Here's to Dynamic American Cities!

Why SB 827 is a step in the right direction.

Just about everyone who lives in a metropolitan coastal area understands the value of affordable housing. It's a given that if you want the benefits that come with living near lots of people and businesses, you're going to have to pay more for your mortgage or rent.

That might be most obviously true of California, where growing demand and stagnant supply have produced 10 of the 11 most expensive metropolitan areas in the country. The state is aware of the problem and at least one potential response, California Senate Bill 827, would address it by limiting the ability of local governments to restrict housing supply.

This expert panel will get us started by talking about California and SB 827 and then they’ll try to unpack what this means for the rest of the country:

Matthew Yglesias, Senior Correspondent and author of "The Rent Is Too Damn High

Emily Hamilton, Mercatus Center State and Local Policy Research Fellow

Salim Furth, Mercatus Center Senior Research Fellow

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REESE: Welcome to the Mercatus Center Policy Download. I'm your host, Chad Reese.

Just about everyone who lives in a metropolitan coastal area understands the value of affordable housing. It's a given that if you want the benefits that come with living near lots of people and businesses you're going to have to pay more for your mortgage or rent.

That might be most obviously true of California, where growing demand and stagnant supply have produced 10 of the 11 most expensive metropolitan areas in the country. The state is aware of the problem and at least one potential response, California Senate Bill 827, would address it by limiting the ability of local governments to restrict housing supply.

Today, our expert panel will get us started by talking about California and SB 827. Then we'll try to unpack what this means for the rest of the country. First up, we're joined by Senior Correspondent and author of "The Rent Is Too Damn High," Matthew Yglesias. Welcome to the show, Matt.

YGLESIAS: Glad to be here.

REESE: Next we have Emily Hamilton, State and Local Policy Research Fellow at the Mercatus Center. Thanks for joining us, Emily.

HAMILTON: Thanks, Chad. Great to be talking land use regulations.

REESE: Last but certainly not least is Mercatus Center's Senior Research Fellow, Salim Furth. Welcome aboard, Salim.

FURTH: Thank you, Chad.

REESE: Now the team's assembled. I want to see if can get a volunteer to give me the 30‑second explanation of why California in particular is struggling with soaring housing prices. I know that's an easy one.

HAMILTON: California has some of the most productive labor markets in the country, especially with San Francisco and San Jose. It also offers a lot of geographic and climate amenities, so it's mostly just a place that a lot of people want to live.

REESE: Is that it? We can wrap things up? California's great.

HAMILTON: [laughs]

REESE: We all want to move there so housing's expensive. We're done. Nothing we can do about it.

YGLESIAS: Look. The obvious thing is, in addition to a lot of demand for living in California, there's the Pacific Ocean on one side. Then the major metro areas that tend to be close to other water features or mountains that are hard to build on. There's a limited ability to sprawl out into the suburbs, which is the classic way in America.

Most American metro area meet adequate housing supplies. They just get bigger and bigger and bigger. San Francisco can't get a lot bigger. It would have to grow taller, and it's not really allowed to do that.

REESE: I want to jump on that because obviously, policy can't do much about the Pacific Ocean, at least in the short term. It can't do much about the mountain ranges in Southern California either, but it seems like that point about not being able to grow taller might be relevant. What is this SB 827? Why is this something that at least a few people think might help California?

FURTH: 827 is a proposal currently before the California Senate that was brought by Scott Weiner who is the state senator from San Francisco. What it would do is preempt local regulations, where your city or town says, "The height limit here is three stories," it would come in and say, "No, actually it's going to be something between four and eight stories," depending on the width of the street that it's facing for blocks that are close to transit.

If you are within half a mile or a quarter mile of a transit station or a frequent bus line then the state is going to come in, if this law passes, and preempt local parking regulations. Minimum parking regulation's gone. Height limits lifted to a mid‑rise level. Any kind of regulations that affect density like floor area limits also preempted.

It's a big deal. Cities are mostly uncomfortable with this. It takes away one of their key tools for designing themselves but I think my view, and I think this is shared by the others on the panel here, is that they've abused that. That's a big reason why California is a lot less affordable, even than other big coastal cities.

YGLESIAS: It's worth saying this is, in some ways, a more radical proposal than I think it initially sounds to people, largely because of the bus element of it. When this first came out, a number of California elected officials and people spoke very positively about it. I think they've changed their minds a little bit when they saw exactly how sweeping it is.

