Happy Tuesday and welcome to another edition of Rent Free. This week's stories include:

• A federal appeals court slaps down the federal government's odd argument that it doesn't have to compensate landlords for its eviction moratorium because the moratorium was illegal.
• Vice President Kamala Harris sets a first-term goal of building 3 million middle-class homes.
• A Michigan judge sides with property owners trying to build a "green cemetery."

But first, a look at an under-the-radar federal regulation change that might make it easier for builders to create more small multifamily "missing middle" homes.

Code Games

In his 1942 book Capitalism, Socialism, and Democracy Joseph Schumpeter praised capitalist mass production for bringing almost every basic commodity, from food to clothing, within the affordable reach of the working man. The one exception he highlighted was housing, which he confidently predicted would soon see a similar collapse in prices due to mass-produced manufactured housing.

As it happens, manufactured housing production—which is built in factories and then shipped and installed on-site—peaked in the mid-1970s and has been limping along as a small share of overall home construction ever since.

Nevertheless, the dream that cheap, factory-built homes can deliver lower-cost housing has never died.

It's certainly alive and well in the current White House.

This past week, the Biden-Harris administration released a "fact sheet" of actions it was taking to lower housing costs. It included an in-progress regulatory change that would allow two-, three-, and four-unit homes to be built under the federal manufactured housing code set by the U.S. Department of Housing and Urban Development (HUD).

"The HUD Code creates economies of scale for manufacturers, resulting in significantly lower costs for buyers," says the White House in that fact sheet. Letting small multifamily housing be built under the HUD code will extend "the cost-saving benefits of manufactured housing to denser urban and suburban infill contexts," it says.

IRC, IBC, IDK

The proposed change comes at an interesting time for small multifamily housing construction.

Across the country, more and more states and localities are allowing more two-, three-, and four-unit homes to be built in formerly single-family-only areas.

That liberalization of the zoning code (which regulates what types of buildings can be built where) has set off a follow-on debate about which building code (which regulates construction standards) newly legal multiplexes should be regulated under.

Currently, the options are either the International Building Code (IBC) or the International Residential Code (IRC).

The IBC and IRC are model codes created by the non-profit International Code Council, which are then adopted (often with tweaks and changes) by states and localities.

The IBC typically covers apartment buildings of three or more units, while the IRC covers single-family homes. Neither is particularly well-suited for the regulation of smaller multi-family buildings that cities are now legalizing.

The IBC, for instance, requires expensive sprinkler systems that don't do much to improve fire safety in smaller buildings but can make their construction cost-prohibitive.

Zoning reformers have responded by trying to shift the regulation of smaller apartments into the IRC. But that raises its own problems, says Stephen Smith of the Center for Building in North America.

"It's a complicated thing to do because the IRC is not written for small multi-family. It's written for detached single-family," he says. "For traditional apartment buildings with a single entrance and stairs and halls and stuff, it's not really clear how the IRC would work with that."

The White House's proposed changes open the possibility of sidestepping this IRC-IBC dilemma entirely by letting builders of manufactured, multifamily housing opt into a single, national set of regulations.

A Floor or a Ceiling?

The question then is whether this will actually make life easier for builders.

The effect of HUD regulation on the production of single-family manufactured housing is a topic of intense debate.

Prior to the 1970s, manufactured housing was governed by a patchwork of state and local building codes. In 1974 Congress passed legislation that gives HUD the power to regulate manufactured housing.

Critics of HUD regulation argue that its initial implementation caused the steep decline in manufactured housing production in the 1970s.

In particular, they point to the HUD requirement that manufactured housing must sit on a steel chassis as a regulation that increases costs and decreases production.

Brian Potter, a senior fellow at the Institute for Progress and writer of the Construction Physics Substack, contrastingly argues that HUD regulation has actually helped keep the cost of building manufactured housing down.

The production of all housing, not just manufactured housing, plummeted in the 1970s, he notes. Since the 1970s, the costs of non-manufactured, site-built housing have skyrocketed while the costs of building manufactured housing have risen much less, he points out. Potter argues that the effect of the steel chassis requirement is also overstated.

To this day, manufactured housing is the cheapest type of housing to produce when comparing smaller manufactured housing units to smaller site-built single-family housing units. The HUD code has less expensive requirements and allows builders more flexibility in the construction of units.

"The most interesting and attractive thing about the HUD code is that HUD code homes tend to be much, much less expensive than single-family homes," says Potter.

The hope is that allowing newly legal duplexes, triplexes, and fourplexes to be built under HUD standards would reduce costs compared to building them under IBC or IRC regulations.

Degrees of Change

While the HUD code has been in existence since the 1970s, its explicit exclusion of manufactured, multifamily housing is a relatively recent development. In 2014, HUD issued a memorandum saying that only single-family housing can be built under the department's manufactured housing standards.

In a 2022 public comment on the proposed updates, the Manufactured Housing Association for Regulatory Reform argues that the 2014 memorandum was in error and that HUD actually has no regulatory authority to cap the number of units that can be built under the code.

According to the White House fact sheet, the Biden administration's proposed updates to the HUD code would once again allow up to four units of housing to be built under the code once again.

If the HUD code critics are correct, then this will make a minimal difference. Under this theory, builders would just have another cost-increasing building code to choose from. If folks like Potter are correct, however, this should allow builders to opt into less demanding regulations. We might therefore see an increase in the number of two-, three-, and four-unit homes built.

Building code liberalization will still only be effective in places where zoning code liberalization has already happened. Cities and states still have every power to zone out multifamily housing and ban the placement of manufactured housing.

Where cities have made those "missing middle" reforms, however, it's possible the White House's proposed regulatory changes will increase the production of manufactured, multifamily housing while policymakers figure out whether how to change the IBC or IRC to allow more site-built multiplexes.

If the CDC's Eviction Moratorium Was Illegal, Do the Feds Have To Pay for It?

When the Centers for Disease Control and Prevention (CDC) banned residential evictions for non-payment of rent in 2020, property owners responded with a flurry of lawsuits, arguing that the federal government owed them compensation for what amounted to a physical taking of their property.

While those lawsuits were ongoing, the U.S. Supreme Court ruled in August 2021 that the CDC moratorium was an illegal overstepping of the agency's authority.

This armed the federal government with an audacious response to all those property owners' claims for compensation: Because the CDC's eviction moratorium was illegal and lacked federal authorization, the federal government wasn't required to pay any compensation.

Incredibly, the Court of Federal Claims agreed with this argument—citing past cases that immunized the government from having to pay compensation for clearly illegal, unsanctioned acts of its agents—and dismissed a property owners' lawsuit in the case of Darby Development Co. v. United States.

But this past week, the United States Court of Appeals for the Federal Circuit sided with property owners and reversed that dismal.

The appeals court ruled that the CDC eviction moratorium, while illegal, clearly did have the endorsement of both Congress and the executive branch.

"Taken to its logical conclusion, [the government's] position is that government agents can physically occupy private property for public use, resist for months the owner's legal attempts to make them leave, and then, when finally made to leave, say they need not pay for their stay because they had no business being there in the first place," wrote Judge Armando O. Bonilla in an opinion issued earlier this month.

The case is now remanded back to the federal claims court.

"The government should not be able to hide behind its own illegality to avoid paying damages for that very illegality," Greg Dolin, a senior litigation counsel at the New Civil Liberties Alliance (which filed an amicus brief in the Darby case) told Reason.

Kamala Harris, Supply Sider?

In a speech this past Friday laying out her economic agenda, Vice President and Democratic presidential candidate Kamala Harris criticized state and local restrictions on homebuilding for driving up prices.

