Interactions with anti-Abundance types online are interesting. I had wondered out loud why people who claim to want more green energy oppose a movement that wants to deregulate the construction of green energy and push it forward with the government, then received this reply:
> Yeah cuz if modern political history tells us anything, you'd just get the first item and the rest just can't get done because of the parliamentarian or whatever. Yall really are Charlie running at the football over and over
A lot of distrust appears to be driving anti-Abundance types, and it's both distrust in liberals and distrust in the American political system. Like Musharbash, they don't really think making more green energy or housing by deregulating it would be bad. They just see the word "deregulation" and have an explosive knee-jerk reaction against it, and come up with a story about how the bad forms of deregulation in their imagination will happen and the good parts of the Abundance agenda won't.
Is that story plausible? Sure it is. Compromises have to be made all the time. A compromise on an issue like this, with deregulation and no additional green energy funding, would sometimes lead to more coal and gas rather than less. But the long arc of power construction history appears to be bending towards green energy, and regulations are a major obstacle in its movement.
Agreed. As a former Republican I'm biased, but I put a lot of blame on these kinds of Democrats for the populist Right we get nowadays. They degraded trust in our institutions and convinced people that greedy corporations are controlling everything, so once the GOP stopped resisting this narrative and joined in, they were unstoppable. With so many populists on both sides threatening to tear everything down, I don't know how you fix it.
As a lefty who's on the fence about Abundance, I gotta say that distrust in liberals is an especially active force in the whole Abundance debate. Ezra Klein and Derek Thompson are comfortably center-left, which makes them suspect to those of us further down the line (except when they bash conservatives lol); this is especially true after the 2016 and 2020 campaigns, where there was some bad blood that developed between center leftists like Klein/Thompson and harder leftists (think DSA-ers and beyond). There's also something to be said about the ideological framework behind the Abundance Agenda: Klein and Thompson talk a lot about "deregulating" the economy, which leaves a poor taste in many leftists' mouths (especially given the problems associated with deregulation in finance and air transportation). From our point of view, it seems as if the Abundance Agenda types are ceding the class war altogether: probably a smart move given how the winds are turning ideologically, but not exactly easy for diehard leftists to swallow.
Ultimately, many liberals and leftists will probably buckle and fall in line regarding the concrete policy initiatives, at least at the state and local level. Hell, DSA and a few other progressive orgs are part of the fight against NIMBYist policies in Southern California, though we don't necessarily like to identify as YIMBYs.
By most economists, airline deregulation was a complete success. Prices went down, the number of fliers went up, what more could you want?
I would argue that this paints an incomplete picture of the industry. For one thing, affordability and consumption increased during the period of regulation by roughly the same rate; it was only until the 1970s (a period of general economic dysfunction, I might add) that issues of affordability came up, and the idea of lowering costs via deregulation was politically palatable.
For another, the American airline industry is persistently underwater financially. Sectorwide profits are highly cyclical, with periodic downturns (after 9/11 and the COVID pandemic) eliminating all accumulated profits since 1978 (the numbers go positive after the government bails them out, profits reappear as the economy improves, and the cycle begins anew). The industry is highly leveraged, and virtually every airline has gone through bankruptcy at least once or twice. Then there's also the persistent wage stagnation in the airline industry, a product of deregulation
Long story short, the airline industry is much closer to an oligopolistic/utility industry than a perfectly competitive one. High barriers to entry and volatile sales make the industry prone to cycles of financial dysfunction since all of them charge unprofitable fares (the money being recouped through ancillary fees and periodic govt bailouts, among other things).
Bear in mind that this is a highly heterodox take; most economists tend to overlook the observations I've made and insist that airline deregulation was a complete success. Since airline performance has largely returned to its normal trend pre-stagflation, I'm skeptical, though I could be wrong.
Thanks for the thorough reply! Low profits are a sign of healthy competition, not oligopoly. And if wages have stagnated in the industry (of which I'm skeptical), they must offer some other benefits in order to attract workers as other industries wages are definitely going up.
My concern is that many will quietly nod their heads, but their distrust will lead them to never actually implement abundance policies, allowing red states to continue to pull ahead. The states with the highest GDP growth over the last 5 years or so are almost all red states. If Democrats want to stay poor to prevent anyone from getting rich, voters won't keep putting up with it forever.
I live in SF and fully trust YIMBYs will win, because we are as loud and obnoxious as leftists now. People are really angry about how expensive the city is.