The inclusion of buses as high frequency transit means that huge swaths of Los Angeles, San Francisco, Silicon Valley are covered by it, not just the areas immediately around a rail transit station. If you take this problem seriously and look at it the way I think most of us on the panel do, that is good. That is a good aspect of this proposal, but it can sometimes...

I think Senator Wiener talks about it, sometimes, in a way that makes it sound a little bit more modest, common sense, "We're going to build near the train stations," which, for example, is what's done here in Arlington. It's a big deal. I think it has worked and has some real benefits for the place that we're in right now. They are actually talking about something that is much more of a sweeping change for the state.

HAMILTON: One good aspect of that approach, of doing the deregulation on a land use side before potential future transit development is that it allows the real estate market to drive where this housing is going to go and transit to follow rather than the Arlington model of building transit first and then deregulating land use, which is good, too, but doesn't have the advantage of allowing people to live where they want to based on other factors.

FURTH: One of the problems that we've had, even in places that are growing like DC, is that you end up with all of the growth gets pushed into a few neighborhoods that get marked as, "OK, this place is crummy enough or old post‑industrial warehouses and parking lots. We'll use this to deal with our rising demand."

You get massive change in one neighborhood and then that gets filled up. You move on to the next neighborhood. In some cases, that's really displacing local residents. In a lot of cases, they choose places where nobody lives because then nobody votes against it.

A big part of the value of 827 is that because of the bus line aspect that Matt mentioned, it would actually spread that demand everywhere. Maybe there's enough housing demand in California to just cause enormous change everywhere but I doubt that.

I think it would be nice to say, "Oh, wow. We can add a couple thousand housing units a month to a county the size of Los Angeles and it's not catastrophic anywhere." It's one apartment building here, a duplex there. People's neighborhoods are evolving, not revolutioning.

YGLESIAS: This is important for California, in particular, because of the nature of the Silicon Valley job market and housing market that's close to San Francisco but not in the city of San Francisco by any means. That's where Apple is. That's where Facebook is. That's where Google is.

These are some of the biggest, most important companies in the world. You're talking about an area that doesn't have a city center at all and that also doesn't have these greenfield or brownfield development sites where you could say, "This is warehouses that are no longer used, train tracks that have been abandoned, or just some vacant land."

They're regular, nice suburbs with single family homes but a really modest, normal, middle classy house will go for well over a million dollars there. There's a desperate need to specifically add housing in that area to prevent unworkable transportation type problems. That means you do need a different approach than what you've seen.

There are a number of successful growth models in America, but I think none of them are applicable to that actual situation that plays out between San Francisco and San Jose. Only something along the lines of this that says, "Look, an existing single family home neighborhood can get denser if that's where people want to live," is going to alleviate the crunch around those big tech companies.

FURTH: I look at Silicon Valley as this first in history case of a world leading industry. This is London in 1750 with no new residents. The San Jose metro area has actually declined as a share of the US population since 1992, slightly. It's growing at less than the national growth rate at the same time that it's led a revolution in the world's biggest growth industry.

Normally, you'd get a leading industry and then all the spinoffs, the service industries, the things that grow up around it to serve it, the spinoffs. You get a lot of people who aren't elite programmers getting jobs, and thriving, and building lives there. People who are displaced from the places where factories have been shutting down ought to be able to move to where the biggest growth industry of our era is and they just can't.

The houses aren't there to take the people who lost jobs, not necessarily in the mines in West Virginia or the factories in Detroit, but the people who served them. If you were a bank branch manager in Detroit and your bank branch got shut down, well guess what? They need bank branch managers in San Jose but on that salary, good luck.

REESE: I want to linger on the displacement issue a little bit because I think one of the areas of pushback that people see with local land use regulation is almost the opposite, where it's not just that we're eliminating certain types of displacement.

It's fear that if you eliminate a height requirement, we're going to demolish the affordable housing that does exist and replace it with really large high‑rise luxury apartment condos that are really good for some segments of the population that don't really care about living in the suburbs and can afford that urban or suburban lifestyle but don't do anything to help the people that we traditionally think of as wanting to help with affordable housing.

Is that a valid critique?

