Wednesday, July 6, 2016

NYT on zoning

Conor Dougherty in The New York Times has a good article on zoning laws,
a growing body of economic literature suggests that anti-growth sentiment... is a major factor in creating a stagnant and less equal American economy.
...Unlike past decades, when people of different socioeconomic backgrounds tended to move to similar areas, today, less-skilled workers often go where jobs are scarcer but housing is cheap, instead of heading to places with the most promising job opportunities  according to research by Daniel Shoag, a professor of public policy at Harvard, and Peter Ganong, also of Harvard.
One reason they’re not migrating to places with better job prospects is that rich cities like San Francisco and Seattle have gotten so expensive that working-class people cannot afford to move there. Even if they could, there would not be much point, since whatever they gained in pay would be swallowed up by rent. 
Stop and rejoice. This is, after all, the New York Times, not the Cato Review. One might expect high housing prices to get blamed on developers, greed, or something, and the solution to be government-constructed housing, "affordable" housing mandates, rent controls, low-income housing subsidies (which protect incumbent low-income people, not those who want to move in to get better jobs) and even more restrictions.

No. The Times, the Obama Administration, California Governor Gerry Brown, have figured out that zoning laws are to blame, and they're making social stratification and inequality worse.


In response, a group of politicians, including Gov. Jerry Brown of California and President Obama, are joining with developers in trying to get cities to streamline many of the local zoning laws that, they say, make homes more expensive and hold too many newcomers at bay. 
.. laws aimed at things like “maintaining neighborhood character” or limiting how many unrelated people can live together in the same house contribute to racial segregation and deeper class disparities. They also exacerbate inequality by restricting the housing supply in places where demand is greatest. 
“You don’t want rules made entirely for people that have something, at the expense of people who don’t,” said Jason Furman, chairman of the White House Council of Economic Advisers. 
This could be a lovely moment in which a bipartisan consensus can get together and fix a real problem.

The article focuses on Boulder Colorado, where
.. the university churns out smart people, the smart people attract employers, and the amenities make everyone want to stay. Twitter is expanding its offices downtown. A few miles away, a big hole full of construction equipment marks a new Google campus that will allow the company to expand its Boulder work force to 1,500 from 400.
Actually, The reason Google and Twitter are in Boulder is that things are much, much worse in Palo Alto! A fate Boulder may soon share:
“We don’t need one more job in Boulder,” Mr. Pomerance said. “We don’t need to grow anymore. Go somewhere else where they need you.”

34 comments:

  1. Maybe they can take some insights to the Japanese model of zoning, i.e. instead of zoning for exclusive use allow for inclusive use up to a certain nuisance level. Link below for more details.

    http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html

    ReplyDelete
  2. Perhaps I'm a horrible person, but I actually prefer to live in a neighborhood with people who are similar to myself in terms of income levels, education levels, criminality levels, and occupational status. Zoning laws and Proposition 13 here in California both help to keep neighborhoods uniform.

    ReplyDelete
    Replies
    1. No perhaps about it, buddy.

      Delete
    2. I agree with the "criminality" sentiment, as does nearly everyone else (safe neighborhoods command a dramatic price premium). Personally I view the other items as wholly irrelevant, and believe others do as well for the most part.

      However, before we label you a "horrible person" it's worth noting there's at least a strong correlation -- if not a full blown causal relationship -- between your three rogue factors and something else everyone does care about: public school quality (good school districts also command a large price premium). So maybe we could just tweak your statement a bit to "criminality and other factors relevant to public school quality" to safely avoid any chance of you getting a "horrible person" label.

      Delete
    3. You can do all that with high property taxes.

      Delete
    4. Yes, you are a horrible person.

      Delete
    5. I grew up in a wealthy suburb of Seattle with little crime, so I understand your sentiments. It's nice to live near the familiar.

      Unfortunately, zoning is like a big fat subsidy to one group (incumbent homeowners, the wealthy, high income families) and a sort of expulsion-by-price for the middle class and low-income. I'd argue that the damage done to the middle class by zoning laws is worse than the potential loss of familiarity and safety that would come as a result of implementing less-restrictive zoning.

      Land in SF/NYC is so expensive that any new market-rate buildings in central neighborhoods tend to price-out the riff-raff. I guess what I'm saying is that even if we get rid of zoning, there will still be nice, safe neighborhoods. Zoning isn't the one thing stopping gangs from relocating to your street. To the contrary, getting rid of zoning will allow the housing market to achieve an equilibrium in which rents and housing prices will be lower and housing availability and opportunity is improved for everyone. It won't magically bring crackheads to your doorstep.

      Delete
    6. Yup. Horrible.

