Are Big Real Estate and YIMBYs totally wrong about their never-ending push to solve the housing affordability crisis through a trickle-down agenda? Housing Is A Human Right and many housing justice groups believe so, and so does a group of top researchers that recently published a white paper titled “Inequality, Not Regulation, Drives America’s Housing Affordability Crisis.”
For years, corporate landlords and developers and YIMBY leaders have said that we only need to build more luxury apartments and eventually rent prices will fall for everyone.
Housing justice activists have countered that such a trickle-down housing agenda doesn’t directly help poor and middle- and working-class tenants, who are hit hardest by the housing affordability crisis; that more affordable and homeless housing needs to be built first and foremost; that building more luxury units is a self-serving solution for corporate landlords and developers, who will profit greatly from more pricey apartments; and that existing affordable housing is routinely demolished to make way for luxury units.
Those are just some of the problems with the trickle-down housing agenda of Big Real Estate and YIMBYs. And even Zillow Chief Economist Dr. Svenja Gudell said ten years ago that cities need to build more affordable housing, not luxury, to seriously address the housing affordability crisis.
So now a new white paper titled “Inequality, Not Regulation, Drives America’s Housing Affordability Crisis” has been published by top researchers that include UCLA Luskin Urban Planning Professor Michael Storper. It makes a very strong case that just deregulating zoning laws and then building as many luxury apartments as possible isn’t going to solve anything.
“To put it bluntly,” Storper said in a press statement, “in America we haven’t actually been underbuilding. The problem is demand is now split in a very unequal society. The supply you get is the wrong kind of supply.”
That sounds a lot like what Gudell said in 2016.
“There’s a growing divide in the rental market right now,” the chief economist noted. “Very high demand at the low end of the market is being met with more supply at the high end, an imbalance that will only contribute to growing affordability concerns for all renters. We’re simply not building enough at the bottom and middle of the rental market to keep up with demand.”
In fact, Storper and his team found that “even a dramatic, deregulation-driven supply expansion would take decades to generate widespread affordability in high-cost U.S. markets.”
The main problem, said the researchers, is growing income inequality, not supply and demand.
“Housing markets have functioned as expected in recent decades: supply and prices have closely tracked demand across a broad range of city types,” the researchers wrote. “The problem lies not in a constrained market but in rising inequality. National income and wealth inequality have grown greatly, as have geographic gaps that divide places.”
They added, “This reflects a new geography of work concentrating high-earning college graduates in the largest, densest urban areas. In these cities, non-college-educated workers must compete for housing against residents whose incomes have benefited from globalization and technological change, amplified by agglomeration economies. Housing prices track average income growth, but that average obscures increasingly unequal income growth, with decades of stagnant wages for many workers. This gap between prices and stagnant incomes is the central driver of the affordability crisis.”
So Big Real Estate and YIMBYs have it all wrong, which we’ve been saying for years.
As for solutions for the housing affordability crisis, the researchers recommended that politicians should “enact policies that reduce income inequality.” They also suggested directly increasing access to affordable housing for low- to moderate-income households.
More affordable housing can be created, wrote the researchers, through the expansion of existing programs, such as the Low-Income Housing Tax Credit and Section 8 housing vouchers; passing stronger tenant protections, such as rent control; and pushing for housing decommodification through community land trusts and public housing.
The last two recommendations deal with the greed-driven, predatory business practices of Big Real Estate – something that YIMBYs never address.
We also urge politicians to immediately implement the “3 Ps,” which is similar to the researchers’ recommendations: protect tenants through rent control and other protections; preserve existing affordable housing, don’t demolish it to make way for luxury housing; and produce new affordable and homeless housing through such concepts as adaptive reuse and prefabricated housing. Such a multi-pronged strategy will directly help the people who need it most.
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