Tag: Housing

The Platinum Rule

 

The Golden Rule, “Whoever has the gold makes the rule,” has turned into the Platinum Rule: “He who has the government’s American Excess Platinum Card makes the rules.” Because state politicians lack the power to spend significantly in excess of annual revenues, thanks to state constitutional balanced budget provisions, they turn to Uncle Sugar. The first taste may be free, but then come the demands. This bipartisan political dynamic has pernicious effects on the constitutional balance between states and the federal government. nationalizing much of our policy, right down to local government and so right down to where you live.

But wait, we hear all the time about states in debt, what is this state constitutional limit talk?

Introducing Kite & Key

 

Admit it: you’re a nerd. Admit it, Ricochet!

No worries — me too. And during my years as a think tank executive, that was always a frustration. People who casually followed politics would ask me how to get a quick understanding of a public policy issue and … I wouldn’t know where to send them.

TV and the major newspapers increasingly focus on the political dimensions of policy fights, without telling you anything meaningful about the substantive debates. But where was I going to steer people? To one of our white papers? To a book I knew they didn’t have the time to read? I got paid to be immersed in that stuff — and I loved it. But these people had lives to lead. They wanted to be responsible, informed citizens, but didn’t have endless free time to delve deep into policy research.

‘Systemic Racism’ a Red Herring in Evictions

 

Last month, I testified before the New York State Advisory Committee to the United States Commission on Civil Rights on the vexed question of “Discrimination in Eviction Policies and Enforcement.” Several months before my testimony, the commission issued a report concluding that the United States “is in the middle of an eviction crisis, one in which persons of color are disproportionately impacted and suffer unequal treatment.” The study further held that the racial disparities in eviction that existed pre-COVID have been magnified since the pandemic struck—such that the eviction crisis has an important civil rights dimension.

The economic impact of the pandemic has been exceptionally devastating in New York, in part because of the severe limitations that Governor Andrew Cuomo placed on economic activities under his broad emergency powers. These restrictions directly hamper the ability of tenants to earn money and pay rent, thereby affecting the earnings of landlords, many of whom are part-time. The question then arises as to what kinds of remedial activities should be taken in both the short and long term.

To the New York State Advisory Committee, as well as many other commentators, the solution is a moratorium on tenant evictions. The committee believes the current moratorium should be kept in place, perhaps for as long as it takes for the economy to return to normal. This assessment is supported by the common assertion that the disparate impact of evictions on black and other minority populations is evidence of an entrenched form of “structural racism” that requires corrective measures. The disparate impact of the pandemic cannot be denied. But in my view, any claim of structural racism (or worse) cannot be sustained.

Two Cheers for HUD

 

President Trump’s Department of Housing and Urban Development (HUD) issued a rule this past week grandly titled “Preserving Community and Neighborhood Choice.” That rule undid an Obama administration rule on the same topic, called “Affirmatively Furthering Fair Housing” (AFFH). In July 2015, the Obama administration adopted an aggressive position that allowed HUD to monitor state, county, and local governments that received HUD grants to see that they had undertaken exhaustive efforts to remediate a wide range of racial disparities in housing markets, thereby raising the costs that arise from accepting government grants. Under HUD’s recently revised regulations, HUD Secretary Ben Carson scaled back the regulations so they concentrated not on the overall condition of local housing markets, but on the risks that individual acts of discrimination pose to individual applicants.

At no point in that order did HUD single out suburban housing for special treatment. Nonetheless, with scant regard to the content of the revised rule, President Trump posted a celebratory tweet: “I am happy to inform all of the people living their Suburban Lifestyle Dream that you will no longer be bothered or financially hurt by having low income housing built in your neighborhood.” This ill-advised outburst prompted a cascade of criticism that portrayed the new HUD regulation as a backhanded effort to undo President Obama’s much-needed protections against racial bias. As one critic alleged, whereas Carson carefully cloaked these major substantive reforms in a procedural guise that stressed paperwork reduction, the new rule in reality was intended to “reduce the pressure on local governments to provide space and opportunity for Black families in affluent white neighborhoods.”

