He acknowledges that orthodox economists believe that the law of supply and demand affects housing, and that thus more housing should equal lower prices.  But in Broken City, he argues that new housing (or maybe just new infill housing) means higher land prices and thus to higher housing costs.  His focuses heavily on Vancouver, British Columbia: he writes that “Vancouver, despite tripling the number of housing units within city limits since 1960, has been rewarded for its effort with the third highest housing prices in the world.” (p. 65).  

But Vancouver is just one example: Condon doesn’t compare it with cheaper cities.  Canada has other larg-ish cities, including Edmonton, Calgary, Montreal and Toronto.  Did those cities add more or less housing than Vancouver?  Did housing prices rise more rapidly or more slowly than in Vancouver?  Condon doesn’t address these issues.  He does mention in passing that housing prices have risen in Houston (which was allowed more housing than most North American cities),** but I am not sure he answers the question that motivates most YIMBYs: why is Houston so much cheaper than New York or Vancouver?***

Moreover, Condon’s description of Vancouver overlooks the fact that housing markets are regional and not bound by municipal lines.  What was going on in Vancouver’s suburbs? Were they building at a Vancouver-like pace, or did growth control policies limit suburban pricing and thus create a regionwide housing shortage?  Condon doesn’t address this issue.

His theoretical logic is that “When the city authorizes a doubling of market density.. the residual land price goes up in response… [thus there is] no substantial decrease in the cost per square foot of new housing.” (p. 196).  But these imaginary numbers seem arbitrary.  If density increases by 100 percent, why would land price increase by 100 percent instead of 20 percent or 50 percent?  I am not sure I understand his argument here.

And if land prices were a function of more housing construction, we would find that land prices exploded in places with lots of housing construction, but were stable or declining in places where “Not In My Back Yard” sentiment impeded housing construction.  But even a casual look at the American Enterprise Institute land cost database suggests otherwise: over the past decade or two, land costs has risen in most metro areas: not just in places with lots of new housing such as Austin, but in less permissive areas (such as San Francisco and its suburbs).

Unlike less sophisticated opponents of YIMBYism, he doesn’t argue that new housing is all bad, and he is all for housing owned by government and nonprofits.  But he also argues in favor of programs that make housing less profitable, such as impact fees, rent controls, and inclusionary zoning.  Some (if not most) economists believe that these policies discourage housing construction- but Condon argues that they make housing cheaper by reducing land costs, suggesting that if an extra tax makes a project unworkable, “the price for the land will be renegotiated down” (p. 163).  He points out that California cities “have been less timid than most states” in imposing impact fees (p. 162).  But since land and housing costs in California have exploded in recent years, this fact doesn’t really support his argument.

 He also praises inclusionary zoning because it encourages the creation of nonmarket housing and “lower[s] the prices of developable parcels” (p. 165)- in other words, reduces the demand for land.   In particular, he praised Portland, Oregon’s expansion of inclusionary zoning.  But after Portland passed its inclusionary zoning ordinance in 2016, land costs in Multnomah County (which includes Portland) increased from $1.06 million per acre in 2016 to $1.56 million in 2022.     Meanwhile, building activity crawled to a halt.  In 2017, almost 6000 permits were issued for Portland buildings with five or more units.  In 2024, fewer than 1000 such permits were issued.

He also praises inclusionary zoning in Cambridge, Mass.- where inclusionary zoning has apparently been far less harmful. But Cambridge’s program is far less restrictive, because inclusionary zoning is part of an overlay district- which means that landlords have the option of proceeding either under inclusionary zoning (which allows more units in exchange for more “affordable” units) or proceeding under the prior zoning code.

Similarly, he argues for rent control on the ground that it “quell[s] the appetite of international [investors] for a city’s land” (p. 142)- in other words, makes people less interested in being landlords, which supposedly will reduce land prices.  In New York, where I live, the state government implemented vacancy control, where rents don’t go up even when a tenant leaves.  As a result, landlords have warehoused thousands of rent-stabilized apartments, apparently because they would have to spend money on renovations to comply with housing costs, and are not allowed to raise rents enough to pay for the renovations.  Rather than declining, the median asking rent in each of New York’s five boroughs has increased by 50 percent or more between 2019 and 2026.