"There's a serious housing shortage in many places.  It's too difficult to build, and it's driving prices up. As president, I will work in partnership with industry to build the housing we need, both to rent and to buy. We will take down barriers and cut red tape, including at the state and local levels," said Harris, promising to deliver 3 million units of housing that's affordable to middle-class families by the end of her first term.

It's always refreshing to hear a politician accurately diagnose the cause of America's high housing costs as a matter of restricted supply. It's even better when politicians promise to do something about those supply restrictions. Harris' remarks are rhetorically a lot better than the explicit NIMBYism coming from Republican presidential contender Donald Trump.

Nevertheless, Harris' actual housing policies, including downpayment subsidies and rent control, will only make the problem worse. Downpayment subsidies will drive up demand and prices while leaving supply restrictions in place. Rent control has a long, long record of reducing the quality and quantity of housing.

Harris' speech was also peppered with lines attacking institutional housing investors who are providing much-needed capital for housing production.

Town's Ban on 'Green Cemetery' Is Dead

If the government doesn't like your cemetery, can it just ban all cemeteries? The answer, at least in Michigan, is no, no it can't.

In the case of Quakenbush et al v. Brooks Township et al, a state circuit court judge sided with a married couple who'd sued their local government when it passed a ban on new cemeteries with an eye toward stopping their development of the state's first "conservation burial forest."

"We're excited and feel vindicated by this ruling. We are delighted that the judge understood that Brooks Township's ordinance violated our right to use our property," said Peter and Annica Quakenbush, the plaintiffs in the case. They were represented by the Institute for Justice.

Quick Links

• Jim Burling, the Pacific Legal Foundation's vice president of legal affairs, has a new book Nowhere to Live covering the legal history of zoning in America, the courts' acquiescence to this restriction on property rights, and all the attendant consequences of high housing costs and homelessness that have flowed from it.
• A new paper published on SSRN estimates that a 25 percent reduction in permitting times in Los Angeles leads to a 33 percent increase in housing production.
• Calmatters covers the killing, or severe injuring, of various bills introduced in the California Legislature this year that aimed to pair back the California Coastal Commission's powers to shoot down new housing production. Read Reason's past coverage of the Coastal Commission here and here.
• Hawaii has legalized accessory dwelling units statewide, but they haven't made building them easy.
• If you build it, prices drop.

*UPDATED* (and still true)

When you build "luxury" new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points -- even in the lowest-priced Class C rentals. Here's evidence of that happening right now:

There are 21 U.S. markets where… pic.twitter.com/BF9GY0YiFY

— Jay Parsons (@jayparsons) August 13, 2024

The post Code Games appeared first on Reason.com.

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.

Robert F. Kennedy Jr. won applause at the Libertarian National Convention by criticizing government lockdowns and deficit spending, and saying America shouldn't police the world.

It made me want to interview him. This month, I did.

He said intelligent things about America's growing debt:

"President Trump said that he was going to balance the budget and instead he (increased the debt more) than every president in United States history—$8 trillion. President Biden is on track now to beat him."

It's good to hear a candidate actually talk about our debt.

"When the debt is this large…you have to cut dramatically, and I'm going to do that," he says.

But looking at his campaign promises, I don't see it.

He promises "affordable" housing via a federal program backing 3 percent mortgages.

"Imagine that you had a rich uncle who was willing to cosign your mortgage!" gushes his campaign ad. "I'm going to make Uncle Sam that rich uncle!"

I point out that such giveaways won't reduce our debt.

"That's not a giveaway," Kennedy replies. "Every dollar that I spend as president is going to go toward building our economy."

That's big government nonsense, like his other claim: "Every million dollars we spend on child care creates 22 jobs!"

Give me a break.

When I pressed him about specific cuts, Kennedy says, "I'll cut the military in half…cut it to about $500 billion….We are not the policemen of the world."

"Stop giving any money to Ukraine?" I ask.

"Negotiate a peace," Kennedy replies. "Biden has never talked to Putin about this, and it's criminal."

He never answered whether he'd give money to Ukraine. He did answer about Israel.

"Yes, of course we should,"

"[Since] you don't want to cut this spending, what would you cut?"

"Israel spending is rather minor," he responds. "I'm going to pick the most wasteful programs, put them all in one bill, and send them to Congress with an up and down vote."

Of course, Congress would just vote it down.

Kennedy's proposed cuts would hardly slow down our path to bankruptcy. Especially since he also wants new spending that activists pretend will reduce climate change.

At a concert years ago, he smeared "crisis" skeptics like me, who believe we can adjust to climate change, screaming at the audience, "Next time you see John Stossel and [others]… these flat-earthers, these corporate toadies—lying to you. This is treason, and we need to start treating them now as traitors!"

Now, sitting with him, I ask, "You want to have me executed for treason?"

"That statement," he replies, "it's not a statement that I would make today….Climate is existential. I think it's human-caused climate change. But I don't insist other people believe that. I'm arguing for free markets and then the lowest cost providers should prevail in the marketplace….We should end all subsidies and let the market dictate."

That sounds good: "Let the market dictate."

But wait, Kennedy makes money from solar farms backed by government guaranteed loans. He "leaned on his contacts in the Obama administration to secure a $1.6 billion loan guarantee," wrote The New York Times.

"Why should you get a government subsidy?" I ask.

"If you're creating a new industry," he replies, "you're competing with the Chinese. You want the United States to own pieces of that industry."

I suppose that means his government would subsidize every industry leftists like.

Yet when a wind farm company proposed building one near his family's home, he opposed it.

"Seems hypocritical," I say.

"We're exterminating the right whale in the North Atlantic through these wind farms!" he replies.

I think he was more honest years ago, when he complained that "turbines…would be seen from Cape Cod, Martha's Vineyard… Nantucket….[They] will steal the stars and nighttime views."

Kennedy was once a Democrat, but now Democrats sue to keep him off ballots. Former Clinton Labor Secretary Robert Reich calls him a "dangerous nutcase."

Kennedy complains that Reich won't debate him.

"Nobody will," he says. "They won't have me on any of their networks."

Well, obviously, I will.

I especially wanted to confront him about vaccines.

In a future column, Stossel TV will post more from our hourlong discussion.

COPYRIGHT 2024 BY JFS PRODUCTIONS INC.

The post RFK Jr. Pays Lip Service to the Debt While Pushing Policies That Would Increase It appeared first on Reason.com.

Bryan Caplan's guest-blogging stint has come to an end. We thank Bryan for his excellent contributions to the blog!

Here is a listing of his posts about his book Build, Baby, Build: The Science and Ethics of Housing Regulation. I myself also wrote a post introducing Bryan and the book.

1."Trillions"

2. "*Build, Baby, Build*: My Most Inexcusable Omission"

3. "The YIMBY Napkin"

4. "*Build, Baby, Build*: Responses to the Best Objections"

I think my forthcoming Texas Law Review article, "The Constitutional Case Against Exclusionary Zoning" (coauthored with Josh Braver), in some ways serves as a complement to Bryan's book. In the book, Bryan suggests that judicial review is "probably the best shot [at] radical housing deregulation," but doesn't elaborate further. Braver and I explain how such judicial intervention can happen, and why it should be done.

The post Compendium of Bryan Caplan's Guest-blogging Posts on His New Book "Build, Baby, Build: The Science and Ethics of Housing Regulation" appeared first on Reason.com.

Suppose, then, that cities embraced housing deregulation. Construction booms, prices fall, and — since cities have the strictest regulation — the national population urbanizes. Won't the new arrivals assimilate to their new Democratic political culture, moving the entire United States in a leftist direction?

My honest answer is: It's complicated. I can't find a single academic article that even tries to study this effect. (If you know of any, please share in the comments).

What's clear is that a lot of the correlation between location and politics reflects reverse causation. To a large degree, leftists are more likely to live in cities because they like cities. Rightists do the opposite because they feel the opposite. Steve Landsburg won't like the wording of the 2014 survey question below, but it captures a meaningful attitudinal difference.