But the new HUD rule scores well on two key points. First, it is more consistent with the basic objectives of the Fair Housing Act of 1968 (FHA), which aimed to prevent pernicious forms of discrimination in the housing market. Second, it avoids the highly interventionist mission creep of the Obama-era AFFH rule, which insisted that the purpose of HUD was “to create strong, sustainable, inclusive communities and quality affordable housing for all.”

American Architectural Geography: Part 1, Timing

 

Last winter, Ricochet’s own @thelostdutchman published a great series about Pennsylvania political geography. Being something of a geography geek myself (the map-loving kind, not the critical-theory-spouting kind), I thought I’d try my hand at writing something a tad less detailed and a tad more ambitious — a brief description of American architectural geography.

Finding data which says something meaningful about architecture is not an easy task, perhaps because architecture is an art, and art isn’t quantifiable. But, still, the statistical gods have smiled upon us Americans. In 1940, the Census Bureau decided, for the first time, to ask detailed questions about American housing. As the libertarians winced, homeowners and renters filled out a questionnaire inquiring about such subjects as property values, housing size, mechanical systems (like heating, plumbing, and electricity), and, best of all, housing age. The data is aggregated by county and city (and farm and non-farm), and it’s organized, roughly, by decade — with a category for houses built before 1860, one for houses built in the 1860s and 1870s, one for houses built in the 1880s, and so on. This means that the interested obsessive (like me) can gain some understanding of any one county’s architectural chronology. Is the data accurate? Not entirely. Self-reported data is seldom accurate. But it’s accurate enough to show trends. I’ve done plenty of spot-checking, and the data usually aligns with what I’ve observed. The picture it paints is a meaningful one.

Your Friday treat is three crazy martinis, but only after basking in the glow of the 40th anniversary of the Miracle on Ice and the national morale boost a bunch of unheralded college kids gave us by defeating the supposedly unbeatable Soviet Union in the 1980 Winter Olympics.  Then, join Jim and Greg and as they bang their heads against the table after Nevada Democrats say they can’t promise results of Saturday’s caucuses on the same day they’re held. They also weigh in on Michael Bloomberg’s video of crickets chirping and his fellow Democrats shifting uncomfortably when he asked if any of them had ever started a business – was it deception or just a candidate making a point? And as California Gov. Gavin Newsom says doctors should be able to prescribe housing just like they prescribe insulin and antibiotics, Jim offers Newsom a devastating reminder of which party led California into the homelessness crisis and many other problems.

Rent Control Laws Are Unconstitutional

 

New York City recently implemented its far-reaching Housing Stability and Tenant Protection Act of 2019. That law enacted extensive amendments, all plaintiff protective, to New York’s 1969 Rent Stabilization Law (RSL). The Act imposes the RSL throughout the state. It also reverses the state’s earlier position on Luxury Decontrol for High Income Tenants. Formerly, when a tenant earned over $200,000 per year and paid a rent of at least $2,700 per month, the unit was decontrolled to allow the landlord the benefit of market rate rents. But under the new law, well-heeled tenants can continue to pay at most 15 percent of their gross rent on city housing.

The new act also sharply limits rent increases when landlords make improvements on a tenant’s premises. The older system allowed increases of up to 6 percent per annum, but the newer rules cap that figure at 2 percent, which makes it highly unlikely that a landlord can recover the costs of those improvements (assuming these are still made) over their useful life.

Finally, the new law also works a major change for the many units covered by the RSL but which are rented at below the regulatory cap. These below-cap rentals show how rents are in many areas constrained solely by powerful market forces: landlords cannot move up to the maximum rent levels when demand is not there. Nonetheless, the 2019 law treats the tenant’s current rent as a statutory base for calculating any future rental increases for that tenant. These landlords are now severely restricted in the extent by which they can raise rents going forward.

Seth Barron talks with four City Journal contributors—Rafael MangualEric KoberRay Domanico, and Steven Malanga—about former New York City mayor and now presidential hopeful Michael Bloomberg’s record on crime, education, economic development, and more.

After years of teasing a presidential run, Bloomberg has entered the race for the 2020 Democratic nomination. Just a week before his official announcement, he made headlines by reversing his long-standing support of controversial policing practices in New York—commonly known as “stop and frisk.” Bloomberg’s record on crime will factor heavily in his campaign, but his 12 years as mayor were eventful in numerous other policy areas.