And as a broader theoretical matter, his relationship with the law of supply and demand seems inconsistent: on the one hand, he argues that housing supply doesn’t make housing cheaper, but on the other hand he argues that extra taxes reduce the cost of land by reducing demand for land.   

*For those of you who have not read this blog, YIMBY means “Yes In My Back Yard”, a slogan adopted by those of us who support expanded housing supply.   

**One might ask: if YIMBYism works, why have housing prices risen in Houston? But this question is easily answered: Houston has gained population far more rapidly than high-cost cities, leading to a demand explosion.     But even with this demand explosion, rents have risen more slowly there than in cities that have allowed less housing.  Nominal rents in Houston are about 3.29 times their 1980s level,  while rents in metro New York are five times their 1980s level.  

***Condon hints at an answer in his historical discussion: he points out in Chapter 4 that as American densities nosedived in the mid-20^th century, land costs went down.  So perhaps he believes that sprawl equals low land costs and density equals high land costs.  But Condon admits that densities in the English-speaking world are still very low compared to middle-income countries (p. 93)- so why hasn’t low density continued to bring land costs down?

Person A- infill is cheaper than sprawl because no one has to build new sewer lines!

Person B- Sprawl is cheaper because its more expensive to build in the city!

Person B’s post made me wonder: is suburbia always cheaper?

I decided to do a rough comparison: the cheapest new city houses vs. the cheapest new suburban houses of the same size. I went on Zillow and searched for houses that were a) built after 2020 and b) 2000-2500 square feet.

In some metros (even fairly inexpensive ones), suburbia clearly did seem to be cheaper. For example, the cheapest new house in Chicago started at around $600k, while similar options in Lake and McHenry Counties started at around $360-370k. In St. Louis, the cheapest new home cost around $450k, about a third more than the cheapest new houses in St. Louis and St. Charles Counties.

On the other hand, I found counterexamples. The cheapest new house in Atlanta cost $290k, about 15 percent below its counterparts in Cobb and Gwinnett Counties. The cheapest new house in Houston cost $225k, about the same as its counterpart in suburban Fort Bend County. The cheapest in Cleveland cost $288k, about the same as its counterpart in the suburban part of Cuyahoga County, slightly less than its counterpart in outer-suburban Lake County, and about 25 percent less than its counterpart in outer-suburban Geauga County. In Philadelphia, the cheapest new house is about $350k, about 10 percent lower than its counterpart in outer-suburban Chester County.

All of this is subject to two qualifications. First, this is not an academic “everything being equal” comparison: all I am trying to show is that it seems possible to build urban and suburban houses for similar prices. Second, it may be that at the true outer edges of suburbia, houses are cheaper than in the suburbs I have mentioned.

In a new video, Aevy TV presents CEPT University research with an impressive mastery of the technicalities. A key point – and this connects to Kaur & Anand’s work – is that the large setback rules imposed by Indian regulations make land use extremely inefficient. Instead of public unbuilt space (for roads, parks, and plazas), Indian cities have shocking amounts of private unbuilt space, which by all accounts is poorly used.

The content bounces around a bit (the rent control and government management tangents seem out of place), but it’s a great place to start if you want a deeper understanding of Indian cities than you’d get from movies or tourism.

Returns to Political Contributions in Local Housing Markets
by Rui Yu
Review of Economics and Statistics, forthcoming

Abstract:
This paper examines how politically connected firms shape housing supply in U.S. cities. Using new data on campaign donations to U.S. mayors and a regression discontinuity design, I present three findings. First, developers connected to the mayor sell more new housing units. Second, more sales of new housing by connected developers coincide with higher local housing supply: cities where mayors received more developer donations issue nearly 70 percent more permits for new housing units. Third, differences in mayors’ pre-existing policy stances — rather than connections to developers — is a quantitatively larger determinant of local housing supply.