YGLESIAS: I mean, I think that's a real problem with the current urban redevelopment model that usually says, "OK, we're going to isolate some particular area and say, 'OK, this is where the new development is going to go,' because what happens in a process like that is that the new development goes where there's the least political opposition."

Sometimes, that's a genuinely vacant area, but a lot of times, yes, like that is where sort of politically marginal people are finding housing that they can afford, and they do get displaced from it. I see that as a problem with the status quo that if you allow housing to go where the demand is highest, the demand for housing is not highest in poor neighborhoods.

By definition, poor people wouldn't be living in those neighborhoods, if they were the neighborhoods where the demand was high. When you relax the regulatory framework, if you do it in a principled way, you're going to get new building in the affluent neighborhoods, and you're going to relieve some of the pressure on lower income ones.

I think it's reasonable that people, who have lived through sort of generations of different urban renewal initiatives, are suspicious of these kind of things. It is important to see them undertaken in a rigorous kind of way, but I do think this legislation and comparable ideas to preempt zoning in affluent areas is actually the solution to that problem.

What we're doing instead is what's causing the displacement.

REESE: Yeah, right. I agree that it's a problem, and I agree with Matt that this is a partial solution, probably not complete. I actually wonder if people who are concerned about displacement would have fewer concerns, if 827 sort of phased in so that it affected wealthy areas in the first year or two, and then phased to the rest of the state.

There's one market aspect where cheaper areas are easier to buy and demolish. If you've got an old housing stock and something that's cheap and hasn't been invested in, then what you're destroying is of less value than if you buy a three‑million‑dollar mansion that somebody just rebuilt.

That's not huge. I mean, I think that can be overcome where apartment prices are as high as they are. There is one market element where generally, at least within a neighborhood, the oldest and cheapest building is the one that you want to redevelop. If that's an old paint store then great. If that's persistently going to be poor people's houses, then I understand that that's a legitimate displacement concern.

HAMILTON: We've never seen a large up‑zoning comparable to SB 827 in a high‑cost city, so it's hard to point people who have very legitimate concerns about displacement to see what happened here, and they didn't experience this massive displacement that you're concerned about. We can look at less regulated cities.

In Houston today, there isn't a big gentrification problem because as Matt said development tends to go to the neighborhoods that are already in high demand. We can see the same thing if we look at U.S. cities before zoning was really limiting the supply of housing.

YGLESIAS: Actually, if you look at the Houston [inaudible] , I mean if anything you might raise the opposite concern that a truly unconstrained market doesn't drive any investment into low income areas. There's some level of gentrification dynamic that is probably optimal from the standpoint of people who are living in poor communities.

I don't know that you can really optimize for it one way or the other, but what we do see in the laxer areas is that you have a favorite corner of the city where more affluent people live, where usually investment has gone historically.

More goes there because that's where most people want to live, that's where people want to locate their businesses, that's where decision makers in companies want to bring the jobs close to their own houses. There's relatively little reason to think that what the market wants to do is take poor parts of Los Angeles, knock them all down and put apartments there.

They want to take the west side neighborhoods where the weather is better, where the commutes are shorter, where the stores are already nicer, and they want to pack more people into fancy houses there.

REESE: Isn't that the weirdest thing about California that the weather is different by neighborhood.


YGLESIAS: Yeah, it's very weird. Obviously, the weather is a big selling point of California, and then there are these, like particularly in Southern California, little micro climates that make a big difference to these kinds of things.

It's like if you could build more in Santa Monica where you can walk to the beach and stuff like that, is I think pretty clearly like where a free market would locate extra housing right. It's not a coincidence that those are the fancy parts of the city.

FURTH: Emily, to your point about not having seen up starting, that's true but we have seen demand booms in places that were already built, but then had this big demand surge. One of Glaser's papers looks at New York City, Manhattan.

YGLESIAS: This is Ed Glaser?

FURTH: Ed Glaser, Ed Glaser at Harvard, yeah. Jim, so there's this huge price boom in Manhattan, I don't know maybe mid '60s. Then it's followed very quickly by a huge boom in permitting right. We get to see how many permits the city issues. There's a big price boom, and it takes a couple of years for the developers to get their act together, but then they do and they built a whole ton of new housing.

There's a whole vintage of apartment buildings. This is demonstrably a full city if we want to use that phrase, and prices came back down. There's a temporary boom first in prices, then in permits, and then you get back essentially to the pre‑boom level of prices.