Autumn Colors: The Color of Law, an in-depth review

 

When people are free to associate as they please, we can’t be surprised if they sometimes self-segregate. People self-sort along many affinities, including ethnic affinities. This is what lawyers call de facto segregation, and it’s none of the law’s business. De jure segregation — segregation imposed by law, including segregation promoted by public policy — is, on the other hand, very much the law’s business.

In 1866, Congress passed a Civil Rights Act (the 1866 CRA) asserting the equal rights of blacks before the law, including property rights, and real-estate rights in particular. The 1866 CRA warned

Edward L. Glaeser discusses how the proliferation of unfair laws and regulations is walling off opportunity in America’s greatest cities at the Manhattan Institute’s 2019 James Q. Wilson Lecture.

We like to think of American cities as incubators of opportunity, and this has often been true—but today’s successful city-dwellers are making it harder for others to follow their example. In this year’s Wilson Lecture, Glaeser addresses the conflict between entrenched interests and newcomers in its economic, political, geographic, and generational dimensions.

The Rent Is Too Damn Low

 

New York Governor Andrew Cuomo signed the grandly titled “The Housing Stability and Tenant Protection Act of 2019” into law last week. Its extensive amendments to the earlier law passed with lopsided majorities in both the state Senate and Assembly after progressive lobbyists stormed the legislative beaches in Albany. They pitched their campaign as a fight between good and evil—between rich landlords and strapped tenants. They emphasized the precarious position of some tenants facing eviction, but ignored the huge windfalls given to those fortunate tenants who occupy stabilized units that rent for only a fraction of their market value.

The implicit economic assumption behind the reforms was that the protection of tenants under the Act would result in a simple wealth transfer from rich (or undeserving) landlords to poor (or deserving) tenants, with no collateral consequences to the quality of housing stock or the rate of new investment in rent-stabilized units.

After the passage of the legislation, the Democratic Senate Leader Andrea Stewart-Cousins and the Democratic Assembly Speaker Karl Heastie could scarcely contain their elation: “These reforms give New Yorkers the strongest tenant protections in history. For too long, power has been tilted in favor of landlords and these measures finally restore equity and extend protections to tenants across the state.” Why earlier caps on rents favored landlords was never explained.

Nicole Gelinas and Howard Husock join Seth Barron to discuss New York’s landmark rent-regulation law and its potential impact on housing in the city and state.

Lawmakers in New York recently passed the toughest rent-regulation law in a generation, imposing new restrictions on landlords’ ability to increase rents, improve buildings, or evict tenants. The bill made permanent the state’s existing rent regulations, meaning that future legislatures will find it harder to revisit the issue.

Economics 101 in Labor and Housing Markets

 

A few simple premises of economic theory have the power to generate a wealth of powerful and instructive insights. Nowhere is that more true than with the law of supply and demand, which starts with two basic assumptions: as the price of a good increases, so does the supply—and as the price increases, the demand starts to fall. In an unregulated market, when the downward-sloping demand curve crosses the upward-sloping supply curve, the market is in equilibrium—the point where supply meets demand at a given price.

The only task for a government under this austere model is to make sure that various contracts, whether for labor, housing, or any other good/service are fully enforced, while leaving the terms of those agreements to the parties themselves. Happily, this system of freedom of contract is self-regulating, so that the price or wage of particular goods and services can quickly adjust to changes in supply or demand, or both. A dynamic market thus always moves to reestablish an equilibrium in the face of unanticipated external changes.

Unfortunately, these readjustments do not happen when artificial limits are set on prices or wages. In the housing market, for example, maximum limits on rents make demand outstrip supply, leading to housing shortages. In the labor market, a minimum wage leads to an excess of demand for jobs and a shortage of openings. The greater the deviation between the mandated maximum or minimum price and the market equilibrium price, the greater the potential shortages. Wasteful queues form for high-wage jobs and low-rent housing. Private machinations and political intrigue quickly follow, as desperate tenants and workers switch into high gear to evade the price and wage restrictions ostensibly enacted for their benefit.