This is a reasonable critique and I’ve never used Paris as a model for this reason. Being allowed to build six-story buildings isn’t going to make your city Paris any more than having free speech is going to make you Marcel Proust.

But let’s flip the lens around: What about those buildings Collison chose to exemplify “what is actually on offer”? That’s the Batik Apartments in Seattle, completed in 2018. Strong YIMBY policy have made Seattle a renter’s market:

I agree that the Batik is pretty ugly. I count at least 7 distinct exterior materials interspersed even within a very small area. Why? It’s not the cheapest option, which would be to stick with one, maybe two finishes for simplicity. Nor are the various small protrusions, each of which adds cost and reduces resilience.

So why was it built like this? It could be that customers want this and they just don’t share my preference for simplicity. It could reflect the artistic values of the architects, who seem to be very proud of it.

A third possibility is that the Batik looks unique in exactly the same way every other new building is unique because it had to clear Seattle’s famously strict design review (which has since been pared back by YIMBY-led state laws). Here’s the developer’s 81-page response to the city’s Early Design Guidance (EDG) Report feedback. (The city has a helpful website outlining the 22 steps to submit plans for EDG, which of course is just one of many approvals before construction may begin.)

The EDG response has many renderings of the structure and lovingly presents this awful palette of colors and textures.

Could Seattle architects have legally built classically-styled apartments? I can’t find a single modern example. There’s a good chance that many neighborhood Design Review Boards would have rejected a Haussmann-style building (or even a copy of the Cobb Building) as “pastiche”. In the silly world of contemporary architecture, it’s dishonest to pretend your building is older than it really is, but mandatory to “break up the massing” and pretend your building is several different buildings. The obsession with articulation, multiple materials, and “doodads” yields a style I call “design review rococo.”

American building without design review

So what would American architects build if it was just between them and the market? Surprisingly few big cities allow us to test this idea. Even fast-growing Sunbelt cities like Miami, Austin, and Phoenix usually have design review. Thankfully, there’s Houston.

And…it looks pretty similar. The colors are perhaps a bit more muted on average, but that probably reflects the different climate. Houston builders presumably aren’t wasting their money on architects’ whims. The people with skin in the game believe that breaking up the massing and using mixed materials, although it adds costs, attracts more renters.

Personally, I love the exception among the Houston photos – the Marquis Enclave. It’s an industrial loft imitation complex which covers seven entire blocks and has created an excellent shady streetscape at the edge of the Fourth Ward:

But if you look at the Marquis Enclave’s advertising, it nowhere mentions the architecture or public realm. Instead, the word “modern” shows up four times on the recruitment page.

Aesthetic NIMBYs

If this casual analysis is correct, then Americans don’t care very much about exteriors. And to the extent that they care, they favor midrise buildings that Collison and I find ugly. I would very much like to be wrong about this!

Practically speaking, what it means is that Collison’s core point is probably wrong: offering Americans a product that he and I like better isn’t going to make them favor upzoning.

[Following up on a neighbor’s complaint,] Building Commissioner Dennis Manuwal reviewed the property and confirmed the shed, which sits just two feet from the property line, was in violation of city codes. However, while inspecting the Emmons’ property, Manuwal drove through the rest of the subdivision and observed numerous similar infractions.

During a Board of Zoning Appeals (BZA) meeting on Monday, Plymouth Plan Director Ty Adley reported the scope of the issue. Of the 31 sheds located within the South Pointe Subdivision, only 13 currently meet setback requirements or have previously obtained a variance. The remaining 18 sheds are situated too close to the side yard, rear yard, or both.

The subdivision in question has just 41 houses. Almost half are out of compliance. The obvious solution would have been for Building Commissioner Manuwal to keep his observations to himself. A more sophisticated solution would be for the city to reduce its onerous 20-foot rear setback for accessory structures, which obviously don’t correspond to the normal practice.