The greater risk with Abundance problems is that NIMBY opposition in state legislatures and municipal governments will be too costly to overcome. This is definitely the case in states like California, where one-party rule complicates the path towards throwing out pro-NIMBY incumbents. Blue-state YIMBYs could probably do well by making inroads with erstwhile progressive advocates for affordable housing/rent control. This isn't necessarily ideal from a YIMBY perspective, but after all, politics is the art of compromise, right?
That said, I imagine Ezra Klein & company might be able to woo over a few 1%ers to their cause. A few hundred million dollars thrown at strategic legislative/municipal elections might suffice. But that requires that these wealthy types overcome their own interest in appreciating real estate prices: you'd need a couple billionaires in your pocket to overcome that.
Many problems with the modern left can be understood by thinking of the modern left as a social club. For people who are more neurotic than average, more insecure than average, and less accepting of traditional gender norms than average, the modern left is a 'social bubble' (on college campuses, think tanks, so on and so forth) where people who would otherwise struggle socially can make friends and identify with an in-group. Social clubs definitionally adhere to the lowest common denominator: if only the smart people in the club get some idea, it gets viewed as offensive and elitist to shamelessly promote it to the rest of the people in the group. There are people on the left who are smart enough to understand Klein's idea, but when push comes to shove they are going to prioritize the social cohesiveness of their in-group over literally adopting the most factual belief possible.
If you've read much Hanania, you know that his ideas on LHC seem to refute this depiction. It is probably more accurate to explain the GOP as a social club, but I don't think the depiction fits either group. I would explain liberals as people who would rather be nice than good.
High barriers to building benefits big builders the most. If it costs more money and time even to get a project off the ground, only those with deep pockets and connections to city hall will bother to try.
The most radicalizing fact I learned about housing is that Venice Beach has fewer homes now than in 2000.
I think that it is pretty obvious that American housing construction is very competitive, so concentration could not be an important cause of unaffordable housing. Most industries are dominated by 3-4 major competitors making up the majority of the domestic market. This is nothing like housing construction with over 200 major competitors.
Those that argue for concentration being the problem in the housing industry do not seem to realize that they are undermining their own credibility by making this argument.
Plus the fact that they obviously have not even read the Abundance book.
Apropos conspiracy theories: I find it fun to argue that 'COVID cased 5G'. The correlation is just as good as in the other direction, but you can relatively easily argue that COVID lead to more demand for all things online which lead to (marginally) faster 5G rollouts.
One thing that's missing from the affordable housing conversation is internal migration.
After deindustrialization, millions of Americans left small/medium towns, resettling in large metro areas. They established careers there and as a result, the demand for housing went up.
The problem is housing in high-demand areas by nature of demand is always going to be more expensive. Just as an apartment in SoHo is more valuable than an apartment in the Bronx, a house in the DC suburbs is more valuable than a house in rural North Carolina.
There's an apparent lack of supply of "affordable" housing because the supply of affordable homes doesn't exist where it's in the most demand.
This raises an interesting prospect. Everyone who migrated internally -- from dying Rust Belt towns to booming metro areas -- left existing houses only to demand new ones. The houses they left still exist and are thus affordable.
Take Detroit as the obvious example. The population of Detroit today is half of what it was in 1980. According to Zillow, the median home price in Detroit is $78,028.
You can observe the same trend in Cleveland. Population nearly halved over the last four decades, median home price is $113,522.
Affordable housing DOES exist, it just doesn't exist where Democrats need/want it to exist.
This leaves two options:
1. Continue fighting for affordable housing. It doesn't matter who you blame -- business or regulation. But you're blaming something rather than solving the problem.
2. Move to where the affordable housing is.
The second option is the tradition that most Americans have followed. Remember, the Colonies weren't settled by racist British loyalists, they were settled by indentured servants and people who fled debtors prisons in London.
Likewise, the American west wasn't settled by ideological pioneers. It was settled by poor city folk who were seduced by the promise of cheap land on a homestead.
The solution isn't to build more affordable houses where the real estate is too expensive to justify such housing. It's to reverse migrate out of big cities and repopulate towns and cities where affordable housing already exists.
Agreed. There are choices and we have the freedom to choose. Trade offs exist, but more information about less expensive, low crime areas help lower income populations move toward the American dream.
The observable facts are, after a more than three decade period after 1980, during which homes prices advanced at less than a 2% annual rate in DFW, over the last decade proces has rising at 8%. That is a BIG change.
Hanania writes"The most straightforward way to make money under such circumstances is to lower your prices or increase the quality of the product offered..By standard measures, homebuilding is one area where the standard market forces of supply and demand should operate normally."
