The National War on NIMBYism Has Arrived

An unreported speech offers quiet hope for the future

Welcome to a Sunday edition of Progress Report.

I hope that you had a relaxing long weekend spent with friends and family members. I’m going to guess that you wound up in a few conversations about politics, given the state of the world, and just hope that they didn’t get too intense (if arguments did break out, my guess is that you dismantled everybody with facts and logic).

In tonight’s edition of the newsletter, we’re going to look at one subject that I’m sure everybody discussed outside the context of their mini political debates, even though it represents what I see as one of the most fundamental factors in our current national dissatisfaction and keys to the 2024 election.

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It’s a question vexing liberal columnists, White House advisors, and Democratic political strategists: Wages are up and inflation is down, so why do the vast majority of Americans still tell pollsters that they think the economy sucks?

The answer, I think, is actually pretty simple. Inflation may be way down year-over-year, but that doesn’t mean that things aren’t still super-expensive. Even items that cost a little bit less than they did this time last year are generally still far pricier than they were a few years ago, and more than people can afford.

Housing offers a perfect example of this phenomenon of public opinion running so counter to traditional economic indicators — something that the Federal Reserve itself seems to understand.

Earlier this month, Tom Barkin, the President of the Richmond Fed, gave a speech at an annual housing conference in Virginia. It earned little coverage outside of local media, but Barkin’s address offered insights that went far beyond what Jerome Powell, the Fed chair, generally offers.

“In 2022, the median middle school teacher made just over $60,000. With that salary today (and without becoming cost-burdened), that teacher can afford a $228,000 house with a 20 percent down payment,” Barkin said, outlining the problem facing working people. “But the median price for a new starter home last year was $299,000, and that’s on the off chance you could even find one.”

Barkin offered several solutions, including the same typical financial and tax incentives to developers that anyone who worked at McKinsey for three decades would suggest. Then, he threw down the gauntlet, so to speak.

“While the need for more housing may be obvious to us, it often isn’t to those who don’t want their town to change, or who don’t like the specific change being proposed,” Barkin said. “They understandably worry about environmental impacts, or infrastructure capacity or school crowding. NIMBYism is real, and failing to secure buy-in from the community adds time, cost and uncertainty.”

So the remarks were pretty gentle, all things considered, and generously offered the benefit of the doubt to communities that often resist further development for reasons that don’t have anything to do with the environment or school crowding. Still, a Fed president calling out the NIMBY movement is a very big deal, as it’s an endorsement from an entity that is not generally known for caring about the fate of working people.

Before we dive deeper into the solutions, let’s quickly take a broader look at the scope of the problem.

The Rent (And Mortgage Rates) Are Too Damn High

More than 35% of Americans rent their homes, but due in part to the sprawling patchwork of lenders, landlords, and leases, it’s virtually impossible to find a definitive set of data on what they pay. Still, there are clear trend lines across the data sets.

Prices have been growing much more slowly since inflation peaked in February 2022, and according to Zillow’s latest report, the year-over-year increase in asking price for a rental unit is around 3.6%. Some sources say that it’s actually even slightly cheaper year-over-year, but critically, there’s unanimity around the median asking price.

In 2019, the median rent was $1,643. Today, the typical rent runs about $2011, an increase of 22%. Incomes are rising, but not nearly at the same rate.

Between 2011 and 2021, around 6.5 million affordable units (costing less than $1000 a month) disappeared from the national housing stock. That scarcity helps explain why there were 21.6 million American households that were rent-burdened — or spending at least 30 percent of household income on rent — in 2021.

As for home sales, the median sale price has grown 3.4% year-over-year, according to the National Association of Realtors, while total sales have fallen by 5.7%. The price increase doesn’t take into account the gigantic rise in interest rates, which reached a 23-year high of 7.79% last month.

All of this is to say that it is egregiously more expensive for people to make their monthly home payment now than it was in 2020, when Joe Biden was elected president. At the same time, Americans no longer have access to stimulus payments, expanded unemployment, or the supersized Child Tax Credit, as they did when Biden first took office, which makes the burden feel even heavier.

So What’s Being Done About It?

