunity, but rather by artificially created scarcity in places where people actually want to live.
It isn't the fault of young people today that the economy has gone into a more service and specialized labor direction, but it has, and those sorts of jobs are found primarily in larger metros. Keeping people out of them by exorbitant prices depresses the economy, and sells out the prospects of the upcoming generations for pennies on the dollar in terms of benefits it accrues to the older generations.
Plus, there is a special resentment one gets when they have to move to a downwardly mobile location, away from good job prospects, and away from any form of social network they have elsewhere. Older generations should consider this, as this breeds intergenerational strife.
There is "opportunity" working in a mini-mart in Seattle that's better than the opportunity of working and owning your own home in Iowa?
splain that! Lucy.
You are continuing to assert that yours is a higher moral value....as evidenced by your continual use of the put-down term NIMBY.
You absolutely refuse to admit that people who are resisting condensed housing may have some very valid points.
Keep thinking that way. Keep thinking that the only position that is "morally right" is yours. And you will, as progressives have been finding out, find that you continue to lose.....and will be baffaled as to why since your position is so clearly the only "right" one.
So, tell us what implication these strategies will have for you personally. I've described mine. Will your suburban house have a big apartment built next to it? Will your home lose value...the home which is your retirement nest age?
In other words, what effect will this have on your neighborhood that will decrease the pleasure of living there?
Everybody pays taxes buddy. So do the allegedly rich writers and advocates. But here you tacitly admit to being well off because you think your taxes make you special. Surely you wouldnt think that if you werent at least moderately wealthy. You've confirmed you are a homeowner anyway. So dont pull the "oh, you should think of the working class" or whatever it is that you were trying to say/imply.
Deregulation is the polar opposite of socialism. Maximizing economic benefit is letting the free market function without intetest groups, such as yourself, getting in the way. Giving you a windfall by having prices artificially raised through overregulation is much closer to socialism. I think you should interrogate your own positions more often so that you dont come to the incoherent conclusions in your post.
Your insults are duly registered. And are very convincing.
What insults? Where did I insult you??
"buddy" "make you special" I'm a "special interest group"
I'll let you fill in the rest. It's the same tone as NIMBY is. And it persuades people to move in the opposite direction you are wanting.
Progressives need a psychological consultant. They just don't get how superior they come across and how that attitude (expressed OFTEN in articles and in comments to articles) moves everything backward.
So, now we have Trump, and people like Mamdani who have moved in even a more progressive direction and progressives are on another sugar high (even though he got less than 9% of eligible voters in NYC).
If you bought a property with an easement, then you have no right to complain about people using the easement as allowed. Your choice is only whether or not you buy the property at all. You can attempt to buy off the users of the easement, but if it cuts off access to their own property then they will demand a larger price than you want to pay.
Just because a person pays property taxes, that doesn’t give them the right to tell others in the neighborhood what they can or can’t do with their property. The property taxes also don’t pay for the neighborhood, the neighbors do. The taxes pay for the roads, and maybe garbage collection, fire protection or police patrols, and maybe some schools and parks. And if the amount of taxes paid determines who makes the rules, then the apartment complex with lots of units has more say than a single homeowner.
"Just because a person pays property taxes, that doesn’t give them the right to tell others in the neighborhood what they can or can’t do with their property."
Really? So I can finally open that porn shop next to a school? I can get rid of the sidewalks on my property? Can I start a junk yard in my suburban neighborhood? It's a free for all! Want no noise ordinances in your neighborhood? (they happen all of the time). Can I play amplified music on my lawn at 2:00 a.m.?
Tell us about how this idea of condensed housing will affect you yourself. Will it lower the value of your home/retirement?
And you can yell about it all you want, but my point is that the moral superiority of the people who yell NIMBY will turn voters against you, and already have. It may feel good to believe you are morally superior, but it is the opposite of being persuasive.
The fact that you pay taxes doesn't give you the right to control other people's property
Sorry, but it does. People control other peoples' property all of the time, by law. And besides, all your approach does is make me advocate more to resist condensed housing.
So, tell us, will condensed housing reduce the value of your suburban home? Do you own a home?
I don't have a suburban home
I have a twenty acre ranch in the middle of nowhere
Because I don't like people
But i'm also an economist, and I understand that high home prices are due to lack of supply
And it's not right for me to fuck over millions of young people with zoning regulations to keep prices high.
It sounds like YOU are a NIMBY - someone who seeks to preserve the status quo, which benefits them, at the expense of others, generally by advocating for legal mechanisms that limit their neighbors' property rights.
It is not generally a complimentary term.
Exactly my point. Yet you, and other progressives, believe that using that kind of moral put-down will result in more housing instead of resistance from people who believe they and their concerns are not being taken serious.
So, tell me, what will be the implications for your home and neighborhood with adding a lot of condensed housing?
Man, great thoughts.