Yes one would think these high housing prices would cause builders to move into the DFW market to take advantage of these rising prices--through the standard market forces of supply and demand. But when you look at housing starts they have not risen to levels above those before the financial crisis. I estimate starts are about 4000 in 2005 and they same over the 2012-24 period.
The population has risen has risen by 43% from 2005-2023 indicating ~30% LESS building relative to population today than in 2005, despite the price being 60% higher in real terms.
In contrast, home price in 2005 was 4% lower in real terms than in 1988. I note that housing starts relative to population in 2005 was 75% greater than they were in 1988. All this building seems to have kept real prices low.
OTOH, in the most recent decade, a falling level of building relative to population has seen real prices rise dramatically. It sure looks that the way the market is functioning since 2015 is very different from the way it functioned before 2005. But by throwing out this HHI measure, Hanania argues there is nothing to see here.
I mean you describe an extremely fragmented market- the absolute opposite of a monopoly. 10 companies controlling 30% of the market is about as non-monopoly as you can get.
And that actually undersells it! That's only the market in *new* homes. The housing market as a whole is mostly individual owner-occupiers selling their houses. It would be very hard to find a market as far from a monopoly as housing.
I think both sides are largely off the mark. Sure, concentration might play some modest role in higher prices and there are some absurd NIMBY zoning rules and building codes that should be abolished, but I think the main driver of worsening housing affordability is much simpler, and (depressingly) hard to solve. The US has largely hit its population "carrying capacity" that can be supported with a good standard of living. We now face a scarcity in buildable land in areas where people want to live (there is still plenty of land in parts of Alaska, North Dakota, and the Upper Peninsula of Michigan, but the winters there can be absolutely brutal). This means in most states we are on the inelastic portion of the housing supply curve and any further population increase (even a modest one) in desirable areas will lead to dramatic housing price increases.
The problem is most acute in states (mostly blue states plus Florida) with a high population density, and magnified further in natural disaster prone states. California housing is not expensive primarily due to zoning rules, but instead because of high population density (from immigration, economic domestic migration, and people flocking to its sunny weather, beaches, or Hollywood glamour), lousy topography (a lot of mountainous areas with strong Santa Ana or Diablo winds, plus large stretches of awful desert with inadequate water), and very high natural disaster risk (earthquakes, wildfires, landslides, and mudslides). Many of the expensive California building codes (though admittedly some are absurd and should be eliminated) exist specifically to address these natural disaster risks. The reason San Francisco can't simply "build up vertically" as many would propose as a housing solution is that this is incredibly unsafe given the geology. When the next big earthquake hits San Francisco (it inevitably WILL get struck again), you don't want to be on the 50th floor of a skyscraper, since that is a likely death sentence. Utah has experienced a population boom recently with its lax building codes, but this is a disaster waiting to happen, since many of the new housing developments are located right on or very close to the Wasatch Fault. When Utah has its next big earthquake (the geologic record indicates that the Wasatch Fault has a very severe earthquake every 200-300 years on average) the death toll will likely be shocking.
Texas, by contrast, is mostly flat and largely unaffected by earthquakes. It experiences major hurricanes, but these major hurricanes tend to quickly downgrade to tropical storms a few miles after making landfall due to wind shear from the dry air in much of inland Texas. It experiences tornadoes, but tornadoes by their very nature are severe but discrete and small in size. Texas homebuilders therefore have more options to build both horizontally and vertically. This implies that the housing supply curve in Texas is more elastic than in California, meaning that housing demand increases don't increase price as much as they would in California (but even in Texas buildable land is becoming more scarce in the most desirable metro areas like Austin and DFW). Florida is an intermediate case. It has flat topography and low earthquake risk like Texas, but experiences some of the worst hurricanes on Earth due to the Florida Current. It also has high population density like California due to its sunny weather, beaches, immigration, theme parks, and large number of corporate headquarters.
Here's the thing: California, like the rest of the United States, has extremely low population density. If your model held true, countries like Japan, South Korea, and the Netherlands simply could not exist. They do exist, though, and they have proven that with well-designed zoning codes and intelligent urban planning those high densities can result in vastly better living standards than you find in the cancerous sprawl of the LA Inland Empire.
Planning codes in the US were designed seventy years ago with a key purpose in mind: keep the Jews and the Blacks and the Poors out of the good White neighbourhoods, and to provide an indirect public subsidy to the automotive industry which had taken control of the military-industrial complex during WW2. This is why you have things like laws on minimum lawn sizes and minimum required parking spaces and an unending litany of ways for every last Karen to inhibit the property rights and normal growth patterns that allow the housing market and economy to function. It keeps the üntermensch out of the neighbourhood by preventing the construction of apartments and suites and laneway houses, and compels everyone who lives there to own and maintain a private automobile.