3. Despite these reservations, I suspect that the observed correlation between where you live and what you think about politics is partly causal. Even here, however, the mechanism matters. The default causal story is sheer conformism; or, in social science jargon, "peer effects." Humans crave the approval of nearby humans; imitation is proverbially the sincerest form of flattery; and flattery causes approval. Ergo, being around leftists normally causes you to become more left-wing, and being around rightists normally causes you to become more right-wing.But if conformism is the mechanism of political conversion, mass migration of non-leftists into newly-affordable cities is a double-edged sword. The leftist natives make the migrants more leftist, but the non-leftist migrants simultaneously make the natives less leftist. Net effect on average political orientation: unclear.By analogy, admitting non-Mormons to Brigham Young University probably causally makes them more likely to convert to Mormonism. But if BYU admitted a 50% non-Mormon student body, this would probably also causally turn many Mormons into ex-Mormons. Net effect of the non-Mormon migration on BYU's average religious affiliation: unclear.

   One last political point: Partisan Democrats in safely blue states and partisan Republicans in safely red states both have a strong reason to favor housing deregulation: the electoral college. Unless migration actually flips your state's presidential vote, anyone who prioritizes national politics should hope to attract out-of-state migrants from the other party. This is clearest for California: Due to its famously wonderful weather, much cheaper housing would plausibly attract millions of Republicans, swelling California's population and therefore its electoral vote count. If the migrants come from nearby swing states, even better.

The post *Build, Baby, Build*: Responses to the Best Objections appeared first on Reason.com.

Rent control is having something of a moment: In Los Angeles, tenants are invoking a law that imposes limits on apartments built on sites where rent-controlled units previously stood. A new rent control ordinance went into effect last month in the Bay Area city of Concord, California. Phillipsburg, New Jersey is considering similar restrictions. And, importantly, the Biden administration recently moved to cap rent hikes in some federally subsidized housing across the entire country.

But reviving bad policy doesn't make it less dumb than it was in past incarnations.

Affordable Housing Comes at a High Price

"The Biden administration moved this week to limit how much rent can rise in certain affordable housing units across the country," CNBC's Annie Nova noted April 3. "The cap applies to units that receive funding from the Low-Income Housing Tax Credit, the nation's largest federal affordable housing program, according to experts. The National Low-Income Housing Coalition estimates that around 2.6 million rental homes across the U.S. have current LIHTC rent and income restrictions."

Tenant advocates applauded the move, but it drew criticism, too.

"While well‐​intentioned, rent control fails to achieve its primary goal of improving housing affordability for the poor and disadvantaged," economists Jeffrey Miron and Pedro Aldighieri respond in a piece published by the Cato Institute. "In fact, it often generates unintended consequences that exacerbate the very problems it seeks to solve."

They point out that restricting the price of housing discourages owners from maintaining and improving their property. It can also make it attractive for landlords to pull apartments from the rental market and put them up for sale as owner-occupied dwellings. Those enjoying deals on housing costs might also find themselves in the equivalent of golden handcuffs.

"Tenants in rent‐​controlled units become less mobile to avoid losing access to below‐​market rents," add Miron and Aldighieri.

The authors point to studies finding that rent control has reduced the supply of rental housing in communities as far apart as Cambridge, Massachusetts, and San Francisco. In fact, the use of the City by the Bay to illustrate the failures of rent control has a long history. It was the example offered by Milton Friedman and George Stigler in Roofs or Ceilings?, a 1946 essay on rent restrictions published by the Foundation for Economic Education and recently resurfaced on X by the author Amity Shlaes.

A Tale of Two Housing Crunches

Discussing the effects of the infamous April 18, 1906 earthquake, Friedman and Stigler pointed out that "a city of about 400,000 people lost more than half its housing facilities in three days." In the weeks that followed, people left the city, temporary shelters went up, and construction crews swiftly got to work.

"When one turns to the San Francisco Chronicle of May 24, 1906—the first available issue after the earthquake—there is not a single mention of a housing shortage!" they write. "The classified advertisements listed 64 offers (some for more than one dwelling) of flats and houses for rent, and 19 houses for sale, against 5 advertisements of flats or houses wanted. Then and thereafter a considerable number of all types of accommodation except hotel rooms were offered for rent."

Friedman and Stigler contrasted this to the post-war situation in 1946, when "the city was being asked to shelter 10 percent more people in each dwelling unit than before the war"—a less acute situation than the one faced in 1906. But the result in 1946 was very different from that faced 40 years earlier.

"During the first five days of the year [in 1946] there were altogether only 4 advertisements offering houses or apartments for rent, as compared with 64 in one day in May 1906."

That's because, faced with a sudden mismatch between supply and demand, people decades apart chose very different ways of "rationing" housing stock.

"In 1906, the rationing was done by higher rents," wrote Friedman and Stigler. "In 1946 the use of higher rents to ration housing has been made illegal by the imposition of rent ceilings, and the rationing is by chance and favoritism." Higher rents in 1906 spurred people to build quickly and to efficiently use available space. Restricted prices in 1946 offered no such incentives, so housing remained hard to find.

That would have been a hard-learned lesson—had it been learned at all. But it wasn't.

Lessons Unlearned

Decades later, the 2019 study cited last month by Miron and Aldighieri looked at a 1994 law change in San Francisco that suddenly extended rent control to housing constructed before 1980. Sure enough, tenants benefiting from controlled rents became less likely to move, while landlords subject to restrictions converted their properties to condos and co-ops or redeveloped them to escape regulation.

Rent controls "reduced the supply of available rental housing by 15 percent," the study concluded. "This reduction in rental supply likely increased rents in the long run." Contrary to housing activists' intentions, "the conversion of existing rental properties to higher-end, owner-occupied condominium housing ultimately led to a housing stock increasingly directed toward higher income individuals."

So much for the magical benefits to the poor of price controls on housing. But, despite bitter experience of the ill-effects of rent controls, restricting the price that landlords can charge tenants for use of their property remains popular. Whether it's the Biden administration or local politicians in California, New Jersey, and elsewhere, a policy that pretends to make homes affordable is a very visible way of demonstrating concern for low-income families—even if it's completely counterproductive.

By contrast, the productive approach—getting out of the way—isn't so headline-ready.

"The most sustainable and effective way to promote affordable rents is to enable new construction by deregulating zoning, land use, and building requirements," write Miron and Aldighieri. "Such policies make development cheaper and supply more responsive to prices, keeping rents in check."

Unfortunately, leaving the market free to match supply and demand for housing—or anything else—may meet human needs, but it doesn't make for feel-good press releases. So, government officials continue to offer rent control as a solution to housing woes. And economists have endless opportunities to explore why restricting prices still fails to make housing affordable.

The post Rent Control Remains the Wrong Solution to Housing Woes appeared first on Reason.com.

The most significant factor inhibiting the construction of new housing in the United States—resulting in severe housing shortages in many areas—is exclusionary zoning. But a new study suggests immigration restrictions contribute to the problem, by reducing the supply of workers. Here's the abstract to the paper by Eeconomists Troup Howard, Mengqi Wang, and Dayin Zhang:

US housing markets have faced a secular shortage of housing supply in the past decade, contributing to a steady decline in housing affordability. Most supply-side explanations in the literature have tended to focus on the distortionary effect of local housing regulations. This paper provides novel evidence on a less explored channel affecting housing supply: shortages of construction labor. We exploit the staggered rollout of a national increase in immigration enforcement to identify negative shocks to construction sector employment that are likely unrelated to local housing market conditions. Treated counties experience large and persistent reductions in construction workforce, residential homebuilding, and increases in home prices. Further, evidence suggests that undocumented labor is a complement to domestic labor: deporting undocumented construction workers reduces labor supplied by domestic construction workers on both extensive and intensive margins.