That's sort of kept people who could not afford New York today, they could afford it in the '70s because of this building boom that took the edge off that first demand boom.

YGLESIAS: Interesting.

REESE: But transportation has come up a couple times and Matt, you were just kind of talking about location as being relevant for commuting. I don't want us to gloss over that as we just think about where people are.

I'm interested if you guys can talk a little bit about the transportation aspect of this? Obviously, the California bill would use transportation as defining its features. How does a policy like this affect the way people get around as well?

YGLESIAS: This is a reason, I think a not crazy reason why people are often opposed to new development in their neighborhood that's going to increase competition for street parking, it's going to increase the level of traffic on your neighborhood streets right there.

That's a major sort of driving factor for most individuals. The theory of this legislation is that by locating the new housing on frequent transit carters you, to some extent, mitigate that problem. I think it would be a little dishonest to try to assure people that like everybody in these new buildings is going to take the bus to work, the traffic is going to get worse if you add more housing there.

That's what eventually limits it. You might ask yourself, given that wages are high in the Bay Area, and that the climate is nice, and the food is good, when we have like a singularity and four billion people live there, and the reason is no, right.

There's a crowding effect and eventually it limits the amount of people who would want to live somewhere, unless you get a New York/Paris level of a mass transit system, which I don't think they're going to pull off over there.

Ideally, like people would also improve the transportation policies, but you can add a housing without improving the transportation because the transportation becomes a self‑limiting constraint.

FURTH: In some senses, this is actually welfare for the transit system.

YGLESIAS: Interesting.

FURTH: I don't know if you've looked at transit stats in the US, but transit is falling off a cliff all over America. Even in New York and DC vintage markets, there's a big drop in the last year in transit use.

California's got heavily subsidized, very much reliant on taxpayers. Not great systems with these rising pension costs that are going to put them in a bind. Allowing them to get more customers could salvage the whole system and keep it going as a going concern that isn't constantly going hand in hand to Sacramento. 

It's good for growth and all the ways we've talked about previously. In a sense, yes, the transit is good for the development, but the development is also [laughs] really good for transit. If you want transit in California to continue, you need to let them have customers.

HAMILTON:  A lot of the coverage of the bill has been more focused on the aspects of allowing for more housing to be built, but I think the parking preemption is a really exciting aspect of it also. Donald Shoup is an economist at UCLA who's really dedicated his career to studying parking. He finds that in Los Angeles, parking requirements add over $100,000 to the cost of building each new apartment unit.

Developers certainly know that lots of people in California want to drive and want a place to store their cars, but not everyone does. Some people might be able to get by without a car or get by with fewer cars under this bill. It gives them the freedom to choose housing that doesn't make them pay for these expensive parking requirements.

FURTH: I think that's particularly important in Los Angeles, where they've made substantial investments in building out the LA metro system. Also, it seems to have largely displaced bus ridership, so not worked out from a financing point of view, as well as it could have.

Part of the reason for that is that if to get a home in Los Angeles, you have to, at great cost, have parking spaces, then you're very likely to have a car. Once you have the car, you should drive it. $100,000 parking space plus a car is a big investment in automobiles.

Cars are really useful. The reason to not drive to work would be that you were sparing yourself the expense of having and maintaining a car and an expensive parking space, which there's a good rationale for in Los Angeles. Los Angeles is already actually a fairly dense metro area. If it got even denser to meet the housing demand, people would say not because they're eco freaks who hate cars.


FURTH: It's just a trade‑off. Some people are going to say, "Look, I'm going to save the money and I'm going to take the bus to work. I'm going to ride the metro to work. I'm going to ride a bike. The weather is great." If there's any place you have to wait outside 10 minutes for a bus, you would want it to be Southern California, not Chicago.


REESE: That's fair.

FURTH: If you already have the car, you're going to drive the car, obviously. That's why these parking requirements are so important, I think, because you can say...Sorry. There's a huge chicken and egg issue with a lot of, I think, progressive thinking about this where they want the transit system to be in place first.

Realistically, you have to let people decide that they want to save money and then they become the constituency for the transit system that can maybe manage it well, actually provide customers the other things that they make it sustainable.

REESE: Emily and I come to this conversation from more on the political right, and you come from more of the political left, Matt.