Morality and economics clash quite heavily. What feels good to say is usually disastrous economics. I totally agree. I’d extend the same arguments to gentrification. Run down areas full of crime and poverty need all the help they can get… until they don’t anymore. Then the influx of capital, businesses and demand for being there (which typically are work towards making it a better place to be) increases prices and suddenly the exact thing that people wanted for years is made out to be some negative elitist infiltration of a marginalized culture that was doing fine on their own (thank you very much). These terms and concepts are all nuanced and I think people lean into the connotation of the labels and the “good” vs “bad” category they’ve categorized them as. And, perhaps like so many things, it’s just an issue of labeling and preconceived morality associated with them.
Regardless, great thoughts in your post.
A NIMBY is someone who acknowledges that something needs to be built (for example new housing) but doesn't want it built anywhere near them. They advocate to get the government to make (or keep) that illegal so it has to be built somewhere else.
No, Harry. That is not what I mean by the "meaning" of NIMBY. It is, instead, a put-down by progressives of people who have legitimate reasons for not wanting their neighborhoods changed. It is a term that dismisses their concerns instead of taking them seriously and looking for solutions that can be bought into by everybody.
It's the attitude behind people who use NIMBY that I, as a life-long Democrat, object to. We Democrats took everyone seriously, which is why we have accomplished so much.
People who do not want condensed housing in their neighborhoods have real and legitimate concerns. Trying to dismiss them with name calling (i.e., NIMBY) is a losing strategy. TAKE THEM SERIOUSLY.
Good on you for continuing to point out this challenge — it’s important for us YIMBY’s to not be so flippant, quick, dismissive, and self-righteous. It’s important to acknowledge the genuine tradeoffs — indeed the sacrifice! Made by incumbents who cede their power for the benefit of the larger community.
The democrats I know who were NIMBYish then came around to YIMBY usually did so for one of two reasons:
1/ they felt cudgeled and shamed into it because it became progressive orthodoxy, much like they have with views they felt obliged to accept in polite company, but may continue to secretly disavow. [bad outcome!]
OR
2/ they came to think of it like paying higher taxes — as fundamentally a patriotic sacrifice they were making as the lucky few who have the power to make the future better for the many. [good outcome!]
YIMBY’s will continue to win folks over both ways, but obviously the second is much more preferable, and sustainable.
Curious if that second framing resonates with you? What if advocating for upzoning in your neighborhood became a badge of honor, not because if was recognized as you adopting the right beliefs — but because it was recognized as a sacrifice for the greater welfare of the younger or less fortunate?
Good comment.
Here is where I am: I'd gladly pay more taxes to help people out like this. Just as you said. I pay taxes, gladly. With taxes I buy civilization and a country I want to live in. It's part of my Christian belief system.
Two things I would like to see:
1. Are there other alternatives?
2. Data on what this would do to housing values which, for a huge percentage of people, is their retirement savings
3. Are there negative trade-offs that can be anticipated?
I sort of see the discussion about this problem as just starting, and would like to not assume that the first solution that comes along is the best one.
Yes, it's a bit of an insult.
If someone acknowledges that something needs to be built but thinks that it shouldn't be allowed to be built near them, then they're saying that the government should prioritize their desires over the desires of other people.
Many people see that as selfish, which is why they use NIMBY as an insult.
And not just progressives. I, for example, am not a progressive. But I think I should be allowed to do whatever I damn please with my personal property. And when other lobby the government to make that illegal (especially if I want to build something important like housing on it) that's infringing on my private property rights.
This is why you see places like Dallas, Texas changing zoning laws to allow for denser housing even though the government there is far from progressive.
Who is saying they are prioritizing one over the other? That's our democracy. We vote!
As I have pointed out, we had an easement across our property. About 200 years of a dirt road build right through it. Do we have the right to "be allowed to do whatever I damn please with my personal property?" or are there laws that say that we voted for a system that allows easements, for the good of the neighborhood.
There are hundreds of examples of why you do not have total control over your property. We accept that, except here, by some people, who believe they should have total control over their property but also want control over other peoples' property. What's the difference.
Who gets to decide? You? Progressives? Voters? I thought we had a Democratic system.
plus, tell us about your living situation. Will dense housing affect your property values in your suburban home? Or just other peoples'?
Well obviously we live in a democracy. All of these laws are changed through the democratic process. The people who advocate for zoning changes are just advocating that people elect politicians who say that they are in favor of this sort of thing.
As for me, I don't live in a suburban home. I live in a condo in Tribeca, NYC. MY zip code (10013) has a population density of about 45k per square mile. I think it could house at least twice that many people (similar to some higher density neighborhoods on the UES) and consistently vote for politicians in favor of upzoning my neighborhood.
Then, if we live in a Democracy, then the question that all progressives have absolutely refused to look at is how one is persuasive.
In progressive circles, you are an evil person if you are a boomer, a male, a police officer, white and make a comfortable income.
And then they think that will change peoples' voting preferences.
NIMBY is just another one of those accusations, but progressives won't see it. It does NOT take people who object seriously so we can then start looking for compromises that more people can accept.
We sat and watched this high moral attitude elect Trump. We could see it happening 2 years before the election. But nothing will stop it because people are more attached to their opinions than they are to even their own children.
One theory that I'd be curious to see investigated more: have the outsized returns and increased ease of investing in stocks depressed real estate investment and multifamily starts in particular, even in the most deregulated localities?