The basic idea here is fairly intuitive Economics 101: immigrants—including undocumented immigrants—are an important part of the construction work force. Reducing the number of available workers increases the price of construction, and thereby reduces output.

More counterintuitive is the finding that reducing the number of undocumented construction workers also reduces employment for native workers. But, as the authors point out, this can occur when native-born and immigrant workers in the industry are complements, rather than substitutes. Previous studies document such effects in other industries, and it can occur in this one, too. The authors' findings are consistent with recent work by noted immigration economist Michael Clemens showing that mass deportation—on net—reduces job opportunities for native workers more than it expands them.

Obviously, as the authors recognize, immigration can also increase demand for housing, thereby increasing prices. Similarly, deporting immigrants (or any other group) can reduce demand, thereby lowering prices. But the authors show this effect is outweighed by the ways in which deportation reduces supply, thereby leading to a net increase in housing prices when more immigrants get deported. This makes intuitive sense: allowing in a group that is disproportionately represented in the housing construction industry can result in sufficient new construction to both meet the extra demand created by that group, and also build additional new housing for others.

None of this proves that immigrant workers never displace native-born ones (or vice versa). Similarly, immigrants can sometimes outbid natives for housing (and, again, vice versa). But, on net, the two groups benefit each other economically far more than the reverse. That appears to be true in the housing sector, as in the economy more generally.

If this seems implausible, consider the impact on white males of allowing more women and minorities to compete on a more equal basis in the labor force in the twentieth century.  I summarize this comparison in my last post on the impact of deportation:

One helpful way to think about the issue is to ask whether the twentieth-century expansion of job market opportunities for women and blacks helped white male workers, on net, or harmed them. Some white men likely were net losers. If you were a marginal white Major League Baseball player displaced by Jackie Robinson or other black baseball stars after MLB was integrated, it's possible that you would never find another job you liked as much as that one. But the vast majority of white men were almost certainly net beneficiaries by virtue of the fact that opening up opportunities for women and blacks greatly increased the overall wealth and productivity of society.

If, today, we barred women from the labor force, or restricted them to the kinds of jobs open to them a century ago, some male workers would benefit….

But, overall, men would be much poorer, by virtue of living in a far less productive and innovative society. And many men would lose jobs or suffer decreases in wages because their own productivity depends in part on goods and services produced by women….

Similar consequences would occur if we were to reinstitute racial segregation, thereby severely restricting the job opportunities of black workers. While some whites would come out ahead, most would be net losers, as our economy becomes much less productive.

The key point to remember is that the economy—including the labor market—is not a zero-sum game. Men and women, blacks and whites—and immigrants and natives—can all prosper together, if only the government would let them.

The post How Immigration Restrictions Reduce Housing Construction and Exacerbate Shortages appeared first on Reason.com.

What do the state's insurance and housing crises have in common? Obviously, homeowner policies have an impact on housing costs, but I'm referring to something different, namely the concept of open-ended risk. Insurers are exiting the market because state policies limit their ability to price policies to reflect the risk of a major wildfire season. They rather pull out of California than risk the destruction of their assets.

I'd argue the same thing is happening in the rental market, thanks to a fusillade of pro-tenant laws that subject landlords to an incalculable level of risk. Landlords have freely entered the business and understand the various ups and downs. They can calculate the costs of mortgages, taxes, insurance, and maintenance. They expect to, say, replace carpets and paint between tenants. They know the cost of the eviction process in those instances where it's necessary.

But the Legislature's anti-property-rights crusade—done in the name of protecting tenants in a tight housing market—has not only increased those easily calculated costs, but also the costs that are potentially devastating. It's one thing to realize it might require x-number of legal fees to remove a bad tenant and quite another to wrap one's head around the possibility of someone staying in a rent-controlled unit forever.

And it's impossible to calculate the emotional drain of, say, fighting with highly sophisticated squatters who have illegally moved into your temporarily vacant home, exerted some right—and are going to strip the place to its studs while you scurry for a legal remedy. I know plenty of would-be landlords who wouldn't dream of renting out their home for those reasons. Most mom-and-pop landlords I know are discussing an exit strategy.

That's reducing needed rental inventory. Why does San Francisco, which has some of the strictest tenant laws in the country, have 52,000-plus vacant rental units? Some of the explanations are ordinary (units are in process of renovation or are on the market), but a major one often is overlooked—especially by city politicians who recently passed an Empty Homes Tax that essentially blames property owners for the situation.

Many owners are afraid if they let strangers rent their units they'll never be able to reclaim them. They rather forego $3,300 a month in rent than take that potentially devastating risk. That's because the risk is not calculable. Investors can navigate their way around costs they understand (extra property taxes, higher insurance rates) but will exit if the risks are too high.

We've seen the news stories. Someone moves into a short-term rental then refuses to leave. In Oakland, a group of organized homeless women commandeered a vacant house. In Los Angeles, alleged squatters turned an empty mansion into a party house. If housing is a "human right," then owners no longer have a right to their property.

The number of incidents has soared, so much so that one entrepreneur has started a business helping landlords retake their own properties. In a sane society, no one should have to worry about this. Other states have passed (or are considering) laws to expedite the removal of these home invaders, but California requires an overly drawn-out process, leaving owners at the mercy of progressive judges.

Does that situation make you more or less likely to invest in rental properties? What's your tolerance for risk? Same questions regarding Assembly Bill 2216 by Matt Haney (D–San Francisco) that's moving through the Legislature. It requires landlords to accept pets and forbids them from charging extra rent or security deposits. Landlords can expect obvious costs (carpet cleaning, various repair costs), but they can't calculate the less-obvious ones.

The landlords would not be allowed to ask tenants if they plan to have a household pet until after they've accepted the application. They would be allowed to impose "reasonable conditions" on the pets, but "reasonable" is ill defined. For instance, the bill refers to "common household pets" but is not limited to cats and dogs. Apparently, that means a tenant could have large aquariums with heat lamps that can cause incredible damage. There's no limit (beyond local ordinances) on the number of pets. It keeps owners from dealing with tenant pet disputes.

Sure, the Assembly analysis explains that a "reasonable condition" includes the right to limit potentially dangerous pets, but it does not allow a prohibition based on breeds, such as Pit Bulls and Rottweilers. Yet insurers typically use a list of potentially vicious breeds that they forbid owners from allowing. If a landlord allows such a breed and it mauls a neighbor, the landlord won't be covered. If this bill becomes law, lawmakers will force landlords to accept an unlimited amount of risk.

I love pets, but don't be surprised when landlords exit the business and invest their money into, say, a mutual fund that doesn't bite toddlers or call them about unplugging a clogged toilet.

This column was first published in The Orange County Register.

The post California Is Trying To Drive Landlords Out of Business appeared first on Reason.com.

UPDATE: This event has been postponed till September, for scheduling reasons. I will post the new date and time when it is set.

Note: I am reposting this in order to include the registration link.

On April 23, the Schar School of Policy and Government at George Mason University will hold an event on "Solving the Nation's Housing Shortage." I will be speaking along with economist Bryan Caplan (George Mason University), author of Build, Baby, Build: The Science and Ethics of Housing, and Jerry Howard, former Director of the National Association of Home Builders. Bryan will discuss his book,  which addresses the causes of the housing crisis, and potential solutions. I will speak about how exclusionary zoning—the most significant cause of our housing shortage—violates the Takings Clause of the Fifth Amendment, and how judicial review can help address the problem. These issues are covered in greater detail in my forthcoming Texas Law Review article on exclusionary zoning (coauthored with Josh Braver).