The Netherlands is lucky in that it doesn't have strong earthquake, wildfire, or hurricane risk, which allows it to grow vertically with high density. It also has lots of access to water, which enables it to support a high population density. It is a rare and special case.
Japan is massively overpopulated given its natural disaster risk. This is why when natural disaster strikes Japan it is incredibly deadly (just think back to the tens of thousands killed by the 2011 earthquake and tsunami). The 1923 Great Kanto earthquake killed over 100,000 people. When the next big earthquake hits Tokyo (which has been built vertically despite the risk) the death toll may be in the MILLIONS.
South Korea faces only moderate earthquake risk, allowing for vertical building. Over half of South Korea's population lives in the Seoul metro. Seoul's location in the northwest of the country mostly insulates it from major typhoons (except on rare occasions typhoons have already lost most of their wind strength by the time they make it to Seoul due to the influence of the Sobaek mountains). But even with very favorable geography (far better than Florida or California) Seoul has likely nearly maxed out its viable population limit. Housing is so expensive in Seoul that family formation has nearly ground to a halt. The birth rate has fallen to a horrific level of 0.58%.
How are you calculating the "carrying capacity" of a given region? Are you tallying up hectares of arable land, resource input requirements for the local staple crops, modifying for lifestyle and infrastructure, and expressing a quantifiable output with stated error ranges? Or are you just up and declaring that whatever currently exists is the capacity and working backwards from your preconcieved conclusion? If it's the former, show your work. I'm 100% confident it's the latter, though.
The barriers to entry for single unit stick built houses are quite small as long as you are not having to surmount significant landscape obstacles - flooding, landslides, .... They are even less for placing manufactured housing - even done right. I have know people who became builders.And you can subcontract out the heavy work that needs heavy construction equipment while you are small. The permitting obstacles can be something else. I am seeing small scale and medium scale building in my rural area to the NE of Seattle. It is far harder in the more developed areas, where permitting is far more difficult.
Hanania is correct that this is both an actual argument (should we relax zoning), which both sides agree on, and a proxy argument over who should control the left. The anti-Abundance left fully concedes that zoning is too strict, but then says it’s not important. As an Abundance-pilled Democrat, I’d like to implement the part we agree on and relax zoning, and then fight the larger argument separately.
There’s also some natural suspicion on the left of deregulation, period, since deregulation codes right. This presents another advantage for the Abundance side, since we can theoretically ally across the political spectrum. Hopefully on the left, we can convince them that a lot of regulation is actually enacted by businesses to protect their own interests — see the peanut butter wars, or the AMA.
The anti-Abundance left also refuses to give up the “Everything Bagel” approach, and will say they support more housing, but they want it all to be publicly built, or we can’t drop anything that actually makes it so hard to build, be it environmental review or labor protections. They’ll ask Abundance types “who we should throw under the bus,” to which I say, everyone! Something is very wrong when California can’t build a single mile of high-speed rail. And publicly built housing is even more constrained than private!
It was kind of surreal reading it. Apparently the problem with the YIMBY movement, from a left-wing perspective, is that it's a set of policy recommendations with no particular theory of who is good and who is bad.
I'd have to second the recommendation to read it; the content is worthless, but it seems important to know that this is how people are thinking.
Both sides are wrong. Construction is really expensive. Get rid of zoning and construction is still really expensive. Split up big companies and construction probably gets even more expensive.
But yeah, 200 companies is an insane amount of competition.
Interactions with anti-Abundance types online are interesting. I had wondered out loud why people who claim to want more green energy oppose a movement that wants to deregulate the construction of green energy and push it forward with the government, then received this reply:
> Yeah cuz if modern political history tells us anything, you'd just get the first item and the rest just can't get done because of the parliamentarian or whatever. Yall really are Charlie running at the football over and over
A lot of distrust appears to be driving anti-Abundance types, and it's both distrust in liberals and distrust in the American political system. Like Musharbash, they don't really think making more green energy or housing by deregulating it would be bad. They just see the word "deregulation" and have an explosive knee-jerk reaction against it, and come up with a story about how the bad forms of deregulation in their imagination will happen and the good parts of the Abundance agenda won't.
Is that story plausible? Sure it is. Compromises have to be made all the time. A compromise on an issue like this, with deregulation and no additional green energy funding, would sometimes lead to more coal and gas rather than less. But the long arc of power construction history appears to be bending towards green energy, and regulations are a major obstacle in its movement.
