Why We Need To Achieve Housing Abundance

Americans are better off with plentiful, affordable housing, which means understanding our housing history and escaping its shadow

By Salim Furth

The new “abundance agenda” is a direct result of a national, even global, housing shortage. The people, including Steve Teles, Derek Thompson and Matt Yglesias, who wove the abundance agenda out of threads from wonkish utilitarianism, populist concern for the cost of living and conventional supply-side economics were keenly aware of the housing crunch. They also were steeped in the worldview of the YIMBY movement, which replaces “no” with “yes” in the usual response to development in one’s backyard.

YIMBYs are mostly young urban professionals who have discovered that their housing options are quite limited despite their above-average salaries. Motivated by their own experiences, they have perspective enough to realize that things must be much worse for those farther down the income distribution. Their educational backgrounds predispose them to technocratic solutions, so they naturally trust the strong research consensus that the high cost of housing is a direct result of insufficient housing supply. This lack of attainable housing can be traced to restrictive zoning laws. Amending those regulations, steadily and broadly, offers the chance to work within a system that has proven itself sustainable (for better and worse) to alleviate a large but clearly defined problem in current American life: the scarcity of housing.

Housing Scarcity in a Time of Plenty

The scarcity of housing stands out not as an emblem of the times but as a glaring exception to the abundance of manufactured goods, diverse foods, entertainment and information that urban professionals enjoy. Why, in a society that is a “vast conspiracy to make you happy,” is it so difficult to build a simple home? Research shows that housing is scarce because of a thicket of strict rules and byzantine procedures. If the same is true in the other areas of American life characterized by scarcity rather than abundance, then our problems may be relatively easy to solve.

Even if the abundance agenda had arisen without explicit roots in housing scarcity, it could not very well ignore housing. Shelter is the largest expenditure category for most people, to such a degree that even small increases in the cost of housing—in percentage terms—dwarf large cost increases of most other items.

Nor can the rest of the abundance agenda succeed without getting more housing built in desirable places. If abundance in other sectors boosts the wages or amenities in a given location but housing remains scarce, the owners of the existing homes will just raise prices and capture most of the gains. Thus it is that today—after adjusting for the cost of living—most American workers would have a higher material standard of living in low-wage Buffalo than in high-wage San Jose.

The same physical reality that allows landowners to be the “residual claimants” of value tied to specific locations has implications that ripple through almost every area of life. Where one makes one’s home opens some opportunities—for community, consumption, work, leisure or learning—and forecloses others. And even the very innovations that are stretching the distances across which we maintain friendships and jobs elevate the status of homes, which increasingly double as offices.

The local nature of housing has not stopped researchers from trying to estimate a national housing shortage. In 2022, one well-considered methodology yielded a national shortage of 4 million; another equally valid approach estimated a national shortage of 20 million. What confounds these attempts to calculate a “national shortage” is that while houses are local, people are not. Part of what makes prices so high in Los Angeles is that millions of people who do not even live there would move there if prices fell; they are part of the L.A. housing demand curve despite living elsewhere.

In any case, focusing on a single big number misses the point. The U.S. does not merely need a one-time building boom (although that would help). Reforming land use regulation is not just a means to an end. Instead, institutional changes ought to be the true goal of abundance-minded reforms. Otherwise, with every new economic boom or shift, housing demand will crop up somewhere new, pushing up prices and creating new local scarcity.

Imagine Housing Abundance

Before describing either the problem of housing scarcity or the technocratic reforms needed to solve it, consider how the United States would be different if its most desirable cities were adding a few percent per year to their stocks of housing.

The most obvious consequence would be a substantial decrease in the cost of living. In metropolitan areas such as Boston and Los Angeles, adding 20% to the housing stock over a decade would lower rent about 10% relative to the current trajectory. (For this calculation, I’m assuming the current trajectory is a 5% increase in the housing stock over a decade).

Home prices are harder to forecast than rent—mortgage interest rates, land prices and expectations influence home prices—but housing abundance would generally lower prices relative to the current trajectory. The biggest affordability gains might be felt in “contagion” cities such as Boise and Nashville, where a large share of demand comes from affluent migrants seeking (relative) affordability and outbidding locals.

