The housing crisis is one of the most important policy issues facing the nation. Housing shortages increase living costs for large numbers of people, and also prevent millions from moving to places where they would have better job and educational opportunities, thereby slowing economic growth and innovation. Both Kamala Harris and Donald Trump have taken positions on housing issues. But their ideas are mostly ones that would cause more harm than good. Sadly, neither candidate proposes any meaningful steps to break down the biggest barrier to housing construction in most of the US: exclusionary zoning rules that make it difficult or impossible to build new housing in response to demand.

Harris is the one that has offered more in the way of detailed proposals. She proposes giving $25,000 tax credits to first-time homebuyers and tax incentives for developers selling homes to first-time buyers. She also advocates restricting the use of algorithms to set rental prices, and  capping rent increases and cracking down on "corporate" landlords. The rent control idea may be a reference to the Biden Administration's recent plan to cap rent increases at 5% per year, though it is not clear if Harris endorses it. Harris also promises to build 3 million new homes by 2029, but is extremely vague on how exactly she plans to do it.

These policy ideas range from mediocre to awful. A $25,000 subsidy for first-time homebuyers is unlikely to do much to ease housing shortages. The fundamental problem is one of regulatory restrictions on supply. In that environment, subsidizing demand will simply bid up prices. Moreover, the people who most suffer from housing shortages are mostly renters, not would-be homeowners. This subsidy plan does nothing for them. Much the same goes for the plan to provide tax incentives for developers. This won't do much for supply so long as developers are barred from building much in the way of new housing in many places, especially multi-family housing.

If zoning and other regulatory restrictions do get lifted, Harris's tax credit incentives would be unnecessary. And, indeed, there would be no good reason to have the tax code favor housing purchases over other types of consumption.

Rent control is a terrible idea that is actually likely to exacerbate shortages. This is an Economics 101 point broadly accepted by economists across the political spectrum. Don't take my word for it. Take that of prominent progressive ecoonomists, such as Paul Krugman, and Jason Furman, former chair of Barack Obama's Council of Economic Advisers, who points out that "[r]ent control has been about as disgraced as any economic policy in the tool kit."

Finally, there is no good reason to think that corporate landlords are any worse than other types of landlords, or that algorithmic pricing is somehow making the housing crisis worse. To the contrary, corporate landlords are usually as good or better than their "mom and pop" counterparts. Take it from a longtime renter with experience living under both types of landlords; the corporate ones usually maintain their properties better, and have better customer service. And algorithms can help owners identify situations where they can increase profit by lowering prices, as well as increasing them.

Harris is right to want to build 3 million new homes. Indeed, it would be great to build more than that. But, so far, she hasn't proposed much in the way of effective methods of doing it. Unless and until she does so, her aspiration for 3 million new homes is not much more viable than my desire to add 3 million unicorns to the nation's stock of magical animals.

At times she has made noises about cutting back red tape. I assume, also, that she supports President Biden's plan to make "underutilized" federal land available for housing construction. The latter is a good idea, but it's far from clear exactly which land will be opened up and on what terms.

Trump's housing agenda is less detailed than Harris's, but could well be even worse. The housing chapter of the Heritage Foundation's controversial Project 2025 emphasizes that "a conservative Administration should oppose any efforts to weaken single-family zoning." Single-family zoning, of course, is the most restrictive type of exclusionary zoning blocking new housing construction in many parts of the country. Donald Trump has disavowed Project 2025, and claims he "knows nothing about it." But the author of the housing chapter is Ben Carson, Trump's former secretary of Housing and Urban Development. During the 2020 election, Carson and Trump coauthored a Wall Street Journal op ed attacking efforts to curb exclusionary single-family zoning. He recently reaffirmed that position, promising to block "low-income developments" in suburban areas. On housing, at least, Project 2025 seems to reflect Trump's thinking, and that of the kinds of people likely to influence housing policy in a second Trump administration. The Trump worldview is one of NIMBYism ("not in my backyard").

Trump's immigration policies—a centerpiece of his agenda, if anything is—would also have negative effects on housing. Evidence shows that mass deportations of undocumented immigrants reduce the availability of housing and increase the cost, because undocumented immigrants are an important part of the construction work force (an effect that outweighs the potential price-increasing effect caused by immigration increasing the number of people who need housing). Trump and his allies also plan massive reductions in most types of legal immigration. Slashing work visas is also likely to negatively affect housing construction (as well as damage the economy in other ways).

