With apologies to Mandy Patinkin and The Princess Bride for today’s blog title, I want to use it to launch into an increasingly political issue on zoning and land use.
You all know that the issue of housing affordability has been top of the list on the land use ledger for some time now, and, as we’ve been pointing out, is making its way to the top of the local and national political agenda. You are all also certainly aware of the points that have been made about the causes of the crisis, from interest rates to cost of land, materials and labor, as well as land use regulations.
Planners and local government officials have been trying to make clear that, while land use regulations surely play a role in this issue, they are not the only cause, and probably not even the main one. However, since so little can be done directly by politicians about most of those factors, they certainly can do something about zoning and land use. So let me add a little more ammunition to the planner/local officials arsenal.
In yesterday’s New York Times The Morning email newsletter, the lead story was about how the market in starter homes has seized up, causing those who were hoping to move up into bigger homes as families and income grew to now be stuck in suboptimal homes, and those just entering the housing market to not be able to find any place they can afford to buy (you can see the full story here, but it may be paywalled). The piece points out some very relevant points:
In Chicago, Chris and Alison Wentland told me about the predicament in which they found themselves. Last year, they decided to sell their townhouse in the Lincoln Park neighborhood. Their children, at 2 and 6, were sharing a room not much bigger than a walk-in closet, with their daughter’s bed pressing up against their toddler’s crib. They began looking for a four-bedroom.
They had purchased their townhouse in the low $500,000s, and would likely be able to sell it for $700,000. But getting that one extra bedroom in the popular Lincoln Park neighborhood would put their next home in the $1 million range. Despite having a sizable equity from their starter home, the higher rates and higher cost meant that their monthly payments would go from around $3,000 to at least $7,500, their real estate agent warned.
Wow! And this story is likely repeated many times all across the nation. So why have costs gone up so much? Did local land use policies cause this? No doubt, they have played a role. But the bigger reasons seem to be beyond anyone’s direct control, like the interest rates mentioned. And then there’s this:
The problem is being exacerbated not just by rising prices and high interest rates, which affect every tier of the housing market, but also by something more fundamental: The number of new entry-level homes being built has fallen off a cliff.
In the 1970s, more than 400,000 entry-level homes were built every year. By 2020, only 65,000 were built. One reason for the drop is the rising cost of materials; smaller homes just don’t pencil out for builders.
So the supply of starter homes is not being replenished — by builders or by the last generation moving out and selling. The first rung of the ladder of homeownership, long a key part of the American dream, has become especially hard to climb.
I’m not bringing this up to absolve planners and local officials from any culpability in what is arguably a serious problem. I just think we all need to understand that the problem is much more complex and multi-faceted than what our simplifying minds (simple minds?) seem to want to make of it. If we want to actually do something to move the needle, we need to understand all the parts of the problem. Arguably, some of the bills passed by the Utah legislature last session seem to clue in on that, as they focus more on cost and financing. I think state housing czar Steve Waldrip gets this too.
Now, let’s talk!