Housing abundance would make America much better off. A few celebrated papers have estimated that decreasing land use regulation in high-wage cities could boost GDP by as much as 36% by allowing workers to move to high-productivity cities. I’m skeptical of these claims, because the papers that make them ignore the fact that the people who choose to move to high-cost cities are those who would have high wages wherever they lived, which seems to explain the majority of the apparent big-city wage boost.

However, one need not boost GDP to have a major effect on people’s well-being: Decreasing costs and increasing housing quality will do that. And housing abundance would still boost GDP, albeit less dramatically, via an expanded construction sector and the part of the big-city wage boost that is not explained by self-selection.

People working in the homebuilding sector, from developers to drywallers, would clearly benefit from greater demand for their work. The biggest beneficiaries in this sense might be those for whom new jobs are created.

A secondary consequence of affordability would be a decrease in consumption inequality. Renters and homebuyers would have more money to spend. Landlords, home sellers and investors in existing housing would have less. Since the latter are, on average, more affluent than the former, the reforms would tend to decrease inequality.

Equally important but less quantifiable would be the gains in balance and flexibility for people’s daily lives. Perhaps the only way to understand how housing cost spills over into everyday middle-class life in most places is to spend time in a low-cost city, where it doesn’t. For me, that’s usually Rochester, New York, where my in-laws and several old friends live. With low housing costs, most employed people can live near their jobs and have enviable commutes. Young parents buy houses near their own parents. Retirees stay in the homes where they raised their children. In Boston and D.C., by contrast, my family and friends find they cannot afford to put down roots in the places they were raised.

Another benefit beyond computation is that the large-scale deregulation necessary to achieve housing abundance would constitute a major increase in private property rights. Some of that value is economic, but—as with any other civil right—much of the value is in the dignity of being a free person.

Housing abundance would also make several large-scale problems, from climate change to declining fertility, easier to tackle. The current regulatory system favors energy-intensive lifestyles, such as living in a McMansion with a long commute in Spokane, and disfavors energy-efficient ones, such as living in a walkable apartment in Seattle. Allowing the market to meet the pent-up demand for walkable, transit-accessible housing would painlessly decrease energy usage and carbon emissions and would shore up ridership for transit systems.

Abundant housing would also make it easier to escape the many-tentacled legacy of racism. Although strict residential segregation is, thankfully, relegated to the history books, large disparities remain. Disproportionate numbers of Black and Hispanic Americans live in neighborhoods with low-quality housing and poor access to jobs. Abundant, less costly housing would increase integration and ease all families’ access to better homes and jobs.

The failures of the inequitable U.S. public education system also involve housing. Families pay for education via their housing cost: better school district, higher prices. Getting into a good district is more like joining a country club than like registering to vote. Housing abundance would not directly challenge this broken system, but it would lower the club membership costs.

Finally, housing abundance would ease the cost of raising children, especially since school quality is capitalized into home prices. Demographer Lyman Stone persuasively argues that American women are not having as many children as they wish they could have. Easing housing costs would help families achieve their aspirations for fertility.

Weighing the Downside

Even the best changes have some unwanted side effects. To be fair-minded, I must enumerate the likely downsides of housing abundance as well as the positive spillovers.

An obvious consequence of the transition to housing abundance would be a period of long backlogs and high prices in construction. A building boom would unleash a price war for the services of the building trades, as well as for the materials that go into new buildings. Over time, new workers would be trained and licensed, or immigrate, but there is no logical path to housing abundance that doesn’t involve construction scarcity.

The transition to housing abundance would also pose a variety of challenges to city and county finances. Local fiscal frameworks differ broadly across the states, and some cities would undoubtedly benefit from new taxable investment. But in other places, taxes on housing do not cover the costs of serving new residents. Alongside zoning reforms, cities and states should reform fiscal policies so that new development approximately pays its own freight.