If there is a saving grace to the Harris and Trump housing policies, it's that most of them cannot be implemented without new legislation, which will be extremely hard to push through a closely divided Congress. That's true of the Harris's rent control policies, and her plans to subsidize home purchases, and crack down on "corporate" landlords. Likewise, a Trump administration would probably need new legislation for any major effort to protect single-family zoning against state-level reform efforts.

But Trump's immigration policies are an exception. The executive could ramp up deportation and slash legal immigration without new legislation. Indeed, the Trump administration did in fact massively cut legal immigration during Trump's previous term in office. Deportation efforts could be partially stymied by state and local government resistance (as also happened during Trump's first term). But Trump could partly offset that by trying to use the military, as he and his allies plan to do (whether legal challenges to such efforts would block them is debatable). At the very least, ramping up federal deportation efforts would drive undocumented immigrants further underground, and reduce their ability to work on construction, where laborers are relatively out in the open and more vulnerable to detection than in some other jobs.

In sum, Harris and Trump are offering mostly terrible housing policies. Their main virtue is the difficulty of implementing them.

There are, in fact, steps the federal government can take to ease housing shortages. Most restrictions on new housing are enacted by state and local governments, which limits the potential of federal intervention. But Congress could enact legislation requiring state and local governments that receive federal economic development grants to enact "YIMBY" legislation loosening zoning rules. Perhaps a stronger version of the YIMBY Act proposed by Republican Senator Todd Young and Democratic Rep. Derek Kilmer (their version could be a useful start, but does not have enough teeth). Those who object to such legislation on grounds of protecting local autonomy should recall that YIMBYism is actually the ultimate localism.

The federal Justice Department could also support litigation aimed at persuading courts to rule that exclusionary zoning violates the Takings Clause (which it does!). Such litigation could do much to break down barriers to new housing construction. Federal government support wouldn't guarantee victory. But it could help by giving the argument instant additional credibility with judges.

Finally, the feds could help pursuing the opposite of Trump's immigration policies, and instead make legal migration easier. That would increase the construction workforce, and make housing construction cheaper and faster.

Sadly, neither major-party candidate is proposing to do any of these things. Instead, they mostly sell claptrap that is likely to make the housing crisis even worse.

The post Harris and Trump Offer Terrible Housing Policies appeared first on Reason.com.

Surveys consistently show that owning a home is one of the keys to overall happiness, which no doubt explains why debates about housing prices are so emotional—and so dominant in the Legislature and at city councils. Thanks to low supply and the resulting price surges, many Californians now struggle to buy homes. The nationwide homeownership rate is nearly 66 percent, but that number is only around 55 percent in California.

Obviously, homeownership comes with drawbacks. Replacing a roof or repairing a foundation is expensive. It's harder to take a new job in another city if you've got to first sell your home. But owning a home allows you to design it to your tastes. You're not living in fear the landlord will sell it. You get tax breaks and can build equity over time. You can settle in and become part of the community. The feds have long viewed homeownership as a key to economic stability.

A brewing battle in Northern California 60 miles east of San Francisco in exurban Solano County will determine whether our state is serious about building new housing. It will also show whether YIMBYs—the Yes In My Back Yarders who promote housing construction—are true to their own rhetoric, or are just the urban version of NIMBYs (Not In My Back Yarders) who oppose any construction they don't like.

People often have the misconception that home prices are so high in the Bay Area because urbanization has limited places to build. In reality, there's seemingly endless open land throughout the eight-county region—but government growth controls are limiting opportunity for development. For instance, across the Golden Gate Bridge in Marin County, 84 percent of the land is off limits to development. No wonder the population is only 260,000—and home prices are absurd.

It's the same story throughout the area. Growth-control measures in Alameda County have assured that one sees nothing but lovely empty hillsides on the drive to Oakland, but they have scuttled development plans and assured million-dollar median home prices. Solano is home to some major suburbs but is dominated by vast tracts of ranchland (and wind farms) as one heads eastward to the Sacramento County line. I love the open spaces, but it's an ideal spot for a new city.