Can you explain to us why it seems so difficult for a very blue state to get behind what sounds like, as we're talking about making housing affordable for the poor including working class people in the tech boom, transit, bicycling, making people independent of cars. This doesn't sound like a hard sell, when I think about my progressive friends.


REESE: Why is it so tough for California?

YGLESIAS: I do think in defense of hypocritical progressive people...


YGLESIAS: I think some of the pro‑development attitude in the Sun Belt is a little bit hypothetical. In practice, San Francisco is much denser than any southern Sun Belt cities. If you're talking about how constrained are they by regulation, yes, the constraint is tighter in California.

In terms of what have they actually allowed to transpire, it is denser there, particularly in the East Coast cities, much denser than in conservative Sun Belt ones. People don't like change. I think there was an old thinking on this associated with William Fischel in "Homevoter Hypothesis" that people were just merely trying to maximize the value of their own homes.

You see, I think, an even stronger level of knee‑jerk, small‑C conservatism than that, where people in affluent areas say that up‑zoning is going to lower their property values. People in low income areas say it's going to displace them. Those things obviously can't both be true simultaneously.

People live where they live. They've been there for a long time. They don't want to see it change. I was tweeting on my way in here about the transformation on the Orange Line area here. It's very striking. It's visually striking because you can see the legacy of low‑density, strip mall style suburbs between the new developments here. It looks weird.


YGLESIAS: Americans are used to a certain visual landscape, where there's the place where the city is and there's the place where the suburbs are, and they shouldn't mix. It's jarring to people.

I think people of all political proclivities almost just revolt against the idea that buildings might just not look like each other, or the strip mall might become an apartment building and it would be odd. We need to open our minds a little bit.

FURTH: That's interesting. Going back to something that you said right at the beginning of the podcast about building up versus building out. It's true that the red cities Sun Belt are mostly building out.

Actually, just in my day‑to‑day research here, I've been looking at growth in high‑cost cities, and California really stands out in that unlike the rest of the high‑cost cities in the US, its growth is weakest in high‑density areas.

If you look at Seattle, DC, Miami, even Chicago which has a declining population, and to a lesser extent Boston and New York, in already high‑density areas is where they're adding often the most new housing. They're adding at a much higher rate.

California's big cities are adding between 1.8 and 2.7 percent, that's a six‑year figure. Six years for your three biggest metro areas in California. You're getting about two percent more housing units in the dense‑ish. We're not talking about Manhattan or downtown San Francisco, but anything that you could remotely call urban. Very low growth.

California is actually closer to the rest of the country in terms of building out in the suburbs, where it's not adding densities in the cities. That was something that I didn't know. Obviously, I see what's happening in DC. Seattle is out of control. Seattle, and those kind of dense neighborhoods, has added 15 percent to its housing stock in six years.

YGLESIAS: We have had on the East Coast some cities like Baltimore and Philadelphia, which have lost population even while adding housing in the downtown cores. I think Philadelphia maybe is now actually growing. On the East Coast and some other places, there has been a trend toward density even in troubled places. California has a somewhat unique...I don't know.


YGLESIAS: I don't know what they're doing.

HAMILTON: Is it local‑level environmentalism that people want to preserve the nature that's very close to them rather than the broader natural environment?

YGLESIAS: It's definitely some of it. The local Sierra Club chapter in California is very, very opposed to this legislation. There's a contrast between a nature enthusiast and a person who is concerned about air pollution. Personally, I hate nature.


YGLESIAS: I would never go hiking or something like that.

FURTH: I will always fondly remember your piece where you wrote a very convincing argument against eating outside.

YGLESIAS: Exactly. That was my most dogmatic anti‑outdoors kind of thing.


YGLESIAS: I still, though, care about climate change and the long‑term viability of human civilization. That is different from-


YGLESIAS: -just liking a quaint natural environment. The institutional legacy of the environmental movement is much out of park appreciators. I'm into preserving natural landscapes. It's then evolved into what we would consider modern pollution concerns.

There's oftentimes a tension between those ideas. A built‑out California would make a greener United States, but probably a less green literal California.

REESE: I'll make another attempt to have so division here because you all agree on so many things. This gets back at what, I think, you were talking about earlier, Matt, where there is sometimes this surprise at a stark juxtaposition between low‑density and high‑density building in areas where we've seen this kind of change happen.