The event is free and open to the public. Here is the time and address:

12-1 PM, Schar School of Policy and Government, George Mason University, Van Metre Hall, Rm. 111, 3351 Fairfax Dr., Arlington, VA

You can register at this link.

The post Upcoming Event on "Solving the Nation's Housing Shortage" [update] appeared first on Reason.com.

A San Marcos, Texas, couple would like to remove a reference to a Ku Klux Klan supporter from the front of their home, but the local historic preservation board has said no dice.

The reference in question is a large metal "Z" bolted to a wrought iron Juliette balcony on the front of Kristy Kay Money and Rolf Jacob Sraubhaar's house in San Marcos' Burleson Historic District.

That "Z" is the initial of the home's owner and builder, Frank Zimmerman, a prominent local businessman and owner of the city's downtown historic theater who served as San Marcos mayor from 1949 to 1951.

Zimmerman also has ties to the Ku Klux Klan. His theater hosted Ku Klux Klan days and screenings of Birth of a Nation.

Given this legacy, Money and Sraubhaar decided they wanted to remove the balcony and its large "Z" from the front of their home.

But because their home is in a historic district, although not a historic structure itself, the couple needed to get the sign-off of San Marcos' Historic Preservation Commission to alter its façade. In May 2023 the commission voted unanimously to deny their application to remove the balcony from the front of the house.

In response, Money and Sraubhaar sued San Marcos in federal court, arguing that the city's refusal to let them remove the balcony and initial is an uncompensated physical taking in violation of the Fifth and 14th Amendments and an unconstitutional exercise of police powers under the Texas Constitution.

"It's an occupation of property for a public benefit. It's for an alleged public purpose, in this case, the people on the design review board want to look at it. So, we think that's a taking," says Chance Weldon, a lawyer with the Texas Public Policy Foundation, which is representing the couple.

In response, San Marcos filed a motion to dismiss the case, primarily arguing that Money and Sraubhaar should first have to appeal their case to the city's Zoning Board of Adjustment before taking their case to court.

The U.S. District Court for the Western District of Texas Austin Division is currently considering the case.

"We think it's wholly un-American that if you want to change something to the aesthetic of your property, you have to get sign-off from a board of unelected bureaucrats based on what they think looks right," Weldon tells Reason.

The post Historic Preservation Board Stops Family Removing KKK Supporter's Initial From Front of their House appeared first on Reason.com.

Feisty Joe: I am glad Joe Biden seemingly took a lot of Adderall before delivering his State of the Union address, since it made him look alive. The only downside was that the actual policies he talked up were all terrible.

Overall, the speech seemed like a campaign event in more ways than one. Biden repeatedly called out "my predecessor" without criticizing Trump by name, and brought up issues like January 6, as well as Republicans' inability to pass legislation. Biden said Trump's "bowing down" to Vladimir Putin is "outrageous," as well as "dangerous" and "unacceptable" (paired with a call for more Ukraine funding, natch). There was a fair amount of heckling in the chamber throughout, and Biden himself was feisty and confrontational. The decorum of previous addresses was conspicuously absent last night. (And Biden's opponent resorted to, uh, predictably juvenile artistic rebuttals.)

As for actual substance, Biden spent a fair chunk of time "proposing temporary tax credits of $400 a month to compensate for high mortgage rates and the end of title insurance fees for federally backed mortgages," per Reason's Christian Britschgi. The White House circulated more info about this plan, which would "increas[e] the number of tax credits available for low-income housing developers" and create "a $20 billion competitive grant program that would directly fund affordable apartments." All of these are odd, expensive fixes for the actual problem, which is low housing supply that could be fixed by zoning reform and reducing the political power of NIMBY activists.

Biden also devoted a few lines to making the wealthy pay their "fair share," specifically claiming that "working people who built this country pay more into Social Security than millionaires and billionaires do."

"Under current law, the payroll tax that funds Social Security is capped so that, for this year, only the first $168,600 in earnings are subject to it," writes Reason's Eric Boehm. "Raising that cap—or eliminating it—is frequently discussed as one possible solution to Social Security's approaching insolvency. That seems to be the idea that Biden was gesturing towards in his speech." But this solution, clothed in eat-the-rich rhetoric, would not come anywhere close to fixing the actual Social Security funding issues and would involve a massive tax increase on the many people who make more than $168,600 in earnings.

"Too many corporations raise prices to pad their profits charging more for less," said Biden at one point, referring to what he calls "shrinkflation" and calling out candy bars and bags of chips as an example of this. "The snack companies think you won't notice if … same size bag, put fewer chips in it," he added. Not only is this comically unserious, but it's also insulting to Americans struggling with inflation and high grocery costs—no amount of blameshifting should distract from the fact that COVID-era stimulus spending (from both presidents) led to inflation, which has led to interest rate hikes to tame that inflation, which has thankfully not created a severe recession but has certainly led to a lot of budgetary pain for normal Americans. 

Proportionate response: "If you ban TikTok, I will kill myself," one constituent caller told a House GOP office, according to Politico. Right now, members of the House are weighing moving forward on legislation that could possibly result in a TikTok ban for U.S. users within the next six months.

TikTok is owned by the Chinese company ByteDance. The legislation, which advanced out of committee with an impressively unanimous vote, "creates a narrow process to let the executive branch prohibit access to an app owned by a foreign adversary if it poses a threat to national security," per the Associated Press, in addition to forcing ByteDance to sell TikTok so it can continue to be accessible to American users.

"If you actually read the bill, it's not a ban. It's a divestiture," Rep. Mike Gallagher (R–Wis.), cosponsor of the TikTok bill, told Politico. In fact, the decision is "squarely in the hands of TikTok to sever their relationship with the Chinese Communist Party." If the U.S. version is sold to a non-Chinese company, "TikTok will continue to survive."

Scenes from New York: "They're gonna hang out in Whole Foods," complains one New Yorker about a migrant shelter proposal that would place recent border-crossers in Gowanus, Brooklyn. (From now on, I will point to this stupid quote when people ask why I abandoned Brooklyn in favor of Queens.)

QUICK HITS

• All about Opill, the first over-the-counter birth control pill that the Food and Drug Administration has approved.
• "A congressional probe of Chinese-built cargo cranes deployed at ports throughout the U.S. has found communications equipment that doesn't appear to support normal operations, fueling concerns that the foreign machines may pose a covert national-security risk," reports The Wall Street Journal. "The installed components in some cases include cellular modems, according to congressional aides and documents, that could be remotely accessed."
• Preliminary data out of Los Angeles suggests that AI is 3.5 times better than social workers at predicting who will become homeless.
• God bless Hawaii: land of poke bowls, hula girls, and the appropriate amount of political disillusionment.

Wow. 29% for uncommitted in the final Hawai'i tally. pic.twitter.com/VMMsu1hX3S

— Read Let This Radicalize You (@JoshuaPHilll) March 7, 2024

• British author J.K. Rowling has been reported to the police for misgendering a trans person. Her thread about free speech is incredible, and ends with this delightful nugget:

Aware as I am that it's an offence to lie to law enforcement, I'll simply have to explain to the police that, in my view, India is a classic example of the male narcissist who lives in a state of perpetual rage that he can't compel women to take him at his own valuation. 5/5

— J.K. Rowling (@jk_rowling) March 6, 2024

The post State of the Union (on Stimulants) 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.

America's high housing costs got a brief shout-out in President Joe Biden's State of the Union address tonight, with the president mostly proposing policies that would subsidize demand of this heavily supply-constrained good.

"I know the cost of housing is so important to you. If inflation keeps coming down mortgage rates will come down as well. But I'm not waiting," said Biden, proposing temporary tax credits of $400 a month to compensate for high mortgage rates and the end of title insurance fees for federally backed mortgages.

