One Final Effort: A blog about economics and housing

The developed world has a housing problem. Across North America, Europe, and Oceania, people are pushed in poverty because of the cost of housing. Higher wages are being eaten up by higher rents. People are fleeing our most productive cities due to high housing costs, draining our capacity for productivity and economic growth. The fear of never owning a home has entered the cultural zeitgeist and is creating a wedge between generations in our discourse. Urban sprawl destroys our environment and worsens climate change. Our richest cities also have the most homelessness.

For decades, economists and housing researchers have proposed a reasonably simple solution to these problems: reforming our zoning and land use systems to allow for more housing to built. And, for decades, they have largely been ignored. Governments have tried seemingly everything: from tax concessions, to subsidising demand, to rent control, to inclusionary zoning - except for allowing us to build more housing.

Underpinning this failure on the policy front was a failure in the housing discourse. Historically, discussions of housing policy have been dragged down by one simple fact: we could not prove that relaxing zoning laws would increase supply, and therefore make housing more affordable. This led to debates as to whether areas with relaxed zoning laws and high supply - for example Houston or Tokyo - proved that reform could work elsewhere. But these locations did not have an appropriate counterfactual, which allowed critics to argue that unique geographic factors, such as Tokyo’s declining population, rather than elastic housing supply, made them affordable.

Others developed complex statistical techniques to measure the impact of zoning and planning regulations on supply and prices. While these were, and remain, worthwhile, their complexity allows critics to muddy the waters and cause confusion, and they are not well understood by the layperson.

But then, over the past few years, something amazing began to happen. Pressured by a growing YIMBY movement and the economic consensus, some governments actually began to take housing affordability seriously. Auckland, in 2016, allowed denser housing to be built on most of it’s inner urban land. Minneapolis then abolished single-family zoning throughout the entire city. Oregon, California, and Maine followed, making dense housing legal statewide. Minimum parking requirements have begun to fall out of fashion. Today, at least 7 jurisdictions - cities or states - have adopted ‘upzoning’ policies. It is a revolution in housing policy.

These reforms may sound mundane or unsexy to the general public, but they might be amoungst the important economic reforms this decade with benefits to liveability, the environment, and productivity. They will also likely have a sizeable effect on poverty and homelessness. Indeed, Auckland and Minneapolis have already started to see the benefits of lower house prices and rents.

This revolution in housing policy was followed by a revolution in housing research. This was my introduction to upzoning - I stumbled upon it late last year upon reading this paper about Auckland. I believe this paper will be looked upon over the next decade as a ‘moon landing’ moment in housing policy. It broke the barrier to where we had never gone before - it proved for the first time, without a doubt, that these reforms work. Auckland didn’t invest in new infrastructure. It didn’t need new institutional investors in housing. It didn’t need a focus on build-to-rent. It didn’t need inclusionary zoning. It relaxed zoning rules, and built new housing. And affordability improved.

Papers based in Portland and Zurich quickly followed. There may be a dozen or so such papers by the middle of the decade. There is no longer a need to get into a long debate about the demographics in Tokyo, or whether new housing needs to be ‘affordable’. We don’t need more reviews of our zoning and land use systems. We need reform.

But, few, at least in Australia, seemed to understand this breakthrough. The discourse still seems to be talking about irrelevant minutiae. We still seem to think that these reforms are up for debate.

So, against this backdrop, I decided to start this blog, for a couple of reasons. First, we need to keep a stocktake of all of the research on zoning reforms. Over the past few years policy has been moving rapidly all across the world, and it’s getting tricky to keep track of it all. Hence, I have built the Upzoning Tracker - which will highlight when and where areas have reformed their zoning systems, and what their effects are.

Second, while much smarter housing researchers than me are pumping out high quality research seemingly every week, few seem to picking off the lower hanging fruit. We now have sophisticated causal analysis that upzoning increases housing supply - but what is happening to rents? Will construction levels be maintained over time? Has homelessness declined in upzoned areas? Have low-income households found more affordable housing? I will try to get at all these questions, and more.

Third, we need to be able communicate the weight of evidence surrounding this policy revolution clearly, and succinctly. There are so many misunderstandings related to housing affordability perpetuated by myths, NIMBYs, and bad research. Although I support zoning reforms, I will try my best to be as unbiased as possible in how I present the data and emerging evidence so we can identify what works and what doesn’t.

Fourth and finally, Australia - where I am based - is lagging behind in this revolution. While single-family zoning increasingly appears to be an endangered species overseas, it remains healthy here. Like the Cane Toad, I hope upzoning can be an introduced and invasive species.

This blog will not all be about housing though. Over time, I will likely wade into other policy debates - I’m interested in migration and education economics - and analyse other interesting pieces of data. If any of this sounds of interest, you can help out by bringing to my attention anything I’ve missed or suggesting that I look into something. I can be reached at onefinaleffortblog@gmail.com or on twitter.