To improve housing affordability, we need policies that ‘increase land’. Public transit and remote work might just do it. Plus – which cities are actually affordable may surprise you.
You read my mind. I have a new essay coming out in a few weeks where I revisit the topic of housing.
This is correct, “upzoning” aids, but does not solve, the housing cost problem. It needs to be paired with tax reform. By replacing property taxes with Land Value Taxes, we achieve a few things:
1) We stop punishing developers
2) We disincentivize land speculation and discourage vacant lots.
3) We discourage suboptimal land uses (golf courses and parking lots)
4) Taxing land values reduces land costs
You are also correct that higher density (even without lower housing prices) has advantages. Indeed, the infrastructure inputs required for cities (piping, concrete, power lines…etc) grows sublinearly to population, while the outputs (incomes, GDP, patents…etc) grow superlinearly.
Large cities are much more productive and innovative and we should want big, dense cities.
Your commentary on upzoning doesn’t make sense because there has been barely any upzoning done in the US. Upzoning is the one and only way to aid housing affordability long term.
Edit: upzoning is also the only way to make transit possible.
I'm not sure about no upzoning in the US, but we have numerous cities around the world undertake upzoning and, unfortunately, the results on price impacts were minimal. (I actually did a couple of deep dives on this - https://www.nominalnews.com/p/housing-will-deregulation-fix-everything). What is the exact cause why upzoning does not bring the price relief can be debated - in my opinion, it's that land captures a lot of this excess value and thus it will adjust in price under upzoning polcies. So upzoning is helpful in getting more people to live in an area, but probably (and based on the most up to date research) will not make a dent in the affordability issue. I think the lack of empirical studies showing the direct impacts of upzoning policies on affordability suggest that that is not the metric we should be judging upzoning policies on.
Regarding public transit, I see at as a chicken vs egg situation. Should you build public transit into booming places or should you build public transit and then the market will value it. There a quite a few anecdotal stories of public transit seeming to cause growth (Harrison. New Jersey after the update of the PATH train is one I spotted). But I haven't seen any specific research on this exact questions. One thing I did find, is that public transit should be one of the least controversial ideas from a welfare perspective, since studies have shown that everyone is better off with public transit investments (although house values of unconnected areas do drop).
Great analysis on this.
Thank you!
You read my mind. I have a new essay coming out in a few weeks where I revisit the topic of housing.
This is correct, “upzoning” aids, but does not solve, the housing cost problem. It needs to be paired with tax reform. By replacing property taxes with Land Value Taxes, we achieve a few things:
1) We stop punishing developers
2) We disincentivize land speculation and discourage vacant lots.
3) We discourage suboptimal land uses (golf courses and parking lots)
4) Taxing land values reduces land costs
You are also correct that higher density (even without lower housing prices) has advantages. Indeed, the infrastructure inputs required for cities (piping, concrete, power lines…etc) grows sublinearly to population, while the outputs (incomes, GDP, patents…etc) grow superlinearly.
Large cities are much more productive and innovative and we should want big, dense cities.
Your commentary on upzoning doesn’t make sense because there has been barely any upzoning done in the US. Upzoning is the one and only way to aid housing affordability long term.
Edit: upzoning is also the only way to make transit possible.
I'm not sure about no upzoning in the US, but we have numerous cities around the world undertake upzoning and, unfortunately, the results on price impacts were minimal. (I actually did a couple of deep dives on this - https://www.nominalnews.com/p/housing-will-deregulation-fix-everything). What is the exact cause why upzoning does not bring the price relief can be debated - in my opinion, it's that land captures a lot of this excess value and thus it will adjust in price under upzoning polcies. So upzoning is helpful in getting more people to live in an area, but probably (and based on the most up to date research) will not make a dent in the affordability issue. I think the lack of empirical studies showing the direct impacts of upzoning policies on affordability suggest that that is not the metric we should be judging upzoning policies on.
Regarding public transit, I see at as a chicken vs egg situation. Should you build public transit into booming places or should you build public transit and then the market will value it. There a quite a few anecdotal stories of public transit seeming to cause growth (Harrison. New Jersey after the update of the PATH train is one I spotted). But I haven't seen any specific research on this exact questions. One thing I did find, is that public transit should be one of the least controversial ideas from a welfare perspective, since studies have shown that everyone is better off with public transit investments (although house values of unconnected areas do drop).