      Delete
    7. I commend your honesty. At least you are not a hypocrite, like most Australians. They say they are non-prejudiced and want to welcome thousands of immigrants. But have also very strict zoning laws becasue they want to protect the essence of their neighbourhoods. Sydney and Melbounre are becoming incredibly expensive for that reason, and the same problem bekons.

      Delete
    8. There's nothing wrong with wanting the kind of harmony and beauty a neighborhood gets by legislating racial homogeneity. Its great to see another wizard speaking up against this onslaught of white oppression, brother. Thank you.

      Delete
    9. If you don't like your neighbor, just up and move. It's not horrible to dislike your neighbor. Go to a gated community, for crying out loud, and pay the price for your preferences. What's horrible is to restrict others' choice of housing to satisfy your own desire for peace and tranquility. You should pay the price yourself, not foist lower quality of living on others.

      Delete
    10. I don't know how you concluded that I didn't have to pay the price for my preferences. The median home price in my county is now $645,000, and I recently paid almost that much for a modest 1500 sq. ft. house.

      Delete
    11. The price of your house itself is irrelevant. And yes, you are a horrible (and evidently braggadocio) person.

      Delete
    12. In a free society, wanting to live in a neighborhood with people like yourself only makes you a horrible person if you use the power of the state to enforce that uniformity. Which is exactly what the Reconstruction-era Southern states did after the Civil War.

      Delete
    13. In the Reconstruction era after the Civil War, Southern states were ran by Union military governors. I believe what you meant to say is post-Reconstruction era Southern states where the North and Republicans sold out Southern blacks to make Rutherford B. Hayes president after the contested 1876 presidential election.

      Delete
  3. I'd be great if something similar would happen here in UK. Building regulations have had a massive negative impact on the housing market here too, especially in London. UK politicians know it; for example:
    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/6357/1767142.pdf

    However, what they have come up with is to try to help buyers by giving them taxpayers' money to purchase expensive houses, instead of relaxing regulations and increasing supply:
    https://en.wikipedia.org/wiki/Help_to_Buy

    Apologies to go back to another topic, but this is one of many reasons why I think UK politician outside the EU won't be a freer country. The EU is not imposing or supporting these silly and dangerous regulations and initiatives, but they have been freely (pun intended) chosen by the UK (including the supposedly market-oriented conservative party).

    ReplyDelete
  4. "“We don’t need one more job in Boulder,” Mr. Pomerance said. “We don’t need to grow anymore. Go somewhere else where they need you.”

    And you wonder why the Country has been stuck with sub 2% growth for the last eight years.

    ReplyDelete
  5. This is a good post.

    Hard to believe now, but the Supreme Court only upheld local property zoning in 1926, and on a split vote at that. It was and is a terrible decision. Worse, the Supreme Court even gratuitously editorialized in its decision that it thought apartment buildings had to no right to parasitically intrude on single-family detached housing neighborhoods. It was class warfare, but from the top down.

    The West Coast is suffocating under property zoning.

    The problem of property zoning is far more serious than that of the minimum wage, which is a topic of near-daily (and justified) vilification.

    I wonder why? I think it is because property zoning tends to benefit property owners, and they are politically powerful. So mute is smart. Who funds think tanks anyway?

    But a rant against the minimum wage….

    ReplyDelete
    Replies
    1. Well put. I bet you would agree your comment could be improved by removing the fifth last word in the first paragraph.

      Delete
  6. I'm not exactly sure how this applies to places like San Francisco, Los Angeles, New York, London or any other megalopolis (as opposed to Boulder, CO) unless you're saying that all the low rise apartments need to be torn down and replaced with mega-story apartments.

    In fact this has been happening in my neck of the woods. According to the 2010 census statement Los Angeles is “the nation's most densely populated urbanized area is Los Angeles-Long Beach-Anaheim, Calif., with nearly 7,000 people per square mile” (New York/New Jersey ranks 5th). Also note that from 1980 to 2015 the LA Metro area has increased by over a million people (from 3 million to 4 million residents).

    Anyone who has traveled to or lived in these cities knows there is no more open space for single family dwellings. Based on my experience the population increase over the last 35 years has been by replacement of “wingdings” with much larger apartment buildings.

    So is your solution to tear down these apartments built mostly by small landlords? Perhaps we could add another million folks in the land now part of the Santa Monica Conservancy (who needs open space anyways) or do we evict current residents of single family homes, bulldoze and re-zone their property?

    Before we do so however, some reasonable consideration should be given to traffic, water usage, local pollution and urban blight.

    ReplyDelete
    Replies
    1. There's vast areas of LA and SF Bay Area with single family homes. To me the solution looks like replacing lowrise commercial with 6-12 story mixed use apartment buildings and replacing (not at all once, not by government edict) many single family homes with <6 story apartment buildings, or even just quadplexes and similar (aka modern day wingdings).