That's exactly what savvy venture capitalists from the Bay Area are planning. Beginning in 2017, a group called Flannery Associates has quietly purchased 50,000 acres—in a move that echoes the Walt Disney Co.'s secretive purchase of swampland around Orlando in the 1960s as it pursued the construction of Disney World and eventually Epcot Center. Big dreams require bold action, especially if one wants to build an entirely new city in regulation-choked, growth-controlled California.

The project has become the biggest thing in Solano County in perhaps forever, which makes the proposal's name, California Forever, apropos. A New York Times article in August turned local buzz into a statewide controversy. It described the idea as follows: "Take an arid patch of brown hills cut by a two-lane highway between suburbs and rural land, and convert it into a community with tens of thousands of residents, clean energy, public transportation, and dense urban life."

California Forever representatives have been holding the usual array of public meetings, as they prepare for a November countywide ballot initiative that's necessary to rezone the land from agricultural uses. That's necessary because in 2008 county voters overwhelmingly passed the Orwellian-named Orderly Growth Initiative—a common type of NIMBY open-space measure that has paved (actually, not paved) the way for the state's housing crisis.

The Press Democrat reports that the initiative campaign is off to a "bumpy start," which isn't surprising for a project of this scale. It's also not surprising that some locals take a burn at the idea of tech moguls from the Bay Area helicoptering into a somewhat rural area and imposing their big ideas on them.

Fortune magazine reported that, "The Silicon Valley billionaires' Astroturf city being built from scratch is running headlong into a NIMBY backlash." Ironically, it's not only NIMBYs who are a problem. The San Francisco Chronicle reported the proposal has divided YIMBYs. "It's sprawl with a prettier face and prettier name," one YIMBY activist told the newspaper.

I've found many YIMBY critiques on social media, which is odd given the plan is filled with the latest urbanist concepts. "All cities were once 'new' cities," California Forever notes. It's also spot on when it explains that "we will never, ever come close to solving our housing affordability challenges through infill alone." But many YIMBYs aren't so much about building housing, but shoehorning us into tiny apartments along bus lines.

The project certainly is shaking up the housing debate across the state—and might determine whether new generations will be able to take part in the American Dream.

This column was first published in The Orange County Register.

The post A Brand New City in Northern California Will Show if the State Is Serious About Housing Solutions appeared first on Reason.com.

Happy Tuesday and welcome to another edition of Rent Free. Despite the ink still wet on many state-level YIMBY reforms prodding local governments to allow housing, we're already witnessing a concerted counter-revolution from the forces of local control. This week's stories include:

• Slow-growth activists in the Boston-adjacent suburb of Milton, Massachusetts, have successfully overturned state-required zoning reforms that allowed apartments near the town's train stations.
• Local governments in Florida are trying to defang a new state law allowing residential high-rises in commercial zones with lawsuits and regulatory obstructions.
• A lawsuit against Arlington, Virginia's exceedingly modest "missing middle" reforms that were passed last year trundles on.

But first, our lead item is a short take on how America's overregulated, undersupplied housing market turns good things, like economic growth, into bad things, like more evictions.

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Why Evictions Go Up in a Good Economy (and Why It Doesn't Have to Be This Way)

In an article from last week, L.A. Times columnist LZ Granderson asks "If the economy is so great, why are evictions soaring?" Despite low unemployment and better-than-expected economic growth "evictions have spiked and homelessness has reached a record high," he notes.

Granderson's explanation for this incongruity is that it's all just the latest ill effects of Reaganite low taxes, slim government benefits, and underregulated corporations.

The more compelling answer is that evictions are up because the economy is so great (or at least better than it used to be).

Landlord Incentives

As Granderson notes, unemployment is low. The unemployment rate has been under four percent for the past two years. Real wages have also been growing.

For landlords, that means that there are a lot of workers with steady incomes out there who would likely make for steadily paying tenants. If their current tenant isn't paying rent or is behind on rent, a low unemployment rate boosts their confidence that they'll be able to find another one who will pay their bills on time. That makes it less risky to take on the costs of evicting a tenant and turning over a unit.

That's a counterintuitive answer. The intuitive assumption is that since evictions are a bad personal economic event, they'll happen more often when economic times are bad generally.

This was the assumption that prompted both Republican and Democratic presidential administrations, and almost every state government, to adopt eviction moratoriums during the pandemic. The fear was that sudden, mass unemployment would result in millions of delinquent renters being kicked out of their homes.