Agreed. As a former Republican I'm biased, but I put a lot of blame on these kinds of Democrats for the populist Right we get nowadays. They degraded trust in our institutions and convinced people that greedy corporations are controlling everything, so once the GOP stopped resisting this narrative and joined in, they were unstoppable. With so many populists on both sides threatening to tear everything down, I don't know how you fix it.
I don't think we can. But I do have some hope that the stupid on both sides can cancel out.
As a lefty who's on the fence about Abundance, I gotta say that distrust in liberals is an especially active force in the whole Abundance debate. Ezra Klein and Derek Thompson are comfortably center-left, which makes them suspect to those of us further down the line (except when they bash conservatives lol); this is especially true after the 2016 and 2020 campaigns, where there was some bad blood that developed between center leftists like Klein/Thompson and harder leftists (think DSA-ers and beyond). There's also something to be said about the ideological framework behind the Abundance Agenda: Klein and Thompson talk a lot about "deregulating" the economy, which leaves a poor taste in many leftists' mouths (especially given the problems associated with deregulation in finance and air transportation). From our point of view, it seems as if the Abundance Agenda types are ceding the class war altogether: probably a smart move given how the winds are turning ideologically, but not exactly easy for diehard leftists to swallow.
Ultimately, many liberals and leftists will probably buckle and fall in line regarding the concrete policy initiatives, at least at the state and local level. Hell, DSA and a few other progressive orgs are part of the fight against NIMBYist policies in Southern California, though we don't necessarily like to identify as YIMBYs.
What is wrong with deregulation in air transportation? And which deregulation specifically?
Yea that one is pretty universally seen as successful, lmao
By most economists, airline deregulation was a complete success. Prices went down, the number of fliers went up, what more could you want?
I would argue that this paints an incomplete picture of the industry. For one thing, affordability and consumption increased during the period of regulation by roughly the same rate; it was only until the 1970s (a period of general economic dysfunction, I might add) that issues of affordability came up, and the idea of lowering costs via deregulation was politically palatable.
For another, the American airline industry is persistently underwater financially. Sectorwide profits are highly cyclical, with periodic downturns (after 9/11 and the COVID pandemic) eliminating all accumulated profits since 1978 (the numbers go positive after the government bails them out, profits reappear as the economy improves, and the cycle begins anew). The industry is highly leveraged, and virtually every airline has gone through bankruptcy at least once or twice. Then there's also the persistent wage stagnation in the airline industry, a product of deregulation
Long story short, the airline industry is much closer to an oligopolistic/utility industry than a perfectly competitive one. High barriers to entry and volatile sales make the industry prone to cycles of financial dysfunction since all of them charge unprofitable fares (the money being recouped through ancillary fees and periodic govt bailouts, among other things).
Bear in mind that this is a highly heterodox take; most economists tend to overlook the observations I've made and insist that airline deregulation was a complete success. Since airline performance has largely returned to its normal trend pre-stagflation, I'm skeptical, though I could be wrong.
https://www.nber.org/system/files/working_papers/w13452/w13452.pdf
https://houstonlawreview.org/article/4895-the-financial-performance-of-the-airline-industry-post-deregulation
Thanks for the thorough reply! Low profits are a sign of healthy competition, not oligopoly. And if wages have stagnated in the industry (of which I'm skeptical), they must offer some other benefits in order to attract workers as other industries wages are definitely going up.
I was confused about that and charitably interpreted it as some deregulation wave I didn't learn about in college.
My concern is that many will quietly nod their heads, but their distrust will lead them to never actually implement abundance policies, allowing red states to continue to pull ahead. The states with the highest GDP growth over the last 5 years or so are almost all red states. If Democrats want to stay poor to prevent anyone from getting rich, voters won't keep putting up with it forever.
I live in SF and fully trust YIMBYs will win, because we are as loud and obnoxious as leftists now. People are really angry about how expensive the city is.
The greater risk with Abundance problems is that NIMBY opposition in state legislatures and municipal governments will be too costly to overcome. This is definitely the case in states like California, where one-party rule complicates the path towards throwing out pro-NIMBY incumbents. Blue-state YIMBYs could probably do well by making inroads with erstwhile progressive advocates for affordable housing/rent control. This isn't necessarily ideal from a YIMBY perspective, but after all, politics is the art of compromise, right?