The city chose neither of those. Instead:

Homeowners must now either physically relocate their sheds to comply with the 10-foot side and 20-foot rear setback requirements, or they must officially apply for a “variance of development standard.”

To obtain a variance, residents will need to present their case to the board and explain specifically why their shed cannot be relocated to meet the standard setbacks. Adley emphasized that there is no blanket solution, and the board will consider each variance application individually on its own merits.

There is a blanket solution – relax the zoning – but the city officials are too committed to their codes to be responsive to their citizens.

After decades of background study and advocacy – see here for a research compilation – legislators in Maine and Texas passed bills that allow starter homes by putting guardrails on local minimum lot sizes. Without guardrails, localities often require every new house lot to be much bigger than what local families can afford.

California took another approach, allowing small developments of up to 10 starter homes statewide under specific parameters. I don’t know of any data yet, but Californians tell me this is much more successful in generating new home starts than other, higher-profile reforms the state has passed.

With those successes, several more states have serious proposals on the table for 2026. Here’s a brief comparison, emphasizing the lot size that’s required under the law, where the law applies, and whether the law has detailed protections against local poison pills.

The “detailed protections” are important because it’s very easy to shadowban small lot homes via large setbacks, width or depth requirements, and so on.

Some interpretive points:

• Typical of California lawmaking, its statute is highly complex and covers many scenarios in detail. It has been continually refined with updates to the initial 2021 law.
• The Maine and Texas laws have been enacted. However, they’re still too new to know how they’re working out in practice.
• Texas’ bill is limited to a narrow range of sites in big cities, a compromise that was necessary to pass it.
• Massachusetts’ ballot measure on minimum lot sizes is a key test case for public support for YIMBY policies.
• Indiana’s bill passed, but its minimum lot size provisions were amended out.
• The Maryland Starter & Silver Homes Act specifies that town houses are allowed everywhere. I think the authors’ intent is that 3 or 4 town houses could be built on a 5,000 square foot lot via condo regime, but that might require amendment or implementing regulations.
• Connecticut’s bill follows Maryland’s on many points, but its text clearly allows a jurisdiction to limit townhouses to one per 5,000 square feet of land, which is effectively a ban.
• In Colorado (as in Texas), developers often build out utility systems. The law thus doesn’t require a connection to public utilities but allows standard local utility requirements.
• The Idaho bills ban minimum lot sizes above 1,000 or 1,500 sq ft in starter home subdivisions on parcels of 4+ acres, but allows a locality [or HOA] to require 30 feet of frontage and 70 feet of depth, implying a minimum of 2,100 sq ft. In one bill, localities can also limit density to 12 units per acre, which means an average of 3,630 sq ft per lot.
  • The HOA preemption applies only to newly-written HOA deed restrictions so that it isn’t going back and changing existing contracts.
  • I’m skeptical that the HOA preemption can work as written. HOA deeds have so many detailed provisions which a judge may find “reasonable” (e.g. house size, landscaping), the only way to effectively build what they didn’t contemplate is to (a) require that they allow starter home subdivisions and (b) fully void all deed restrictions on a qualifying starter home subdivision.
• Kentucky’s HB 617 has minimum lot size provisions adapted from Texas. Legislators adjusted the population cutoffs for applicability. But they left the 5-acre site minimum, which is probably too much for a state of small cities, which cannot easily absorb Texas-sized subdivisions. The bill also has parking and RICZ provisions.

It may be impossible to legislate minimum lot size guardrails that clever local regulators can’t sneak around. But I’m impressed with the thoughtfulness and quality of these bills. Removing excessive requirements for new homes is a key step to enabling starter homes in more places.

