Nearly 10 years ago, on July 28, 2016, Zillow Chief Economist Dr. Svenja Gudell released a “Zillow analysis” about the kinds of apartments built in America – luxury units compared to affordable. It was a time when YIMBYism was starting to get its legs, and when the real estate industry didn’t want to hear anything about building affordable housing. It was also a time when politicians weren’t talking all that much about a housing affordability crisis, although it was clearly brewing. Zillow’s analysis, as far as we know, also didn’t get much play in the mainstream media.
Ten years later, though, Gudell’s findings, and the warning that came with it, are more relevant than ever.
“There’s a growing divide in the rental market right now,” the chief economist said. “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.”
She added, “As a result, these segments are becoming very competitive, as both new renters look to find their first place and existing renters get shut out of homeownership because of extremely limited for-sale inventory.”
Gudell concluded: “Apartment construction at the low end needs to start ramping up, and soon, in order to see real improvement.”
The chief economist, in other words, was saying that building more affordable housing must be the top priority, not more luxury. Unfortunately, it was the shot that wasn’t heard around the world — and the housing affordability crisis only worsened.
Instead, YIMBYs, who appointed themselves housing experts in 2016 and 2017, ignored Gudell’s findings and aggressively lobbied politicians throughout California to build more high-end housing – exactly what Gudell said wasn’t needed.
YIMBYs, with funding and support from Big Tech, pushed an extremely flawed “trickle-down” housing approach, saying more high-end apartments would eventually create more affordable housing for less affluent Californians. Housing justice activists constantly clashed with YIMBYs, such as California YIMBY CEO Brian Hanlon, over this point.
Why did YIMBYs push high-end housing? If you look at news stories from 2016 and 2017, YIMBYs, especially in the Bay Area, were furious that they were shut out of posh neighborhoods for one reason or another. So they determined that they needed to push for more construction of high-end apartments in those upscale communities – or in “up-and-coming” neighborhoods that could be turned into fancy enclaves through gentrification and displacement – by changing zoning rules.
YIMBYs, who were largely well-educated, young professionals, weren’t all that concerned about solving the worsening housing affordability crisis in California, which was crushing the poor and middle and working class. It was all about them and their upscale tastes.
The real estate industry, especially the corporate landlord front group the California Apartment Association, also pushed a self-serving, trickle-down agenda: the construction of more luxury apartments meant higher rents and bigger revenues.
And corporate landlords and developers used “trickle-down” to argue against stronger tenant protections: any policy, such as rent control, that gets in the way of building more luxury apartments, they said, should be stopped.
But a group of 32 top economists and other housing experts, over the years, have continually made the point that Big Real Estate’s anti-rent control arguments, which YIMBYs have fully embraced in the past couple of years, are outdated and wrong. That includes the bogus idea that rent regulations will stop housing construction.
In fact, those economists and experts say rent regulations is exactly what’s needed to protect hard-working tenants against the predatory business practices of the powerful, multi-trillion-dollar real estate industry.
“Recent research shows that the market itself needs to be fixed,” Brian Callaci and Sandeep Vaheesan of the Open Markets Institute wrote in the Harvard Business Review. “Any plan to overhaul the housing market needs to, first, confront the power of landlords to raise rents. Second, it requires rethinking public governance of housing markets behind simplistic prescriptions to just free the housing market from government regulation, assuming lower rents will follow. And third, it needs to provide more muscular government involvement in housing, through price regulation, more robust planning, and even direct public provision.” (Italics are mine.)
Interestingly, while Big Real Estate and YIMBYs were making endless noise about solutions that went against what Gudell said was needed to solve the housing affordability crisis, housing justice advocates were pushing exactly for what the chief economist urged: the construction of more low-end, or affordable, housing.
In fact, it’s long been a key part of a multi-pronged approach advocated by Housing Is A Human Right and other housing justice groups. It’s called the “3 Ps”: protect tenants through rent control and other protections; preserve existing affordable housing, not demolish it to make way for more unaffordable luxury housing; and produce more affordable and homeless housing – or low-end housing – through such concepts as adaptive reuse and pre-fabricated housing.
Simply put, housing justice activists have been right all along, and YIMBYs and Big Real Estate have been seriously wrong, negatively impacting the lives of millions. That also goes for the politicians who embraced the real estate industry’s trickle-down, luxury-housing push.
Big Real Estate is a lost cause, and who knows if YIMBYs will ever see the multiple errors of their ways. But state and local politicians still have a chance to fix things. They must build, build, build more affordable and homeless housing.
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