That said, I imagine Ezra Klein & company might be able to woo over a few 1%ers to their cause. A few hundred million dollars thrown at strategic legislative/municipal elections might suffice. But that requires that these wealthy types overcome their own interest in appreciating real estate prices: you'd need a couple billionaires in your pocket to overcome that.
Many problems with the modern left can be understood by thinking of the modern left as a social club. For people who are more neurotic than average, more insecure than average, and less accepting of traditional gender norms than average, the modern left is a 'social bubble' (on college campuses, think tanks, so on and so forth) where people who would otherwise struggle socially can make friends and identify with an in-group. Social clubs definitionally adhere to the lowest common denominator: if only the smart people in the club get some idea, it gets viewed as offensive and elitist to shamelessly promote it to the rest of the people in the group. There are people on the left who are smart enough to understand Klein's idea, but when push comes to shove they are going to prioritize the social cohesiveness of their in-group over literally adopting the most factual belief possible.
If you've read much Hanania, you know that his ideas on LHC seem to refute this depiction. It is probably more accurate to explain the GOP as a social club, but I don't think the depiction fits either group. I would explain liberals as people who would rather be nice than good.
High barriers to building benefits big builders the most. If it costs more money and time even to get a project off the ground, only those with deep pockets and connections to city hall will bother to try.
The most radicalizing fact I learned about housing is that Venice Beach has fewer homes now than in 2000.
This is detailed and persuasive. And it doesn't even mention that new houses have an extremely close substitute: already existing houses.
I think that it is pretty obvious that American housing construction is very competitive, so concentration could not be an important cause of unaffordable housing. Most industries are dominated by 3-4 major competitors making up the majority of the domestic market. This is nothing like housing construction with over 200 major competitors.
Those that argue for concentration being the problem in the housing industry do not seem to realize that they are undermining their own credibility by making this argument.
Plus the fact that they obviously have not even read the Abundance book.
The footnote got me 😂
Apropos conspiracy theories: I find it fun to argue that 'COVID cased 5G'. The correlation is just as good as in the other direction, but you can relatively easily argue that COVID lead to more demand for all things online which lead to (marginally) faster 5G rollouts.
One thing that's missing from the affordable housing conversation is internal migration.
After deindustrialization, millions of Americans left small/medium towns, resettling in large metro areas. They established careers there and as a result, the demand for housing went up.
The problem is housing in high-demand areas by nature of demand is always going to be more expensive. Just as an apartment in SoHo is more valuable than an apartment in the Bronx, a house in the DC suburbs is more valuable than a house in rural North Carolina.
There's an apparent lack of supply of "affordable" housing because the supply of affordable homes doesn't exist where it's in the most demand.
This raises an interesting prospect. Everyone who migrated internally -- from dying Rust Belt towns to booming metro areas -- left existing houses only to demand new ones. The houses they left still exist and are thus affordable.
Take Detroit as the obvious example. The population of Detroit today is half of what it was in 1980. According to Zillow, the median home price in Detroit is $78,028.
You can observe the same trend in Cleveland. Population nearly halved over the last four decades, median home price is $113,522.
Affordable housing DOES exist, it just doesn't exist where Democrats need/want it to exist.
This leaves two options:
1. Continue fighting for affordable housing. It doesn't matter who you blame -- business or regulation. But you're blaming something rather than solving the problem.
2. Move to where the affordable housing is.
The second option is the tradition that most Americans have followed. Remember, the Colonies weren't settled by racist British loyalists, they were settled by indentured servants and people who fled debtors prisons in London.
Likewise, the American west wasn't settled by ideological pioneers. It was settled by poor city folk who were seduced by the promise of cheap land on a homestead.
The solution isn't to build more affordable houses where the real estate is too expensive to justify such housing. It's to reverse migrate out of big cities and repopulate towns and cities where affordable housing already exists.
Agreed. There are choices and we have the freedom to choose. Trade offs exist, but more information about less expensive, low crime areas help lower income populations move toward the American dream.
Everyone needs to read Bryan Caplan’s book: Build, Baby, Build. https://www.google.com/url?q=https://www.amazon.com/Build-Baby-Science-Housing-Regulation/dp/1952223415&sa=U&ved=2ahUKEwitjJfysduNAxVuEFkFHS0BDTwQFnoECCUQAQ&usg=AOvVaw1RrbrDYklPIG3IhTRpUFnV
The observable facts are, after a more than three decade period after 1980, during which homes prices advanced at less than a 2% annual rate in DFW, over the last decade proces has rising at 8%. That is a BIG change.
https://fred.stlouisfed.org/series/ATNHPIUS23104Q
Hanania writes"The most straightforward way to make money under such circumstances is to lower your prices or increase the quality of the product offered..By standard measures, homebuilding is one area where the standard market forces of supply and demand should operate normally."