It's easier for us to maybe dismiss that in saying, "Oh, you're just stacking it away. You're used to certain things." Is there a value to a zoning process or zoning laws and local end‑use regulations that do preserve neighborhood character and focus on those kinds of things?


REESE: Not a lot of enthusiasm for that. [laughs]

YGLESIAS: I think there's a place for this kind of thing. I don't think that it would be unreasonable to say, "OK, there are some buildings that are worth preserving." Even there are some whole neighborhoods that are worth preserving just like we say you're not going to turn the Grand Canyon into a techy mall.


YGLESIAS: There's a cost to these things. Costs are sometimes worth paying. I think that you have to ask yourself, people have to ask themselves. Look at a whole community, look at a whole state and be like, "Well, where are we? How serious is this kind of problem?"

If people want to look at Seattle, which is in fact adding a lot of housing, and say, "OK, there is one neighborhood in Seattle that I think is so lovely that we're going to keep it unchanged," or we're going say, "Five percent of the buildings are the five percent awesomest buildings and we're going to save them." Those aren't crazy ideas per se.

I think what's been interesting about the reaction to this proposal in California is that this is not going to pass. Nobody actually wants to up‑zone this radically. At the same time, nobody is saying, "Oh, actually, I think the status quo is fine."

That's the issue. It's like you have to do something if you're going to say that the status quo is bad. In California, there's overwhelming consensus that what they're doing isn't working, so they're going to have to do something else.

FURTH: Character just can't stay the same. You can keep your physical character, but then your human character turns over completely over the course of 20 years and you replace all of the townies with techies.

If you want to allow the people who have been living there for generations to stay living there even as demand rises, then you've got to radically change the way the neighborhood physically looks. We just have to make these trade‑offs.

I don't think that those are valueless things. I don't take displacement unseriously. I value architecture and streets that are pleasant to be on. If you don't recognize the trade‑offs and say, oh, at a certain point, when we're trading off 100 percent of this type of character against 0percent of that type of character, you've gone too far.

HAMILTON: California has lots of lovely neighborhoods and lovely buildings. But giving the control to neighborhoods to say, we want to preserve our area just the way it is, is what leads to the displacement in less politically connected neighborhoods.

I think a historic preservation cap is interesting idea that would require people to make hard trade‑offs on which buildings actually need to be preserved. Just giving neighborhoods the control leads to the problems that we're having today.

YGLESIAS: I think you might want to say that something like SB 287 is too broad brush. The idea of centralizing the decision making somewhat makes sense. If you were talking, not about California, right, if we were talking about Paris, they have a problem of affordability in Paris.

They have a similar dynamic where the wages are much higher there than in other parts of France, where you have some declining industrial regions. It might be good to get more people into Paris to work for the big French companies, provide services, etc. At the same time, Paris isn't just like a pretty city. Tourism to Paris, specifically, is a huge economic engine for France.

It would be, I think, obviously, a blunder for the French government to totally ruin that in pursuit of some more bank branch managers. To think strategically about, like, what are we trying to do, like, where do we want more houses and offices to go, is a perfectly reasonable sort of idea there. You don't want the decision to be made by everyone just about, well, what's going to happen on my block.

You need to be thinking, what's the right choice here for France, for the region or something grander than that. When you do what we often do in the United States, and you let everybody make a decision about what's best for their hyper‑local area, you just, you overweight the interests of the people who happen to live right there versus everybody else.

There's an appropriate scale for these kinds of things. We make decisions about different policy areas at different kinds of levels. We, for historically contingent reasons, have decided that housing policy should be made at a super‑duper, duper low level and it leads to a dysfunctional outcome. I don't think recognizing that means that the decision should never be to preserve something.

FURTH: I think there's an interesting probably disagreement between us here, because on the one hand, yes, as you get more and more local, you get this, well, I don't care what happens outside, and in any case, my little neighborhood can't change the housing dynamics of the state.

Once you take it all the way to the limit and say, well, we're just going to let each individual homeowner decide what to do. Well, then, you actually solve the problem, because then people will say, "Wow, I get the full benefits of being able to up‑zone myself."

In places where, even where the citizens are very anti‑growth. Austin, Texas, right, has viciously anti‑growth, partly because they have actually had enormous growth rates compared to most of the rest of the country. They've actually dealt with really rapid increase in population and congestion. The whole spirit of Austin is, I came here 15 years ago and no one else should be allowed to.