In many contexts, housing abundance will also put a strain on infrastructure, congesting roads and requiring upgrades to water and sewer systems. Although urbanists like to focus on the cases where new housing need not create congestion—in walkable areas, for instance—it is unlikely that national housing abundance can be achieved without adding drivers to already-crowded roads in major cities. Again, there are important reforms that can mitigate the costs of urban growth, such as charging user fees for roads and parking, but those only become popular with residents when congestion is undeniably terrible.

Finally, housing abundance would likely increase emigration from already-shrinking areas. The unique problems facing Rust Belt cities and poor, rural areas would be harder to solve if more of their young and ambitious people decamped for opportunities on the coasts. It’s easy to overstate this risk—most Rust Belt cities have healthy economies with higher wages than much of the Sun Belt. But even within growing metro areas, Alan Mallach calls our attention to swaths of working-class urban America that are slipping into poverty. Accelerated population loss, at either the regional or neighborhood level, makes it harder to fight the vicious cycle of disinvestment.

Looking squarely at the upside and downside risks of housing abundance, I firmly believe that the tradeoffs are worthwhile. Notably, the upsides of housing abundance mostly involve expanding the pie, while the downsides are borne by those who might end up with a smaller slice.

The Complex Roots of NIMBYism

Although the downside risks of housing abundance are common arguments for people who oppose deregulatory reforms, those new whines (forgive me) are held in the old wineskins of 1970s anti-growth sentiment. We YIMBY activists are just the latest in a sequence of reformers facing problems born of a previous generation’s solutions to its own problems.

The 19th century bequeathed to the 20th cities that were squalid, violent, polluted and corrupt. To muckraker Jacob Riis, romantic Ebenezer Howard and modernist Le Corbusier, the crowded, filthy environment was the proximate cause of the moral degradation of the urban poor. Thus they inspired slum clearance to displace and “save” the poor. And their respectable readers created suburbs to remain economically linked to the city but protect their own children from its soot-choked miasma. World War II and its aftermath provided the economic impetus to accelerate these transformations.

Within a few decades, however, the suburbs began to seem soulless, and slum clearance (by then euphemized as “urban renewal”) had failed on its own terms and was plainly racist. The most vivid violation of the old cities was freeways that plowed through politically powerless neighborhoods to serve those who had moved to the suburbs.

A new generation of reformers, including Jane Jacobs, Barbara Mikulski and Sammie Abbott, rose up in the 1960s and ’70s, demanding that communities have the final say in their own development. “Amenities” such as new freeways should be built if and where “the community” wants them, they reasoned. But regardless of whether it was the reformers’ intent to treat new subdivisions and apartment buildings with the same skepticism as freeways, the institutions they created did so.

Just as environmental determinism guided the reforms proposed by Riis’ generation, so the worldview of the 1970s informed the response of Jacobs’ generation to the land use problems of its time. Living through a decade of decline at the end of an epoch of abundance, this generation could not help but see the seeds of its own misery in the consumption society of the 1950s and ’60s. It was promised the freedom of the open road; it got gas lines. Entire counties had been transformed into suburbs that were just as monotonous as the potato fields they replaced. A worldwide population explosion seemed like it could only end in calamity.

Advocates for the urban poor paradoxically cheered and abetted the new institutions of neighborhood veto. Housing was not scarce—it was abundant, at least in poor neighborhoods, as central city populations tipped downward for the first time. The advocates, speaking for otherwise powerless communities, could finally exercise a veto over what was built in their backyards.

The intellectual mothers of contemporary NIMBYism have mostly passed on. But they are paid unwitting homage under fluorescent lights on weeknights at planning board meetings, urban and suburban, as residents use the language of community defense against even the most modest incursions: “The community was not consulted,” “This will destroy our neighborhood,” and of course, “I’m in favor of affordable housing, but not on this site.”

Before we, the living, redesign the institutions that build—or prevent—housing in this country, we ought to discharge a debt of comprehension to the earnest reformers who designed the system we mean to dissolve—and consider carefully whether our solutions might leave larger problems for the next generation. Part 2 of this essay will discuss these proposed solutions in more detail.