In addition, Biden proposed cracking down on the price fixing of big landlords and urged Congress to pass his plan to build or renovate 2 million affordable homes.

That housing policy got a shout-out at all in a State of the Union address is somewhat rare, despite housing being the largest line item in most Americans' budgets. Regrettably, most of the policies Biden proposed would do little to address the cause of high housing costs and could make the problem worse.

Higher rents and home prices are a natural consequence of local and state zoning laws, labyrinthine approval processes, federal restrictions on mortgage financing, and environmental reporting laws, to name a few.

All these laws limit the supply of new housing, which drives up the price for any given level of demand. That's a diagnosis the Biden administration itself has endorsed in various housing briefs and "action plans."

Despite that insight, the president's proposals to subsidize home buying will, all else equal, increase demand while leaving supply constraints in place. That will only raise prices further. People who claim new federal subsidies will be no better off. Anyone who misses out on the subsidies will be worse off.

Biden's proposal to crack down on price-fixing landlords is likely a reference to the hot new idea that landlords are illegally colluding on rents by paying for third-party algorithms that propose market-clearing maximum rents.

The Federal Trade Commission and the Department of Justice released a memo earlier this month saying that this could be illegal, without offering any clear guidance on when it would actually be illegal.

Even property owners who set their rents below whatever a third-party algorithm recommends could still be guilty of price fixing.

"Even if some of the conspirators cheat by starting with lower prices than those the algorithm recommended, that doesn't necessarily change things. Being bad at breaking the law isn't a defense," read the memo. One shouldn't expect this garbled threat to do much to move the needle on rents.

In his remarks tonight, Biden didn't elaborate much on the policy he proposed to increase actual housing supply, his plan to build or renovate 2 million affordable homes.

A White House fact sheet circulated earlier today provides a little more detail. The plan, such as it is, would involve increasing the number of tax credits available for low-income housing developers—something the tax bill approved by the House and being considered by the Senate would do.

The White House fact sheet also calls for creating a $20 billion competitive grant program that would directly fund affordable apartments, "pilot innovative models" for affordable housing production, and, more interestingly, "incentivize local actions to remove unnecessary barriers to housing development."

When it comes to housing funding, $20 billion is a lot of money. It's nearly a third of the current budget for the U.S. Department of Housing and Urban Development.

As part of its existing "housing supply action plan," the Biden administration has allegedly retooled a number of federal transportation grant programs to incentivize local zoning changes. As I've written, that doesn't seem to have made much of an impact on where those grants go. San Francisco, the nation's beating heart of anti-development regulations, got one of the largest grant awards from one of these supposedly retooled programs.

Congress has also passed a smaller, $85 million "baby YIMBY" grant program more focused on paying local governments to change their zoning rules. Here too, the language of the grant program (and the applications it's received thus far from localities) suggests it will end up being more of a subsidy for routine planning work than a powerful incentive for liberalizing zoning laws.

Given the difficulty state governments have had trying to prod local governments into being more pro-housing with explicit zoning preemptions, I'm skeptical of how much federal carrots can do here.

Perhaps the best thing the president can do for zoning reform is to use his bully pulpit to argue for it. Biden had an opportunity to do that tonight, and he didn't take it. It was a missed opportunity.

The post Biden's Plan To Subsidize Homebuyers Won't Work appeared first on Reason.com.

America is celebrated for its economic dynamism and ample and generously paid employment opportunities. It's a nation that attracts immigrants from around the world. Yet Americans are bummed, and have been for a while. They believe that life was better 40 years ago. And maybe it was on some fronts, but not economically.

Surveys repeatedly demonstrate that Americans view today's economy in a negative light. Seventy-six percent believe the country is going in the wrong direction. Some polls even show that young people believe they'll be denied the American dream. Now, that might turn out to be true if Congress continues spending like drunken sailors. But it certainly isn't true based on a look back in time. By nearly all economic measures, we're doing much better today than we were in the 1970s and 1980s—a time most nostalgic people revere as a great era.

In a recent article, economist Jeremy Horpedahl looked at generational wealth (all assets minus all debt) and how today's young people are faring compared to previous generations. His findings are surprising. After all the talk about how Millennials are the poorest or unluckiest generation yet, Horpedahl's data show them with dramatically more wealth than Gen Xers had at the same age. And this wealth continues to grow.

What about income? A new paper by the American Enterprise Institute's Kevin Corinth and Federal Reserve Board's Jeff Larrimore looks at income levels by generation in a variety of ways. They find that each of the past four generations had higher inflation-adjusted incomes than did the previous generation. Further, they find that this trend doesn't seem to be driven by women entering the workforce.

That last part matters because if you listen to progressives and New Right conservatives, you might get a different story: that today's higher incomes are only due to the fact that both parents must now work in order for a family to afford a middle-class lifestyle. They claim that supporting a family of four on one income, like many people did back in the '70s and '80s, is now impossible. Believing this claim understandably bums people out.

But it's not true. One of its many problems, in addition to the data evidence provided by Corinth and Larrimore, is that it mistakenly implies that single-income households were the norm. In fact, as early as 1978, 50 percent of married couples were dual earners and just 25.6 percent relied only on a husband's income. I also assume that there are more dual-income earners now than there were in the '80s. While this may in fact be true for married couples (61 percent of married parents are now dual-earners), because marriage itself has declined, single-earner families have become relatively more common.

Maybe the overall morosity on the economy has to do with the perception that it's more expensive to raise a family these days than it used to be. Another report by Angela Rachidi looks at whether the decline in marriage, fertility, and the increase in out-of-wedlock childbirths are the result of economic hardship. She finds that contrary to the prevailing narrative, "household and family-level income show growth in recent decades after accounting for taxes and transfers." Not only that, but "the costs of raising a family—including housing, childcare, and higher education costs—have not grown so substantially over the past several decades that they indicate an affordability crisis."

So, what exactly is bumming people out? We may find an answer in the 1984 Ronald Reagan campaign ad commonly known as "Morning in America." It begins with serene images of an idyllic American landscape waking up to a new day. It features visuals of people going to work, flags waving in front of homes, and ordinary families in peaceful settings. The narrator speaks over these images, detailing improvements in the American condition over the past four years, including job creation, economic growth, and national pride.

I believe this feeling is what people are nostalgic about. It seems that they are nostalgic about a time when America was more united and it was clearer what being American meant. Never mind that this nostalgia is often based on an incomplete and idealized memory of an era that, like ours, was not perfect.

This is a serious challenge that we need to figure out how to address. One thing that won't help, though, is to erroneously claim that people were economically better off back then and call on government to fix an imaginary problem.

COPYRIGHT 2024 CREATORS.COM.

The post The Economy Is Doing Way Better Than Many Believe appeared first on Reason.com.

ST. LOUIS—Rich LaPlume, 58, cracks his knuckles and leans back against a chipped door frame in the basement of St. Lazare House—a St. Louis community home for homeless youth with a history of mental illness. Taped to the wall behind him is a series of brightly colored motivational posters, with slogans like "I AM A FIGHTER" and "BELIEVE IN YOURSELF."

"When you're homeless and are dealing with a mental health condition, you lack so much more than a home," he tells me. "It's so hard to get on your feet, and you need so much support. And for so long, this population has been invisible. That's a problem." Around 30 percent of homeless individuals nationwide suffer from a mental health condition—a statistic St. Lazare aims to combat.

Yet LaPlume has problems of his own to worry about. As director of St. Lazare House, he has spent six years overseeing the full financial process of running the home, including the renewal of contracts and leases, the coordination with mental health care providers, and the allocation of grant money. Thanks to LaPlume and his team's programming, over 60 youth have been given a new life free from chronic homelessness.

But despite all of his hard work, as of this November, St. Lazare House is $155,000 in debt.