Why go through the hassle of investing in real estate when you get pretty good returns from parking your money in the S&P?
This story would seem to track both with rising P/E ratios (less earnings needed to justify high stock valuations) and the case of Japan, where rents have remained comparatively affordable, but the local stock market has delivered much less growth than in the US.
The marginal investor in real estate almost certainly had stock market access already…I think the simpler story about Japan is that they are able to keep costs down and they have very very low population growth so demand is not rising the way it is in the US (which is also why they have experienced broad economic stagnation).
In Japan for the last few decades a house or apartment has been a depreciating asset, houses and large buildings go down in value and are thus not seen as an investment, but more so a place to live. There isn’t a large market for used houses, and most that are bought are torn down to be replaced by a new house. Construction standards of modern houses there reflect the average short lifespan of the buildings and thus have lower construction costs.
Thanks for this! It makes sense that these factors would reduce construction costs and it's certainly true that Americans see homes as investments more so than most other countries, but I'm referring more to the rental housing market here, which is necessarily run as a business.
My suspicion is that an overperforming stock market raises the returns that investors expect of any other asset class, including rental housing. What I'm not sure of is how big this effect is.
Yes, this is a very real thing and something not much discussed by YIMBYs. It's not, though, that before real estate investors couldn't easily invest in equities (they could), it's that financing conditions are hugely important and expected/'necessary' returns are hugely impactful on development (and even repositioning). We could have no zoning laws whatsoever, but if real estate investment consistently delivered a risk-adjusted levered yield below what one could expect in the equity market, nothing would get built. This is why real estate people love low rates... When a deal doesn't pencil, it doesn't mean that it loses money, it means that it doesn't generate a high enough return for the opportunity cost to be worth it.
Bingo.
Higher interest rates force investors to pay even closer attention to the opportunity cost of their investments.
If stocks are doing well in spite of high rates (and the money is going more so to NVIDIA than REITs), it's even tougher to attract enough investment in real estate to bring down prices.
Yes, more serious investors already had stock market access, but the rising % of net worth held in stocks over time (which I think is due to a variety of factors, including generational change and increased ease of access) could be a significant factor in raising stock market returns and P/E ratios which has consequently raised the bar in terms of how much return a real estate investment would have to generate in order to beat the opportunity cost of investing in stocks.
I see what you mean now. I agree that this could have an effect, but I think it would be small, for two reasons. First, it is also true that along with the stock market access comes the ability to invest in real estate (e.g. through buying REIT stocks). Second, I kind of have to imagine that demand shocks for stocks in the way you suggest are correlated with demand shocks that drive housing price increases directly (alongside the indirect channel you're suggesting).
(btw, what needs to happen is that stocks need a better return. While access increases demand, in theory this is a one-time shock, and shouldn't *necessarily* have an effect on returns, though there are certainly reasons it could)
People could invest more in REITs which would drive more real estate investment but tech stocks are what is really driving the market.
So we are seeing more growth in data center construction than rental property construction.
If anything, investments that are not rental housing need to see a worse return and then perhaps more investor money will be driven towards this need.
This problem also happens in Houston to a smaller extent. Read up on the Ashby high rise to get an idea on how local residents try to impede building up.
Home prices haven’t increased at all. They are lower currently than in decades. The issue is that the dollar has had its value inflated away. When home prices per Case-Schiller are denominated in gold instead of dollars this becomes apparent. Something about increasing the money supply 40% in three years can do that. Compare: https://pricedingold.com/us-home-prices/
Secondly this article ambiguously conflates the City of Dallas with suburban cities. Dallas proper is fully built out north of I-30, so smaller lot sizes would require redevelopment and destroy historic neighborhoods. There is abundant available land and lots south of I-30 but those aren’t being sought for development for some odd reason.
As in so many areas of society and culture, technocrats are a massively destructive force that ignores human values. This worldview is rightly being rejected by more and more people who have seen the outcomes.
This is factually incorrec
And you can see this easily by comparing home prices to average household income
Home prices have greatly increased compared to average household income
Which is why the average age of first time home buyers has gone from 28 to 38
"The housing researcher Ed Pinto has said that if the first rule of real estate is “location, location, location,” the first rule of housing affordability should be “small lots, small lots, small lots.” If you want lower prices, you should want smaller lots."
But why can't people afford homes the same size as before? Why is it costlier to build them now in comparison to decades ago? I think that's one of the key issues here.
I’d like to read your take on the NIMBY problem from the perspective of existing homeowners who believe that changing the density rules will negatively reduce the value of their homes. Is it reasonable to expect them to suck up the loss for the sake of the community? Maybe the “Abundance” approach pencils out for cities, but not for individuals?
Because those homeowners shouldn't have the right to control other people's property
If they want to control that piece of property, they should buy it
Generally, I think we underrate the fact that we have far fewer entrants into the mortgage market and mortgage credit seems far harder to access today than it did in say the 90s. All these cities build way fewer homes than they did 30 years ago and it feels strange that no one is asking why.
Sure the urban zoning problem is obvious, but we used to just plow over the ranch land for houses all the time, but that process seems to have slowed considerably even in small metros where commutes are not an issue.