Yes one would think these high housing prices would cause builders to move into the DFW market to take advantage of these rising prices--through the standard market forces of supply and demand. But when you look at housing starts they have not risen to levels above those before the financial crisis. I estimate starts are about 4000 in 2005 and they same over the 2012-24 period.
https://fred.stlouisfed.org/series/DALL148BP1FH
The population has risen has risen by 43% from 2005-2023 indicating ~30% LESS building relative to population today than in 2005, despite the price being 60% higher in real terms.
In contrast, home price in 2005 was 4% lower in real terms than in 1988. I note that housing starts relative to population in 2005 was 75% greater than they were in 1988. All this building seems to have kept real prices low.
OTOH, in the most recent decade, a falling level of building relative to population has seen real prices rise dramatically. It sure looks that the way the market is functioning since 2015 is very different from the way it functioned before 2005. But by throwing out this HHI measure, Hanania argues there is nothing to see here.
Seriously?
I mean you describe an extremely fragmented market- the absolute opposite of a monopoly. 10 companies controlling 30% of the market is about as non-monopoly as you can get.
And that actually undersells it! That's only the market in *new* homes. The housing market as a whole is mostly individual owner-occupiers selling their houses. It would be very hard to find a market as far from a monopoly as housing.
I think both sides are largely off the mark. Sure, concentration might play some modest role in higher prices and there are some absurd NIMBY zoning rules and building codes that should be abolished, but I think the main driver of worsening housing affordability is much simpler, and (depressingly) hard to solve. The US has largely hit its population "carrying capacity" that can be supported with a good standard of living. We now face a scarcity in buildable land in areas where people want to live (there is still plenty of land in parts of Alaska, North Dakota, and the Upper Peninsula of Michigan, but the winters there can be absolutely brutal). This means in most states we are on the inelastic portion of the housing supply curve and any further population increase (even a modest one) in desirable areas will lead to dramatic housing price increases.
The problem is most acute in states (mostly blue states plus Florida) with a high population density, and magnified further in natural disaster prone states. California housing is not expensive primarily due to zoning rules, but instead because of high population density (from immigration, economic domestic migration, and people flocking to its sunny weather, beaches, or Hollywood glamour), lousy topography (a lot of mountainous areas with strong Santa Ana or Diablo winds, plus large stretches of awful desert with inadequate water), and very high natural disaster risk (earthquakes, wildfires, landslides, and mudslides). Many of the expensive California building codes (though admittedly some are absurd and should be eliminated) exist specifically to address these natural disaster risks. The reason San Francisco can't simply "build up vertically" as many would propose as a housing solution is that this is incredibly unsafe given the geology. When the next big earthquake hits San Francisco (it inevitably WILL get struck again), you don't want to be on the 50th floor of a skyscraper, since that is a likely death sentence. Utah has experienced a population boom recently with its lax building codes, but this is a disaster waiting to happen, since many of the new housing developments are located right on or very close to the Wasatch Fault. When Utah has its next big earthquake (the geologic record indicates that the Wasatch Fault has a very severe earthquake every 200-300 years on average) the death toll will likely be shocking.
Texas, by contrast, is mostly flat and largely unaffected by earthquakes. It experiences major hurricanes, but these major hurricanes tend to quickly downgrade to tropical storms a few miles after making landfall due to wind shear from the dry air in much of inland Texas. It experiences tornadoes, but tornadoes by their very nature are severe but discrete and small in size. Texas homebuilders therefore have more options to build both horizontally and vertically. This implies that the housing supply curve in Texas is more elastic than in California, meaning that housing demand increases don't increase price as much as they would in California (but even in Texas buildable land is becoming more scarce in the most desirable metro areas like Austin and DFW). Florida is an intermediate case. It has flat topography and low earthquake risk like Texas, but experiences some of the worst hurricanes on Earth due to the Florida Current. It also has high population density like California due to its sunny weather, beaches, immigration, theme parks, and large number of corporate headquarters.
Here's the thing: California, like the rest of the United States, has extremely low population density. If your model held true, countries like Japan, South Korea, and the Netherlands simply could not exist. They do exist, though, and they have proven that with well-designed zoning codes and intelligent urban planning those high densities can result in vastly better living standards than you find in the cancerous sprawl of the LA Inland Empire.