      If all you see is wingdings everywhere you really aren't looking very hard...

      Delete

    2. No, sadly, the wingdings are all but gone in West LA.

      Presently, cross town traffic in West LA means that it can take over 1 hour to travel 2.5 miles to Santa Monica.

      So the modern urban planners’ solution to this problem would be to create multi-billion dollar transit systems that are not economically sustainable. And frankly that would be the easy part. God and Northern California does not part with water nearly as easily.

      By the way zoning laws have essentially never stopped a determined developer from putting up an ugly cell block style apartment building of any size in LA. Nor has it stopped a vagrant from camping out in any open space not covered with a structure (vagrants want a free lunch in the nicest part of town as well).

      Res ipsa loquitur.

      Delete
  7. Freedom also involves the right of a community to set standards. Zoning laws assure that the community doesn't decay with, for example, poor landscaping, poor maintenance, foreclosed properties, or other activities that reduce everyone's property values. People pay up to live in areas with strict zoning laws. Changing these laws without their consent is theft.

    ReplyDelete
    Replies
    1. Do you not realize that zoning laws are essentially theft as well? They are used by homeowners to artificially increase the values of their homes at the expense of non-homeowners. Reversing this state of affairs is the opposite of theft. And the origin of most zoning laws in the US was opposition to racial integration, not to maintain nice lawns...

      Delete
  8. Yes. Palo Alto is the worst. But most cities in California are also terrible.

    ReplyDelete
  9. It's good to remember here Bernie Siegan's 1970 Journal of Law & Economics article, "Non-Zoning in Houston":
    https://www.jstor.org/stable/724839?seq=1#page_scan_tab_contents

    ReplyDelete
    Replies
    1. Unfortunately, Houston now has zoning laws, though they don't call them that: http://www.farmerhayek.com/2016/05/does-houston-have-zoning-laws.html

      Delete
    2. Houston has some moderate restrictions from a variety of sources. Equating Houston's lack of completely unfettered construction to zoning laws in Seattle or Palo Alto is absurd. Houston's cost of living is a great example of the value of light regulation.

      Delete
  10. 2016 is the centennial of the first zoning laws, in New York City. The fact that Houston's citizens have defeated several attempts to install (or inflict) zoning in that city may mean that zoning rollbacks might not be a bad course of action. No developer would build a housing development right next to a current industrial site; the market will make the project uneconomic.

    ReplyDelete
  11. So I take it pretty much everyone here would be perfectly okay with someone opening a liquor store, a casino, a halfway house, a "massage" parlor, a duck farm, an outdoor shooting range, or a sewage treatment plant right next to their home?

    ReplyDelete
  12. I don't want the elimination of zoning laws. On the contrary, I want very STRONG zoning laws. But I want those zoning laws to be the opposite of the suburban loving laws that we currently have.

    I want laws that outlaw any future development on land that is currently either natural land or even farms.

    You should instead only be allowed to redevelop existing developed land. But on that redeveloped land, local governments should be forbidden from putting in stupid limitations such as against multi unit or tall buildings. On the contrary, those such be greatly encouraged. New parking lots should be outlawed, with only parking garages built into the buildings that they serve to be allowed.

    And if the land is next to a public transit stop, there should be MINIMUM size requirements on the building, such as that it must be at least 50 stories tall.

    Greedy towns, like Palo Alto, that have more jobs than houses such be denied all income tax refunds until that situation is rectified.

    ReplyDelete
  13. The Supreme Court New London zoning case, and the aftermath, may be instructive. Constitutionally, the government cannot seize private property for private economic development, and public revenue enhancement, even with a generous compensation to a private property holder, I think. It would seem to me that overturning a publicly lawful development limitation, e.g., zoning, casts a similar shadow. While a generous offer of compensation to property owners in the affected zone for a loss in the quality of life the restrictions offer, it may be rejected by the community, even a single property holder. The resolution probably depends on social/civil pressure from those for change, but not the denial of property rights, even by a single owner. The case has the historical aura of the federal government seizing recognized Native American lands to benefit invading settlers.

    ReplyDelete
  14. In California, the removal of land from development has become the most significant non-zoning impediment to affordable housing. For example, vast swathes of the San Francisco Bay Area are public and quasi-public (e.g., conservation easements) “open spaces.” The practical economic effect is this land is annexed to the holdings of existing landowners, vastly increasing the value of the incumbent housing stock.

    ReplyDelete

Comments are welcome. Keep it short, polite, and on topic.

Thanks to a few abusers I am now moderating comments. I welcome thoughtful disagreement. I will block comments with insulting or abusive language. I'm also blocking totally inane comments. Try to make some sense. I am much more likely to allow critical comments if you have the honesty and courage to use your real name.