REESE: Right, I came here to get away from Dallas. Right?

FURTH: Right, yeah, right.

REESE: Have you make it become the second Dallas.

FURTH: They all get together and yell about development. They can't do much about it, because the laws in Texas just give individual property owners an enormous right to do what they want with their own areas. There's like six blocks that are historically preserved and that's probably all that's needed, because Austin was puny until 1960 or whatever.

The result is that housing stays quite cheap there, it's actually not much more expensive to buy a house in Austin than in a declining place like Detroit or Cleveland. Now, you've got some real problems where...

YGLESIAS: It's funny how expensive people in Texas think Austin is, though.

FURTH: Yeah, that's true.

YGLESIAS: My in‑laws live outside of San Antonio, and they're like, "Austin's nice, but oh, my god, the prices."

FURTH: Yeah. San Antonio's the cheapest.

YGLESIAS: It's like a joke to me.

FURTH: Yeah, yeah. They have real problems, they won't build highways. That's what the Austinians do to screw the newcomers.

REESE: Interesting.

FURTH: They, like, well, you can build that subdivision out there, but we are just never going to approve-

REESE: Good luck navigating the local roads.

FURTH: -the highway to accommodate the new suburb. There's things that have to be planned. You can't say, well, we're just going to allow a transit system to evolve naturally and also get modern speeds. The anti‑planning mindset only gets you so far.

But on the affordability, especially if you have an existing infrastructure in place that's going to carry all these people, individual control as opposed to centralized can actually get you a solution to the problem.

Centralized control works really well unless everybody all agrees. If these same Californians who are all voting to not up‑zone their neighborhoods, if they get together at the state level and they say, "Well, we also don't want to up‑zone the whole state," then all you've done is kick the problem upstairs.

You have to really believe that people are going to correctly solve this math problem of, well, when I up‑zone the state, I'm not really up‑zoning my neighborhood, which I care about, I'm up‑zoning all these other ones. I think that works in a pure rationality context, but I don't know if behavioral biases will let that survive.

YGLESIAS: I think we have to see. The jury, to some extent, is out still on Texas, which has grown enormously, but Austin is still not a big city. It's not even close to being the biggest city in Texas.

They are not, in fact, building a transportation infrastructure that supports growth. As you say, somewhat deliberately, they are trying to sabotage the construction of what should be an emerging real big metro area over there.

I'm going to be interested to see how that plays out over the next generation. Do they reach a political equilibrium that allows for something better than a weird mix of like uncontrolled sprawl with then no support for actually bringing more people in there?

Houston has been an interesting case where they have done some changes to allow for more infill, but people sometimes say to me, they're like, "Matt, you must love Houston."

Although, even there, the parking requirements, by quite a bit, and you create an odd form of density, where you have a lot of houses and a lot of people and they all have cars. Because they all have cars and parking lots, there's no transportation, there's not a lot of things you could walk to in your neighborhood.

It's a little bit of a unpleasant kind of place that has then given lax of regulation a bad name in a lot of people's minds. I do hope that they come to something better there. I hope California does, too.

REESE: I will say my one experience in Houston was a very rude awakening to what they call feeder roads, which I was totally, as a Kentucky native, ignorant of vis‑‡‑vis small roads that run alongside their major highways. If you don't know how those on ramps and exit ramps work, you can find yourself in the wrong place very quickly in Houston. I'm a little sympathetic.

I've only got one question left, so I say that to give you all a warning that if there's a topic I haven't hit yet, this is a great time to ignore what I actually ask and bridge to whatever your point is that you'd like to make.

It's always easy in policy to talk about the problems. It sounds like you guys are not super optimistic that this particular Senate bill in California's going to pass, which means it won't be a model for all these other cities to follow.

What does the policy path forward look like? We talked about Houston and Arlington, what are the positive reform opportunities for cities that find themselves struggling to say, how do we solve the affordable housing problem, or the transit congestion problems in our city?

FURTH: I actually think things have turned in the US. The fact that we're talking about this and a lot of people in the intellectual space are, and the fact that we can point to places like Seattle, Austin, New York and Miami that are doing a lot of infill development, that didn't happen, I think, much in the '80s and '90s.