Lessons from the pandemic 

This turned out to be wrong. Even after most state moratoriums had lapsed, the federal moratorium had been struck down by the U.S. Supreme Court, and rental assistance programs expired, evictions stayed well below pre-pandemic averages.

Evictions did rise slowly over time, but there was never the sudden "avalanche" or "tsunami" of people getting kicked out of their homes that some housing activists predicted. Today, according to Princeton University's Eviction Lab data, evictions nationwide are slightly below pre-pandemic averages.

The fact that evictions fall during bad economic times and rise during good times might seem to validate the left-wing view that economic growth under capitalism just means more hardship for poor and marginalized renters. Therefore, the thinking goes, we need more legal restrictions on evictions, rent control, and/or direct government provision of housing to keep a roof over people's heads. That too is a mistaken view.

More homes, fewer evictions

All else being equal, economic growth and low unemployment will give landlords a greater incentive to evict a delinquent tenant. But economic growth and low unemployment should also raise the demand for housing, and therefore lead to new housing construction.

More housing supply will in turn make the housing market more competitive for suppliers. A landlord with a delinquent tenant can't be so sure they'll be able to find a replacement so easily, as the pool of potential tenants will have a lot more housing options. More housing supply will also lower housing prices, which in turn should result in fewer tenants risking eviction by falling behind on their rent in the first place.

Thanks to zoning, restrictions on mortgage financing, needless environmental reviews, and more, we're not seeing as much new supply as we would under a free market. That means we're also not seeing the eviction-suppressing effects of new supply.

The result of restricted housing supply in a time of economic growth and low unemployment is higher prices and higher evictions.

As Kevin Erdmann explained in his Substack last June, when there's not enough housing to go around, "somebody has to be displaced, and the displacement is achieved through rising housing costs, which tend to pile up the most on the poorest residents."

The good news in the short term is that in the places where evictions are going up the most (mostly booming sunbelt metros), there is a rash of new supply coming onto the market. This glut of new homes and apartments should cool price increases and evictions.

The better news in the long term is that many states are passing YIMBY zoning reforms that will make housing supply even more elastic. That is unless NIMBY forces manage to handicap these laws right out of the gate…

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In Massachusetts, A Popular Rebellion Against New Housing

This past Wednesday, 54 percent of voters in Milton, Massachusetts, an inner suburb of Boston, approved a ballot initiative repealing recently passed local zoning amendments that allowed apartments near local rail stations.

In doing so, the town has made itself non-compliant with Massachusetts' signature YIMBY reform—the 2021 MBTA Communities Law—which requires towns with rail transit service to allow apartments near rail stations.

The vote sets up a crucial test for the state law: can it prod reluctant local governments to zone for infill housing in a way that actually gets units built? Or will it be another state YIMBY reform that's bested by clever NIMBY intransigence?

The backstory

Prior to Wednesday's vote, it appeared most localities were complying with the letter of the MBTA Communities Law. All twelve of the towns required by the law to pass upzoning legislation by the end of 2023 had done so.

That includes Milton. In December 2023, the town passed the state-required zoning changes. But shortly thereafter, local activists gathered enough signatures to put the zoning changes up to a popular vote.

State officials, including Gov. Maura Healey and Attorney General Andrea Campbell, had warned the town that a vote for repeal would make Milton ineligible for numerous state grants and a lawsuit from the state.

Consequences

Having voted for repeal anyway, Milton is now ineligible for three grant programs, including the state's largest capital grant program for localities. It's uncompetitive for another dozen grants.

The attorney general's office has made clear that "communities cannot avoid their obligations under the Law by foregoing this funding." Campbell said in a sharply worded, pre-vote letter to Milton that her office would bring legal action to enforce the MBTA Communities Law "without hesitation."

Jesse Kanson-Benanav, executive director of Abundant Housing Massachusetts, tells Reason that there's speculation that developers could also sue non-compliant town governments should projects they propose that meet the state law standards are rejected.

The combined weight of all these potential enforcement actions is seemingly encouraging most communities to come into line. Milton is thus far the exception, and even there, the margin on its referendum was a little under 800 votes.

An uncertain road ahead

The longer-term risk is that communities will find ways to comply with the MBTA Communities Law on paper while thwarting it in practice. The zoning amendments Milton had approved, for instance, required that newly legal apartments come with parking spaces and below-market-rate units—both of which are a tax on new housing.