Honorable mentions: Illinois, New Jersey, Utah, and Virginia have bills which would gently nudge localities to allow starter homes but without enough compulsion or incentive to be likely to work. Vermont’s 2023 HOME Act was the first clean minimum lot size preemption, but at 5 units per acre (8,712 sq ft) it doesn’t make the cut for ‘starter home.’

The paper’s arguments seem to fall into four general categories:

1. “Regulation isn’t related to housing supply”– As a matter of common sense, it seems obvious that if laws that allow almost no new housing will be amended to allow some housing, more housing will be built than if the law was unreformed. But the authors write that “evidence suggests that upzoning is not meaningfully related to improvements in regional affordability.”  (page 7) They cite a 2023 study by Yonah Freemark.  But Freemark’s study does not support this.  Freemark’s introduction to his article states  “Downzoning policies are largely associated with reduced construction and less affordability. … Early data suggest that upzonings generate positive effects on regional construction and affordability, but more research is needed. (emphasis mine)”  This might be a more ambiguous than YIMBYs would like, but it certainly is not the flat rejection of upzoning that the authors seem to say it is.

Second, they claim that  because “between 2000 and 2020, no major urban area experienced growth in household formation that exceeded its growth to supply, suggesting that there were not significant differences in supply growth between regulated and unregulated regions” (emphasis mine) (pages 7-8). Census data show that about 34,000 of San Francisco’s housing units were built after 2000, and that about 150,000 of Austin’s were. So if the authors really believe that there is no difference between high growth and low growth cities, they must have been very careless indeed.

I think the first half of the sentence (about “growth in household formation”) shows what the authors really mean: the number of households didn’t grow as much as San Francisco as in Austin, therefore supply must have been consistent with demand rather than lagging behind demand. This would make sense if demand for San Francisco was limited to people who stayed there. But as a matter of common sense, demand for San Francisco should include people priced out of San Francisco. Thus, the number of households in San Francisco is not an appropriate measure of demand.

2. “Even if supply is important, Housing supply will never increase fast enough for rent to become affordable”- Through complicated calculations, they claim that in San Francisco, it would take as many as 124 years to meet their definition of affordability.  (page 13)

But this is based on two questionable assumptions: first, they assume that there can at most be a 1.5% annual growth rate in housing.  But they admit that Austin grew by twice this much- despite the fact that Austin still has conventional zoning.  If Austin had no zoning, perhaps its housing supply would grow by even more. 

More important, the authors’ 1.5% assumption is based on growth rates between 2000 and 2020.  But because of the 2008 recession, this was not exactly a high-growth period. About 34 million housing units were built between 2000 and 2020, about the same as between 1960 and 1980- despite the fact that the U.S. population increased by over 50 percent (from 179 million to 281 million) between 1960 and 2000.   To put it another way, in the 2000-2020 period, Americans built one housing unit for every eight people, while in the 1960-1980 period, Americans built one for every five people. 

So if the authors really wanted to imagine a deregulation-fueled building boom, they should have used data from the most growth-friendly metros in the 1960s.  (Nationwide, there were 58 million housing units in 1960, and so if 34 million units were built in 1960-1980, this means that the nationwide housing supply increased by almost 60 percent, or about 3 percent per year.  Presumably, housing supply in some places increased more rapidly).

Second, their idea of an “affordable rent” is very low indeed.  They define “affordability” as making the median one-bedroom apartment affordable to someone earning between $30,000-40,000 a year (well below median U.S. salaries) – which means bringing the average rent in San Francisco down to $971 (p. 13),, cutting rents by more than half. What’s wrong with this? It seems to me that as a matter of principle, any rent decline is a good one: just as reducing cancer or car crashes by 5 percent is worth pursuing, so is reducing rents.

By contrast, when describing their preferred policies, the authors show no interest in quantitative data or weighing trade-offs. The authors vaguely conclude that cities need to “directly increase access to affordable housing among low-to-moderate income households.” (p. 30). But do they bother to ask how many years of housing construction it would take to make half of San Francisco’s apartments this affordable, or about the level of tax increases this would take? Of course not.