The problem, LaPlume tells me, isn't St. Lazare's, which by all measures is an exceptional success—offering stable housing to homeless St. Louisans, plus free mental health care and life coaching, all while maintaining nearly a 100 percent retention rate of its residents. Rather, the problem lies with the St. Louis office of the U.S. Department of Housing and Urban Development (HUD), which failed to process St. Lazare's grant renewal in time for its upcoming fiscal year, which started May 1, 2023. Since then, St. Lazare has been forced to pile up thousands in debt while awaiting reimbursement from the city, which the HUD office could not guarantee it would provide.

But the city failed to renew St. Lazare's annual contract in time. The deadline for renewal from the city was November 1, but due to even more bureaucratic backlogging, St. Lazare's contract wasn't ready. Until they received their contract back from the city, St. Lazare couldn't apply for reimbursement for the lost grant money, and were left to fall deeper into debt while they waited. Just recently, they were informed the reimbursement money wasn't coming.

Left without essential funding, St. Lazare has been forced to rely on savings to pay their lease. LaPlume laments, "It is because of the city of St. Louis that we are able to exist. And yet, St. Louis is our own worst partner."

This isn't just St. Lazare's story. St. Lazare House is one of many nonprofits nationwide suffering from dilatory allocation of federal grant money for the homeless. Most of the funding for homelessness organizations comes from the U.S. Department of Housing and Urban Development's "Continuum of Care" grant program, which allocates funding to states for coordinated housing programs for homeless adults and children. Each year, the federal HUD sends around $3 billion to states in grant funding for distribution to their homelessness organizations.

Yet every year, millions of dollars are sent back.

In 2022, the Office of the Inspector General (OIG) published an audit of Continuum of Care grantee spending levels—examining why, despite skyrocketing national homelessness, large portions of HUD grant money were left unspent. The findings were catastrophic. Between 2017 and 2020, OIG found that $454 million in Continuum of Care funding had gone unspent, or 9 percent of the program's total funding. Of those millions, $257 million had since been recaptured by the federal government during the period of the study. The rest was still missing.

How, amid a pervasive homelessness crisis affecting over half a million Americans, with the power to destroy the livelihood of major cities, can half a billion dollars in funding go unspent?

I ask LaPlume what happened to the missing HUD funds for St. Lazare, and how much the St. Louis city government had lost. His eyes light up: "You won't believe this." He pulls out his phone and dials the number for Shanna Nieweg, a woman he calls his "sister from another mister." Nieweg is the executive director of Horizon Housing Development Company, a homelessness nonprofit just down the street from St. Lazare.

Nieweg picks up immediately, and after a few sentences of prompting from LaPlume, she is rolling off numbers: From 2016 to 2019, the most recent period measured, St. Louis sent back $2.2 million in HUD Continuum of Care funding. This number jumps to roughly $2.7 million when including returned funds for planning grants—a sum greater than the four-year HUD budgets for both St. Lazare and Horizon Housing combined. For a city like St. Louis, with a homeless population of 1,100, the impact of this foregone money would be more than significant.

For community homelessness leaders like Nieweg and LaPlume, this bureaucratic ineptitude is personal. At 11:15 p.m. on October 2, St. Louis police entered a major homeless encampment near City Hall and ordered its residents to either clear out by midnight or be arrested. Images of the scene show armed police entering with flashlights and ordering confused and crying residents out of their tents. "They came in the middle of the night so they wouldn't be seen," LaPlume says. After a heated encounter with activists, the police abandoned the project around 1:30 a.m., telling the residents they could remain for the night. But the city's homelessness workers haven't forgotten.

LaPlume recalls quietly, "It was one of the most inhumane things I've ever seen in my life."

For the city's homelessness leaders, the financial waste and hasty dealings with encampments are a symptom of failed bureaucratic leadership. Even amid hard work and shrewd leadership, the disarray of city grant allocation and contracting can set local homelessness organizations up for failure. The problems in St. Louis, when compared to major West Coast cities like Los Angeles or Seattle, are relatively small: A journalist with the Los Angeles Times found nearly $150 million in federal homelessness funding for Los Angeles was returned from 2015 to 2020, as street camping exploded and the city's homeless population soared to over 40,000.

The investigators in the federal HUD audit probed into how and why federal grant money goes unspent in such massive proportions across the country. Their main finding was a number of issues in the tracking and monitoring of grantee spending. In the absence of clear and well-defined spending procedures for states and localities, they concluded, money is returned—or lost. They also noted the difficulty for grantees in finding affordable housing for their homeless—though affordable housing developers charge city governments with excessive bureaucratic red tape holding them back.

Unlike other agencies jostling for money in Washington, the Department of Housing and Urban Development struggles to spend enough. Halting its efforts at homelessness relief is a crisis of bureaucratic backlogging that withholds grant money from organizations in desperate need—not only setting such organizations up for failure but also forcing their home cities to seek out hasty and underfunded solutions to their housing crises. Funding for HUD is increasing next year by $116 million to cover funding increases for HUD homelessness assistance grants. But until HUD fixes its bureaucracy problem, it's unclear what effect the increase will have.

For now, organizations like St. Lazare that depend on HUD funds as a lifeline have no choice but to plow ahead. Many survive the bureaucratic chaos by working together, as do LaPlume and Nieweg. But even then, there are factors out of their control that threaten to shut them down. I ask LaPlume how he deals with all the uncertainty.

He responds, "We've been dealing with this for all our life. But everyone deserves a place to call a home and a stake in their community. So we're going to fight to keep them housed. No matter what."

The post The Feds Give States Millions To Fix Homelessness, but States Are Sending It Back appeared first on Reason.com.

In recent months, many politicians and media outlets have focused on the "migrant crisis" in various cities, supposedly caused by the arrival of large numbers of asylum seekers. Many of these migrants cannot support themselves, and end up taking up shelter space or living on the streets. In a recent Atlantic article (unfortunately, paywalled), Jerusalem Demsas explains why the supposed crisis is in reality a product of flawed government policies, rather than migration, as such:

When the mayor of New York, of all places, warned that a recent influx of asylum seekers would destroy his city, something didn't add up.

"I said it last year when we had 15,000, and I'm telling you now at 110,000. The city we knew, we're about to lose," Eric Adams urged in September. By the end of the year, more than 150,000 migrants had arrived. Still, the mayor's apocalyptic prediction didn't square with New York's past experience. How could a city with more than 8 million residents, more than 3 million of whom are foreign-born, find itself overwhelmed by a much smaller number of newcomers?

In another legendary haven for immigrants, similar dynamics were playing out. Chicago has more than 500,000 foreign-born residents, about 20 percent of its population, but it has been straining to handle the arrival of just 35,000 asylum seekers in the past year and a half. Some people have even ended up on the floors of police stations or in public parks. Mayor Brandon Johnson joined Adams and a handful of other big-city mayors in signing a letter seeking help with the "large numbers of additional asylum seekers being brought to our cities."

Sometimes the best way to understand why something is going wrong is to look at what's going right. The asylum seekers from the border aren't the only outsiders in town. Russia's 2022 invasion of Ukraine brought a separate influx of displaced people into U.S. cities that quietly assimilated most of them. "We have at least 30,000 Ukrainian refugees in the city of Chicago, and no one has even noticed," Johnson told me in a recent interview.

According to New York officials, of about 30,000 Ukrainians who resettled there, very few ended up in shelters. By contrast, the city has scrambled to open nearly 200 emergency shelters to house asylees from the Southwest border.