Kanson-Benanav suggests some towns might come into paper compliance by upzoning commercial parcels that wouldn't likely be redeveloped into housing or upzone near environmentally protected areas where development is infeasible.

"It's hard to know what's written on paper, what its impact will be in practice," he says.

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In Florida, the Backlash to the Law That Allowed Too Much Housing 

Was it too good to last? That's the question that YIMBYs in Florida might be asking themselves as local governments rebel against, and state lawmakers mull reforms of, the state's year-old Live Local Act.

The law allows developers to build apartments in commercial and industrial areas, local zoning be damned, provided the new housing includes affordable units.

Because the law's affordability requirements are turning out to be pretty modest, and its density allowances are turning out to be mouth-wateringly generous, developers have made ready use of the law to build massive new high-rises that would have otherwise been prohibited by local zoning.

Now the backlash. The Tampa Bay Times reports that Pasco County threatened to sue developers trying to use the law to build apartments. Another city adopted a six-month building moratorium to block a Live Local Project.

At the state level, the Florida Senate approved a bill that weakens the Live Local Act's zoning preemptions in one respect while strengthening them in another.

S.B. 328 would allow local governments to say no to Live Local projects that are more than 150 percent taller than adjacent buildings if its near a single-family neighborhood. In applicable areas, that's a significant reduction in the law's height allowances.

On the other hand, S.B. 328 would prohibit local governments from imposing floor-area-ratio regulations on Live Local projects. That would significantly pare back localities' ability to thwart Live Local projects they don't like.

All things considered, S.B. 328 doesn't appear to be a bad trade. It's now being considered by the Florida House of Representatives.

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In Virginia, Lawsuits Challenge Modest 'Missing Middle' Reform

Early last year, Arlington County, Virginia, approved a series of zoning changes that allowed up to at least four units of housing to be built in neighborhoods formerly zoned for only single-family housing.

The architects of the reforms described them as intentionally "small 'c' conservative" by only allowing a modest amount of new housing. A yearly cap on how many new duplexes, triplexes, and the like could be built made sure of that.

The cap's done nothing to mollify opponents of the missing middle reforms, who expressed heated opposition during the local legislative process and are now suing to undo the already passed reforms.

Last month, an Arlington Circuit Court Judge rejected a motion from Arlington County seeking to stop the lawsuit from going to trial later this summer. Also last month, residents in neighboring Alexandria, Virginia, sued to overturn that city's also-quite-modest ending of single-family-only zoning.

Zoning reformers might consider these lawsuits good news in a way. Middle-housing opponents lost in the democratic process, so now they have to resort to the courts.

On the other hand, local courts have recently issued some truly bizarre rulings overturning other state and city laws abolishing single-family zoning. The Arlington and Alexandria lawsuits will be an important test of whether even modest missing middle reforms can stick.

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Quick Links

• California's zoomer socialist lawmaker, Assemblymember Alex Lee (D–Milpitas), has introduced a bill that would ban corporations from purchasing and renting out single-family homes. Studies suggest such bans mostly work to exclude renters from living in more expensive single-family neighborhoods where they could afford to rent but can't afford to buy.
• Earlier this year, Rent Free covered the case of Vanie Mangal, who was stuck with an abusive, non-paying tenant for close to four years because of eviction moratoriums and New York's dysfunctional housing court system. Real Deal reports that Mangal is at last rid of her tenant (who trashed the place before she left).
• A Washington bill capping annual rent increases at seven percent statewide has passed the state House of Representatives. It will now be considered by the state Senate.
• A proposed Illinois bill would lift the state's preemption on local governments adopting rent control policies.
• "The most magical place on Earth's" plan to build a 1,400-unit affordable housing project is failing to enchant neighboring residents.
• The "year of the granny flat" is picking up steam. The Rhode Island House of Representatives passed a bill last week that will allow homeowners to build accessory dwelling units within the footprint of their existing home and on large lot single-family properties. It's a pretty modest ADU reform, all things considered.
• Is exclusionary zoning unconstitutional? Yes, say George Mason University law professor Ilya Somin and University of Wisconsin Law School professor Joshua Braver in a new article.
• The Federation of American Scientists argues the federal government should require localities to liberalize their zoning codes in order to receive federal highway funds.
• The Boston Globe has a new article on the perilous politics of zoning reform in Boston.

The post Good Times, Bad Times: Eviction Edition appeared first on Reason.com.