3. “Our arguments above were actually too optimistic”  The authors make several arguments as to why they think the scenario discussed above may be too optimistic rather than too pessimistic.  First, they argue that “Upzoning and deregulation likely have positive impact on land values and increase wealth inequality between landowners and renters (p. 14)” and again cite the Freemark study. But Freemark writes: “Keeping land-use policies as they are today—or, more problematically, implementing downzonings—could reinforce inequalities. Research on downzoning shows that it, too, can increase housing costs by limiting construction in the most desirable neighborhoods.” So it does not seem to me that the authors have read Freemark correctly.

Moreover, if retaining the regulatory status quo kept land costs down, the regions with lots of new housing would have exploding land costs while those with very little new housing (such as Long Island) would have stable land costs.  In fact, land costs seem to go up even in regions that basically shut off new housing. (I wrote about this issue here).

Second, they write that new supply “ought to significantly increase the short-term cost of construction labor … influencing the cost of new units.” (p. 14).  Do the authors really think that construction labor is cheaper in New York or San Francisco than in fast-growing, pro-construction Sunbelt cities like Houston? If so, they are wrong. (Having said that, I don’t know whether the pay gap between these cities has grown or shrunk in recent decades).

Third, they argue that “developers often delay construction in anticipation of higher future returns” (p. 15) and that “there is no reason to believe that developers would ever knowingly build enough housing to drive investment returns below market rates.” (id.) In other words, developers somehow have enough foresight to never build too much housing.  If this was true, development at an Austin-like level can never happen, because developers are so wise that they know not to build when rents are coming down.   But of course, such development IS happening in Sunbelt cities and happened even more rapidly in the mid-20^th c.  So I am not quite sure I understand the authors’ argument.

4. “Its all about demand.”  The authors heavily rely on one statistic: growth rates in mean income.  They point out that San Francisco’s rents have risen at about the same rate as mean income, and therefore conclude that rising incomes cause rising rents (pages 25-26).  (They also look at Houston and Cleveland, but not any other cities).   

Leaving aside this article’s miniscule sample size, a few things seem questionable about this part of the article.  Their definition of mean income includes “non-wage and salary employment income (e.g. employer contributions to health insurance or 401ks).”  But since no one is going to use their health insurance premiums or retirement accounts to pay rent, this means that their definition doesn’t seem all that relevant to rent growth.  And because health insurance premiums were lower in 1980 than they are today, this calculation method seems designed to exaggerate income growth.   Furthermore, if the authors wanted to compare income and rent among renters, they should have looked at mean income for renters rather than mean income for all human beings. (In fairness, I do not know if data exists on this point).

Furthermore, their definition of median rent seems unrelated to real-world rent growth: they define rent as Census-calculated median rent, but Census calculations seem unrelated to market data.  For example, the Census says that the median gross rent for one-bedroom apartments is a little above $2400- but out of the 1900 apartments available on Zillow, 1570 rent for more than this.  (Having said that, if you are trying to compare rent growth over time, maybe the Census data is the best you have).

More broadly, they treat income as something that goes up and down independently of housing costs. But I doubt that this is the case: if lower- and moderate-income residents shun or leave city X because of high housing costs, this means that high housing costs cause high regional incomes, as well as vice versa. To put it another way: government uses zoning to increase housing costs, causing less affluent people to move to cheaper cities, causing regional income to rise, causing academics to believe that rising regional income causes housing costs to rise.

In sum, there are many things in this article that seem questionable or even downright wrong. Having said that, there is a grain of truth to it: demand goes up and down a lot more rapidly than supply (as I learned in the early 2020s, when rents in Manhattan bounced up and down rapidly). On the other hand, supply could be a lot more flexible than it is today.

*This suggestion seems to me to be simply weird. Lower marriage/birth rates and longer lifespans mean that MORE people will be living alone or with just one or two other people- in other words, households should be smaller. And in turn, smaller households mean demand for MORE housing units, not fewer.