There were some problems with cities, people didn't necessarily want to be there, so it was a demand problem. Even where prices were high, these neighborhoods that were in the city were left alone. I think we are seeing a partial solution. Here's the big one in California from last year, is they got the right to build affordable dwelling units on virtually every single‑family home.

I think 4,000 permits were filed in Los Angeles in the first year. That's going to continue. If you take Los Angeles, right, so a city of, like a million single family homes that all look very, very similar. If every one of those gets the right to double in size or nearly double in size by adding a 1200 square foot accessory dwelling unit, that's an enormous amount of infill density that no one had really contemplated.

It could sort of organically cluster where parking is less tight or transit options exist. You might say, hey, I'm going to rent this dwelling unit, but I'm going to put a stipulation you can't bring your car, because I don't have space in my driveway for you. That's something a landlord can do.

That's a really interesting way forward. I think there are going to be some things like that. It's not going to be, those aren't magic bullets. Right? I actually think that we have turned the corner.

HAMILTON: I think that public consciousness about the problem of not letting housing to be built in cities is increasing, and that's creating opportunities for having debates about, like, SB 827, even if it doesn't pass. Although I'm not completely pessimistic that some version of it might not pass.

REESE: OK, so there's some chance there.

FURTH: There's going to be on one transit station at the upset.

HAMILTON: But, yeah, I think the Overton window has certainly shifted in these conversations. Like Salim, I have some optimism. I also think it's important to take a look at cities that aren't yet expensive, but that are growing, and a look at what could be done to preserve the current development conditions there.

YGLESIAS: I should say that I would be very pessimistic about this specific legislation, but I think that it is the right political path forward. I started by noting that this is a very radical proposal, and I think that that is a good idea.

In Washington DC, our former Planning Director, Harriet Tregoning, she set about to do, I think, a very useful effort at up‑zoning. She pre‑compromised to what she thought would be the most potent objections to the idea and put forward an agenda that didn't totally fit the principles that she had articulated.

What happened when that came out was, people still raised objections, there were further compromises in the process. What wound up being done in the new plan was just not that big of a departure from the status quo.

I think it's right to say, look, if the principle based solution here is that we should drastically up‑zone a huge swath of the state, you put that out there, you let people object, you wind up, either something compromised watered down passes, or you force people to cough up proposals of their own.

Because what is fascinating about California is that you could imagine a world in which people say, "Look, this is fine. Like, I have my house, it's really nice. I don't want anything to change. I think everything is fine." That's just not what any elected officials or any citizens there are saying. Everybody is saying that they have a problem, so now you have a proposal to change it.

It's very drastic, it's very radical. A lot of people don't want it. If you can have a conversation where everyone's like, "Well, we're going to do something," something will wind up getting done. This ADU bill is weirdly more sweeping than I would have thought anything could be, possibly didn't even realize how sweeping it was.

It goes to show that when an issue is on the policy agenda, something constructive tends to get done, and that's what we [inaudible] .

REESE: Well, I think with that, despite the fact that we're obviously just scratching the surface on this issue, and I think we almost had buried in there, other entire podcasts that could have been done on federalism and labor force mobility.

I almost want to bring you guys back on and lock you in here for another couple of hours. But I will let you go for your all's sake and for our listener's sake.

FURTH: Thank you.

REESE: I would like to wrap up. You guys have been prolific on this issue and we'll link to a lot of the work that you've done, Salim and Emily, I know you just released a policy brief on this issue in particular. Matt, I know you've written particularly on the transit effects, the results, and what SB 827 or policies like it might do to car and transit use.

I just want to give our listeners an opportunity to keep up with your work. I'll just going to go around the table and ask if you guys, whether it's a website that you want to promote or a Twitter account or handle or you want to give our listeners. Where's the easiest place for folks to go to keep up with what you're working on the topic? I'll start with you, Matt.

YGLESIAS: Just definitely read my Tweets. I'm @mattyglesias there, and got links to everything.

FURTH: Yeah, similarly, Twitter's the best place to reach me, it's going to be @salimfurth.

HAMILTON: I'm @ebwhamilton, and I write for the blog Market Urbanism.

REESE: Great, and as always, I'm eager to hear from you as well. Please email me your questions, comments, complaints or episode ideas at [email protected], or find me on twitter @ChadMReese.

Thank you all.

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