Thoughts on Today’s Vietnam

 

I am returning from Vietnam today, after a visit that stretched from Saturday through Tuesday. Literally. The flight arrived at midnight Friday, and the flight out departed at 2:00 am on Wednesday. I am writing this at the Transient Lounge in Seoul Airport, an amenity deserving a post of its own. My flight for the U.S. departs after a nine hour layover here.

I was in Vietnam visiting the family of my middle son’s fiancee, they had the engagement ceremony over the weekend. Since most of her family will not be able to visit the U.S. when she and my son get married, the engagement ceremony was done in lieu of the wedding for the Vietnamese relatives. To protect their privacy, I will hereafter refer to her as Vietlady and my middle son as Pipeliner (since he designs oil and gas pipelines).

A Different Take on America’s Housing Crisis

 

In my recent podcast with Lynn Fisher, we discussed America’s affordable housing crisis in mainly economic terms. Demand is too high, supply is too low, therefore roll back regulations on land-use and zoning and allow the market to work. As Fisher put it, if cities start “allowing townhomes and duplexes and places that were originally single-family homes to be redeveloped into 20 unit buildings, I think you would see the market take care of itself.”

This answer came in the context of San Francisco, infamous among US cities for its cost of living, which economists see as a major drag on growth: excessive costs keep people from moving to these cities where they’d be far more productive. But a previous podcast guest, Joel Kotkin, offered a much different opinion when we discussed this topic. Here’s a brief, lightly-edited excerpt from our conversation:

Pethokoukis: There’s been a lot of talk that we need to move people into these high-productivity cities like San Francisco. Is the key moving more people to those places, or just moving them more to cities, but cities in the Midwest or Texas?

Howard Husock joins Seth Barron to discuss the Fair Housing Act, racial discrimination in residential neighborhoods, and efforts to reinvigorate the law today.

This year marks the 50th anniversary of the passage of the Fair Housing Act, the landmark legislation signed by President Lyndon Johnson aimed to end housing discrimination and residential segregation in America.

Member Post

 

The Hobbit-hole is a tubular, subterranean dwelling, built into a hillside. Hills are of course a scarce resource in a dense city, especially in a place like Hong Kong, which is naturally hilly, but very built up. Architect James Law has come up with an ingenious urban solution for those craving that tubular, subterranean feel: […]

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California’s Single-Family Home Gridlock

 

In his excellent article, “The Great American Single-Family Home Problem,” Conor Dougherty, an economics reporter for the New York Times, offers a riveting account of a heated land-use dispute in Berkeley, California. In 2014, a real estate developer purchased a dilapidated home at 1310 Haskell Street in an estate sale. But his plan to rip that structure down to put three modern single-family homes on the lot met with intense local resistance. The neighbors claimed that the new homes would reduce street parking, block sunlight, and change the character of the neighborhood for the worse. Lawsuits delayed construction for several years even though that project complied with all local zoning ordinances. The story illustrates the fatal pathologies that grip land-use regulation in the United States.

In the short run, such regulations produce notable local victories. They slow down the projects and raise the costs of new construction, dulling the ardor of the hardiest developer. But these local victories can become regional disasters, as an acute housing shortage raises the prices of existing units to unaffordable levels, leading first to long commutes over clogged highways and then to outmigration by small businesses and individuals who cannot tolerate the grind. In response to this impasse in California, Governor Jerry Brown has backed a set of administrative reforms designed to prod wayward local governments to expedite issuing building permits. But it is highly unlikely that piecemeal reforms of this nature will make the slightest dent in the current housing crisis, partly because they are often packaged, as Dougherty notes, with proposals to subsidize affordable housing and demands that construction workers be paid prevailing (i.e. union) wages.

The difficulty stems from a fundamental premise of modern American land-use law that has gone unexamined for decades: namely, that the government has the unquestioned right through its planning processes to impose a stifling array of permits and restrictions that tell the developer what, when, where, how and how much to build on his own property. Indeed, recent work finds that “as much as 40% of the slowdown in economic growth” is attributable to the ever-expanding panoply of land use restrictions. Clearly, the situation has taken a turn for the worse. It is important to understand how a wrong turn in basic legal theory undergirds the current crisis.