Planning codes in the US were designed seventy years ago with a key purpose in mind: keep the Jews and the Blacks and the Poors out of the good White neighbourhoods, and to provide an indirect public subsidy to the automotive industry which had taken control of the military-industrial complex during WW2. This is why you have things like laws on minimum lawn sizes and minimum required parking spaces and an unending litany of ways for every last Karen to inhibit the property rights and normal growth patterns that allow the housing market and economy to function. It keeps the üntermensch out of the neighbourhood by preventing the construction of apartments and suites and laneway houses, and compels everyone who lives there to own and maintain a private automobile.
The Netherlands is lucky in that it doesn't have strong earthquake, wildfire, or hurricane risk, which allows it to grow vertically with high density. It also has lots of access to water, which enables it to support a high population density. It is a rare and special case.
Japan is massively overpopulated given its natural disaster risk. This is why when natural disaster strikes Japan it is incredibly deadly (just think back to the tens of thousands killed by the 2011 earthquake and tsunami). The 1923 Great Kanto earthquake killed over 100,000 people. When the next big earthquake hits Tokyo (which has been built vertically despite the risk) the death toll may be in the MILLIONS.
South Korea faces only moderate earthquake risk, allowing for vertical building. Over half of South Korea's population lives in the Seoul metro. Seoul's location in the northwest of the country mostly insulates it from major typhoons (except on rare occasions typhoons have already lost most of their wind strength by the time they make it to Seoul due to the influence of the Sobaek mountains). But even with very favorable geography (far better than Florida or California) Seoul has likely nearly maxed out its viable population limit. Housing is so expensive in Seoul that family formation has nearly ground to a halt. The birth rate has fallen to a horrific level of 0.58%.
How are you calculating the "carrying capacity" of a given region? Are you tallying up hectares of arable land, resource input requirements for the local staple crops, modifying for lifestyle and infrastructure, and expressing a quantifiable output with stated error ranges? Or are you just up and declaring that whatever currently exists is the capacity and working backwards from your preconcieved conclusion? If it's the former, show your work. I'm 100% confident it's the latter, though.
You can absolutely build tall towers that are earthquake proof. See: Tokyo.
Also, we have tons of zoned areas for only two stories. Six stories would triple the supply and still be relatively low.
If you zone large areas of suburban land for single family homes with large lots, you run out of land pretty quickly, even in the US.
If you don't, few developed countries have more available land than the US.
The barriers to entry for single unit stick built houses are quite small as long as you are not having to surmount significant landscape obstacles - flooding, landslides, .... They are even less for placing manufactured housing - even done right. I have know people who became builders.And you can subcontract out the heavy work that needs heavy construction equipment while you are small. The permitting obstacles can be something else. I am seeing small scale and medium scale building in my rural area to the NE of Seattle. It is far harder in the more developed areas, where permitting is far more difficult.
Hanania is correct that this is both an actual argument (should we relax zoning), which both sides agree on, and a proxy argument over who should control the left. The anti-Abundance left fully concedes that zoning is too strict, but then says it’s not important. As an Abundance-pilled Democrat, I’d like to implement the part we agree on and relax zoning, and then fight the larger argument separately.
There’s also some natural suspicion on the left of deregulation, period, since deregulation codes right. This presents another advantage for the Abundance side, since we can theoretically ally across the political spectrum. Hopefully on the left, we can convince them that a lot of regulation is actually enacted by businesses to protect their own interests — see the peanut butter wars, or the AMA.
The anti-Abundance left also refuses to give up the “Everything Bagel” approach, and will say they support more housing, but they want it all to be publicly built, or we can’t drop anything that actually makes it so hard to build, be it environmental review or labor protections. They’ll ask Abundance types “who we should throw under the bus,” to which I say, everyone! Something is very wrong when California can’t build a single mile of high-speed rail. And publicly built housing is even more constrained than private!
Did you read Kevin Erdmann?
Zoning is only part of the problem, another big part is effectively outlawing mortgage for large sections of the population.
Ben Krauss, who is in some way involved with Matt Yglesias' substack, recently recommended this article: https://www.thenation.com/article/society/yimby-abundance-power-housing/
It was kind of surreal reading it. Apparently the problem with the YIMBY movement, from a left-wing perspective, is that it's a set of policy recommendations with no particular theory of who is good and who is bad.
I'd have to second the recommendation to read it; the content is worthless, but it seems important to know that this is how people are thinking.
Both sides are wrong. Construction is really expensive. Get rid of zoning and construction is still really expensive. Split up big companies and construction probably gets even more expensive.
But yeah, 200 companies is an insane amount of competition.