Market Insights

Steve Randy Waldman is a writer and thinker with an extensive online following. I have always enjoyed the thoughtfulness he brings to the subjects he writes about, but we come from different ideological points of view, so sometimes our perspectives lead to different emphases.

We had the opportunity recently to have a brief visit IRL, and coming out of that conversation, Steve wrote a great post about urban housing, extending some of our previous conversations and taking account of some of my points.

I invite you to read the entire post. Here is an excerpt:

Kevin describes urban density as an "inferior good", economics-speak for a good people buy less and less of as their incomes grow. Think of porridge as kind of the basic foodstuff of the poor in Victorian novels. On the one hand, maybe it’s not the best food in the world. As people grow wealthy, they buy fresh fruit and meats and vegetables. On the other hand, because it is cheap and calorific, porridge could be extremely valuable to people who don’t have the money to spare! Poor people spend a large share of their food budget on porridge, while richer people spend very little.

Suppose a well-meaning rich person looked at the blandness of porridge and lobbied the government to ban the product. The poor should eat meat and fruit and fresh vegetables just like the rich! They’d be healthier! MAHA!

Our activist might think they were doing a good thing, but in fact they’d be condemning the people they mean to help to starvation, as the poor simply could not afford the calories they need in these more expensive forms.

Kevin points out that dense, lower-income cityscapes offer a lot of opportunities and amenities to their residents. You might have a lot of people living in "SROs" (single-room occupancy, think boarding houses with shared bathrooms), or families crammed into small apartments. But with high density, no one needs a car to get to shopping or services. There may be opportunities to work within a few blocks. Residents come to know each other. They become potential collaborators in entrepreneurship and providers of mutual aid to one another.

Density has a lot of proponents these days, but many of us have as our lodestar a kind of affluent density, the upscale districts of a European city. Kevin wants us to revisit the downscale density we’ve spent decades disdaining… In the meantime, we’ve made the world and our cities much worse — and we’ve made the problem of growth, whether endogenous or due to outside demand, more insoluble — by failing to see the good in places where there were lots of human problems only because there were lots of human beings.

One way I would put it is that if you imagine New York City in its heyday - when it was growing by double-digit percentages every decade and immigrants were moving there from all over the world in droves - what do you picture?

There were wealthy families in the Upper East Side, but the bulk of the population was in the Lower East Side.

Today, families with lower incomes move away from New York City in droves. Economists say that these cities have become superstars. It is the wealthy who are drawn to live there. They must be more special than they ever have been before.

Over the course of the 20th century, we made the infrastructure of the Lower East Side illegal, but not the Upper East Side. Is it surprising that New York only attracts the well-off now? Is that because it is more special now?

I would say that there have been two steps to this process. The first step was clearing slums and putting highways and parking lots in our major cities where they each had their versions of the “lower east side”. That step has been broadly documented.

The second step has not been so well documented because the second step has been something that didn’t happen.

For a half-century, cities flattened and cleared out urban places where the poorer half lives. In the next half-century, building new versions of those places was forbidden. So, in a few cities like New York, where some of the pre-existing infrastructure survived, poorer families still prefer to live in the dense neighborhoods. In almost all American cities, those neighborhoods barely exist or don’t exist.

Cities serve the poor, and, through a series of unintended and intended consequences, we stopped building them and built suburbs instead.

The highest moral path forward for a nation becoming richer and more developed over time would be to allow those neighborhoods to emerge - neighborhoods with numerous informal and small-scale businesses, services within walking distance, small homes, and high density. And to make sure they also have easily engaged public services and a strong law enforcement presence.

That’s easy to say from a perch at a computer screen in the suburbs. Those are commitments that are hard to arrange, hard to maintain public support for, and hard to negotiate over time and space.

But the alternative path we took is unsustainable, and, as it has turned out after several decades going down this path, cruel.

From birth to 17 years of age, we live, you could say, in domestically provided dormitory housing. For some period from 18 to 21, some of us are required to live in dormitories. (Frequently, favorite highlights of our lives occur in those dormitories.) Then, from 21 to sometime after 65 years of age, it is illegal to build dormitories for our use. Then, sometime after 65 years of age, many return to dormitory housing units which are sometimes publicly subsidized.

Frequently, impositions on city-building are expressed only as limits on structural forms. In the case of dorms, the motivation of those impositions is more explicit. Every type of building can be acceptable when the right people are in it.