As I began writing in early 2022, housing is a moral issue that also functions as a political issue, even if the courage to truly fix the problem is often absent from both sides of the aisle.

Racism, class war, and the power of big developers have conspired to significantly reduce the power of housing vouchers, and rent control has suffered a similar fate. Building more housing seems to be the consensus choice, though there are some real divergences in who the housing should service.

Indeed, Barkin’s speech focused on bringing home prices down, but he never explicitly mentioned affordable housing. It’s a notable omission, given how much of new construction has been aimed at higher-end clients — the US Census last year found that the median rent for new units was really only attainable to families making $72,000 or more per year. Even so, the number of truly affordable units required in new buildings only really comes into play once communities have issued permits to new construction, which is where NIMBYism and zoning law come into play.

Much of the United States is zoned only for single-family housing, a tactic designed to keep property values high and minority populations low. Nationwide, communities are struggling to balance their need for more housing for working and middle-class people with the comfort of exclusivity. Here’s where some of those policies are playing out right now:

Milwaukee, WI: The state’s largest city wants to get much, much bigger, so it’s pursuing a zoning overhaul that city officials have dubbed Growing MKE. While the specifics are subject to citizen suggestions and debate, the aim is to rezone much of the city so that more medium-sized multifamily housing units can be built in a city dominated by single houses and large apartment buildings.

Milwaukee officials want to add expand the options available to include smaller apartment buildings, townhomes, garden apartments, and accessible dwelling units. The mayor wants to nearly double the city’s population, from 600k to one million people, and that will depend in large part on having the capacity to house so many more residents.

Newark, NJ: The city council just voted to rezone commercial districts to permit much taller buildings so long as they include apartment units. It was a dogfight to get it done, driven in part by developers; the corporate real estate industry controls much of the land in the perpetually up-and-coming city, so the next fight will be to ensure that it produces legitimately affordable housing in exchange for its approved permits.

Massachusetts: Passed in 2021 by the state legislature, the MBTA Communities Act demands that towns near mass transit lines maintain zoning laws that permit multifamily housing. Brookline, a well-to-do city right outside of Boston, finally voted to comply with the law a little over a month ahead of the December 31st deadline. New York Gov. Kathy Hochul proposed a similar law this year, only to be instantly rejected by suburban Democrats.

Washington State: Gov. Jay Inslee signed a zoning requirement law in 2021 that now applies to cities across the state. Single-family housing is now illegal across all of Washington; cities of 25,000 people or more must at least allow duplexes, while cities with at least 75,000 are required to permit fourplexes in any residential area. It’s a groundbreaking law, but has one natural loophole: homeowner associations and common interest communities, which are generally home to Seattle’s wealthier neighborhoods.

New construction cannot be the only answer to the housing crisis, given the typical profit margin required by developers, and that necessitates more novel approaches. Barkin rattled off several such projects in the Mid-Atlantic region that he oversees, his list largely consisting of old schools and factories that are being converted to sizable multifamily developments with anywhere from 50-150 units. These are largely either public projects or done with some sort of government incentives.

Some of the most interesting retrofitting is happening in Tucson, AZ, where old bars, hospitals, and motels are being converted into affordable housing.

The city of Tucson bought and is remodeling the old Amazon Motel at 1135 W. Miracle Mile for shelter before beginning construction to convert the hotel rooms into studio apartments for low-income renters.

Along Stone Avenue, south of Grant Road, the city also bought the former Bum Steer bar at 1910 N. Stone Ave., with plans to build family apartments at that site.

Other affordable developments are being made with prefabricated materials that click into place on the construction site, saving time and money. Units at one such planned complex could come in at $500 less per month than the average three-bedroom apartment in Tucson, which sits at around $1900.

Even the National Forest Service is getting involved in trying to solve the crisis, in part to be able to house prospective new employees. In Colorado, the Forest Service signed a lease with an affordable housing developer to refurbish existing cabins and build an entire neighborhood around White River National Forest.

It’ll have up to 150 units of housing and serve as a model for what could be an influx of new sustainable development on very small parcels of Forest Service Land. Ironically, such a development is only possible thanks to a provision tucked into the 2018 Farm Bill, which may be the most tangible thing that the federal government has done to directly create affordable housing.

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