What ensured the quiet assimilation of displaced Ukrainians? Why has the arrival of asylum seekers from Latin America been so different? And why have some cities managed to weather the so-called crisis without any outcry or political backlash? In interviews with mayors, other municipal officials, nonprofit leaders, and immigration lawyers in several states, I pieced together an answer stemming from two major differences in federal policy. First, the Biden administration admitted the Ukrainians under terms that allowed them to work right away. Second, the feds had a plan for where to place these newcomers. It included coordination with local governments, individual sponsors, and civil-society groups. The Biden administration did not leave Ukrainian newcomers vulnerable to the whims of Texas Governor Greg Abbott, who since April 2022 has transported 37,800 migrants to New York City, 31,400 to Chicago, and thousands more to other blue cities—in a successful bid to push the immigration debate rightward and advance the idea that immigrants are a burden on native-born people.

Demsas is largely right here. Ukrainians admitted under the Uniting for Ukraine (U4U)  program have not caused any controversy in cities largely because they are allowed to immediately start working, and thereby can support themselves and contribute to our economy. By contrast, asylum seekers aren't eligible to apply for work permits for six months, and even then it often takes the federal immigration bureaucracy a long time to actually issue them.

What is true for Ukrainians is also true of Cubans, Nicaraguans, Venezuelans, and Haitians admitted under the "CNVH" program—an extension of the U4U model to a combine total 30,000 migrants per month fleeing oppression and violence in those four countries. Several hundred thousand people have entered the US under the CNVH program. But, like the Ukrainians, they have immediate work authorization, and therefore turn out to be a asset to cities, not a burden.

As Demsas explains, the federal government should abolish the six-month rule and let asylum-seekers work legally from day one. The Biden Administration has taken this step for many Venezuelans already in the US. But it needs to expand work authorization to other asylum seekers.

I do think Demsas gets one point wrong here. For the most part, it is not true that "the feds had a plan for where to place" U4U participants.  The program requires each migrant to have a US sponsor. But, beyond that, the federal government makes little or no effort to control where and how they live.

I myself am a sponsor in the U4U program, and have advised other sponsors and migrants.  Generally speaking, the migrants decide for themselves where they are going to settle in the US. Sponsors advise, but do not dictate. I now have eight Ukrainian sponsorees. To my knowledge, never once has a federal official attempted to plan where they live and work, or even offered advice on that subject.

Instead of planning and controlling, U4U mostly lets the market and civil society work. That, I think, is the real key to its success. While I don't myself have CNVH sponsorees, I know people who do; that program seems much the same.

Demsas also notes that, even when it comes to asylum seekers, the  dfficulties encountered in New York and Chicago have largely been avoided in cities like Houston and Miami, even though the latter also have experienced recent influxes. What's the difference between these cases? I don't know for sure. But a major factor is likely that the cities with serious problems also tend to have highly restrictive zoning rules, which make it difficult or impossible to build housing in response to demand. I have previously noted this issue in the case of New York.

By contrast, Houston is famous for not having zoning at all (thereby making housing construction easy, and housing itself very affordable). And Miami is at least less restrictive than cities like New York and Chicago.

In New York, housing issues have been exacerbated by the city's ill-advised free shelter guarantee, which incentivizes both migrants and poor natives to seek out free housing at public expense. New York would be well-advised to end the guarantee, while simultaneously ending exclusionary zoning rules that block new housing construction.

It is also true, as Demsas notes, that Texas Gov. Greg Abbott's migrant busing program—which has heavily targeted New York and Chicago—has caused disruption in those cities:

When immigrants make their way to a city in an organic fashion, they usually are drawn to a place where they have family ties, job leads, or other connections and resources available….

That's very different from the haphazard Texas busing program. When Abbott's buses arrive at their destinations, many of them are filled with people who had specific plans to go somewhere else. Cities then re-ticket many of the passengers. The mayor of Denver told me that roughly 40 percent of asylees who are bused into his city have no intention of staying there.

Abbott should stop the busing program, and instead let migrants choose their own destinations and pay their own way. In addition to increasing the migrants' economic productivity (thereby boosting the US economy) and reducing disruption in New York and Chicago, it would also save Texas taxpayers money. The state has spent some $148 million busing migrants to other parts of the country.

In sum, the "migrant crisis" is largely caused by a combination of perverse federal, state, and local policies that bar asylum seekers from working legally, artificially restrict housing construction, and bus migrants to places other than where they actually want to go. Migrants who enter by programs that avoid these obstacles don't cause any crises. Indeed, they are actually assets to the economy. If governments want to end the "crisis," for the most part they need only get out of the way.

The post The "Migrant Crisis" is Caused by Flawed Work and Housing Policies, not Migrants appeared first on Reason.com.

Hopes that the U.S. Supreme Court might strike down rent control this term were dashed today when the Court declined to take up the two remaining rent control cases on its docket. But a short statement from Justice Clarence Thomas otherwise agreeing not to take up the cases does provide rent control critics some optimism that the Court might reconsider the issue at a future date.

The cases, 74 Pinehurst LLC v. New York and 335-7 LLC v. City of New York, both involved New York City rental property owners' challenges to their state's stabilization regime and related New York City regulations implementing that regime.

The petitioners argued that the 2019 amendments to New York's rent stabilization law amounted to a physical taking because they prevented property owners from choosing their tenants or withdrawing their property from the rental market. They also argued that New York's post-2019 rent stabilization law amounted to a regulatory taking by tanking the value of their properties and removing avenues to "deregulate" (charge market rents on) their units.

Lower courts rejected these arguments. So, last spring, the landlord plaintiffs in both cases petitioned the Supreme Court to take up their case.

The fact that the two cases stayed on the Supreme Court's docket even after it had declined to take up another, higher profile, and more sweeping challenge to New York's rent stabilization law in October raised hopes that the justices might still take up these cases.

At a minimum, rent control critics offered some hopeful speculation that one or more of the justices might write a lengthy dissent to any court decision to not take up the cases that would outline how another rent control challenge could make its way back to the Supreme Court.

Neither of those things happened today. But today's order wasn't a total loss for rent control opponents.

Justice Clarence Thomas did issue a short statement saying that the "constitutionality of regimes like New York City's is an important and pressing question."

Ultimately, Thomas agreed with the Court's denial of cert, saying that petitioners' claims in their lawsuits "primarily contained generalized allegation." In order to evaluate their "as-applied" challenges, the Court would need to see more specific arguments about the circumstances of individual landlords.

For that reason, Thomas wrote, the 74 Pinehurst and 335-7 pleadings would "complicate" the Court's review.

"Any time you get something more than just a denial, I would say that gives you reason for optimism," says Mark Miller, an attorney with the Pacific Legal Foundation, which has supported constitutional challenges to rent control. "Oftentimes justices give statements like this to give you a roadmap for how to better tee up the issue."

In the meantime, however, New York City property owners are offered no relief from the state's rent stabilization regime.

Rent-stabilized owners argue the state's limits on rent increases are so punishingly strict that they can't finance basic repairs or turn over vacant units. The ongoing struggles of New York Community Bancorp, which lent heavily to rent-stabilized buildings, are only compounding this problem.

Without greater flexibility to raise rents or obtain private capital, "the future of rent-stabilized buildings is in the hands of the state government," said the Community Housing Improvement Program (CHIP) and the Rent Stabilization Association (RSA) in an emailed statement reacting to the Supreme Court's decision today. "Thousands of buildings housing hundreds of thousands of tenants are in financial distress. Without action, the homes of many hard-working New Yorkers will deteriorate.

CHIP and RSA had been plaintiffs in another challenge to New York's rent stabilization regime that the Supreme Court also declined to take up last year. Thomas' statement seems to have done little to raise their optimism about future rent control cases.

"We do expect there will be many more challenges to this law, which remains irrationally punitive," they said.

The post After Supreme Court Denies Cases, Clarence Thomas Offers Hope to Rent Control Critics 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.

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…

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.

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.

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.

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.