As the limits on structural forms fail to fully realize their intentions, the more explicit impositions replace them. You can see this today, as “the wrong types” of people (renters) are increasingly moving into single-family homes as a side effect of all the impositions on apartments and on mortgage access. So, today, there are a growing number of bills introduced to ban single-family rentals of one kind or another. Most of those bills are sponsored by Democrats, under the guise of blocking corporate landlords. Obviously, we can’t ban the structural form of single-family homes, so there is pressure to resort to explicitly banning who can own or live in them, as we do with dorms.

We rarely allow lower-east-sides any more. In general, poorer families live in the parts of zoned cities that have been abandoned by others.

After a century of zoning, cities are so removed from any organic form of urban infrastructure that would have value for poorer families, it is hard to find avenues for those neighborhoods to take root. They are considered impositions on the existing parts of the city whose infrastructure has been set in amber, and locals universally oppose them.

Frequently, reformers seek to replace the urban neighborhoods that we are missing with public housing or with developments that are only accepted by the municipal authorities if they have a certain amount of mixed-income or subsidized units.

But, that isn’t what we made illegal. That isn’t what we are missing. Are those solutions progress back toward approving housing forms that include poorer residents, or are they a continuation of the trend of imposing new mandates on the housing we allow?

Also, the problem is that a plurality of every community always comes together to support some sort of exclusion, and we have created the political processes that serve that motivation. I think there are similarities here to the Civil Rights era. Most of the community considers the continuation of some unsustainable inequities to be their moral prerogative. Some of the concerns that motivate exclusion are legitimate, but our process for meeting them isn’t equitable or sustainable.

There is a reasonable tendency to look for unifying themes to make the YIMBY political tent larger. “You should be in favor of this new reform allowing accessory dwelling units (ADUs) to be added to existing lots. What if your parents need transitional housing as they age? Or your adult kids might need affordable housing while they are still getting their financial legs under themselves.”

I appreciate the attempt at a unity message. But, isn’t this just like our dormitory laws? Is it winning the battle only to lose the war if we say, “You should favor this new type of housing because the right sorts of people will use it.”? Can we really get to an equitable community that way?

This is an integration versus segregation issue, even if it is sometimes about class rather than race. School integration required a community committed to the improvement of “the other”.

The problem of the last century of housing is that half the country is always below average, and we have frozen all of our neighborhoods in place in an attempt to get the lower half to live somewhere else. But the lower half still lives somewhere. So, now we have a lower half of the population, but not a lower half of housing stock that evolved to serve them.

Put more bluntly, there are households that nobody wants as neighbors. Housing regulation is a form of statistical discrimination arms race that every neighborhood battles over to help those households live in other neighborhoods.

Beyond the immediate needs and uses, the broad acceptance of things like ADUs will allow our neighborhoods to evolve again, in a way that mainly serves the bottom half. Neighborhoods that fill up with ADUs, duplexes, small multi-unit buildings, small productive and retail activities, and services like cottage industry or informal child-care serve the needs of residents who need affordable housing, local services, and dense support networks.

The deeper reason that ADUs are an important reform isn’t that the current homeowner’s mother will need to transition into assisted living in the next 10 years. The deeper reason is that in 50 years an immigrant family will be able to purchase that home because they will be able to make the mortgage payment with the help of the rent they get from a 40 year-old bachelor living in the back yard who needs time to get his life together. And maybe sometimes these small-scale housing options naturally extend community, helping guide residents who haven’t been good neighbors with the helping hand of small-scale landlords to become better neighbors.

I saw this process on my grandparents’ farm. Over the decades, hired hands moved into their quarters. None of them were exactly Harvard grads. Many had a history of difficulties. All of them were treated as a sort of at-arms-length extended family. Many moved on, along with their personal struggles. But this setup provided them all with the chance to be better, to be appreciated, and to be productive.

And when they were, there was someone there who was more than an employer or a landlord, who sometimes shared meals (and in the old-days, bath water) with them, and would be proud of them.

I suppose I’m bad at politics because it’s probably not a winning strategy to say, “We need this law so your neighborhood can slowly recede in its relative socio-economic rank within your city.” That’s what filtering is. And, I’m sorry. I don’t think we can make better communities by pretending things aren’t what they are. It’s not sustainable for every existing neighborhood to be set in socioeconomic stone.

They aren’t set in stone now. But every neighborhood wants to buck the trend, and they try to do that by blocking structural evolution that would accommodate it. So the neighbors change anyway. They just are denied neighborhood infrastructure that would serve them.

We don’t have many neighborhoods today that were able to start that transition 50 years ago. The best time to plant a tree was 50 years ago. The second-best time is today.