All You Need Is Love (and Deregulation)
Building our way to affordable cities does not require a government-led "post-neoliberal" approach to housing development.
Happy Tuesday, and welcome to another edition of Rent Free.
To start with a brief programming note, I am off on vacation these next two weeks. Consequently, the newsletter will be a bit more abbreviated and a little less hooked to the news the next couple Tuesdays.
That includes today's, where our sole main story responds to the unusual claim that Washington, D.C.'s relatively impressive record on housing production proves the need for proactive government planning.
Is Washington, D.C., Not So YIMBY After All?
This Saturday, The Economist ran a piece on D.C.'s "YIMBYiest neighborhood" of NoMa, which has been leading the nation in new apartment construction over the past several years.
The neighborhood, formerly called "Swampoodle" was once mostly an industrial area with few residents. Through zoning changes that allowed new housing near newly built Metro rail stations, the city enabled a building boom there and other neighborhoods like it.
Rent Free Newsletter by Christian Britschgi. Get more of Christian's urban regulation, development, and zoning coverage.
A lifting of zoning restrictions on new housing followed by a sharp increase in housing production sounds like a YIMBY success story, if ever there was one.
Not so, says Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator.
In an article published in Washington Monthly a few days before The Economist's piece, Shearer argues that D.C's housing boom is not the result of "bottom-up zoning reform" but rather "top-down government action."
Shearer acknowledges that D.C. did its fair share of upzoning. But he argues that it was the city's supplemental government interventions—the setting of housing production targets, generous subsidization of affordable housing construction, infrastructure investments, and more elaborate planning generally—that made those upzonings really yield units.
It's this government-led approach that's enabled D.C. to produce more units per capita than famously unzoned Houston, says Shearer. YIMBY reforms that replace single-family-only zoning with zoning that allows duplexes, triplexes, etc., have produced a minimal number of new homes.
This all proves to Shearer that a "post-neoliberal" approach to housing is more productive than the hands-off "YIMBY playbook."
It probably wouldn't be too fruitful to debate the semantics of what counts as a YIMBY vs. a "post-neoliberal" approach to housing policy. Most self-identified YIMBYs (regrettably) have few inherent qualms about subsidies and government planning, provided they're paired with relaxed zoning. Likewise, Shearer measures the success of D.C.'s "post-neoliberal" agenda in large part by its ability to boost private housing production. There seems to be a lot of overlap.
It is nevertheless worthwhile to interrogate Shearer's substantive claim that D.C.'s "top-down" approach is getting more units built than cities that have taken a more hands-off approach.
For starters, I think Shearer is wrong to say that D.C. is outperforming Houston on housing production.
If one looks at the housing permit data culled by housingdata.app—which pulls permitting numbers from the U.S. Census Bureau's Building Permits Survey—D.C. has in fact been building more units per capita than Houston for most years in the past decade.
But that's to be expected. Median incomes and average home prices are nearly twice as high in D.C.
People have more money in D.C. and are willing and able to spend more money on housing as a result. The returns to building that housing are much higher in D.C. One should expect, then, that D.C. is building way more housing per capita than Houston, not just modestly more over the past couple of years.
Instead, the former has only surpassed the latter in per capita housing production within the past decade, and only by a significant amount in a handful of those years. And according to housingdata.app, in 2023 and 2024, Houston was back to building more housing per capita.
This says nothing of a place like Austin, Texas, which has built far more housing per capita than both D.C. and Houston.
Shearer is on stronger footing when he notes that cities that have eliminated single-family-only zoning—a much-heralded YIMBY policy goal—have seen minimal additional housing production as a result.
As Reason has consistently covered, most such "middle housing" reforms—whereby single-family-only zoning is replaced by zoning that allows duplexes, triplexes, and fourplexes—typically yield at most a few hundred new units in their first years.
That's because these reforms only allow a few extra units to be built per property.
In some cases, these reforms haven't even allowed for more buildable floor area, meaning a new triplex would have to be no larger than a single-family home it would replace. Often, "missing middle" reforms still retain other rules about setbacks, parking, and impact fees that limit them even further.
If a reform only allows a little more housing to be built, one would expect that only a little bit more housing does get built.
Low-yielding "middle housing" reforms aren't, therefore, proof of a failure of deregulation. They're a failure to deregulate.
It's worth noting that the implementation of some middle housing reforms has been blocked by lawsuits. That suppresses the number of homes that result from them even more.
Furthermore, the various D.C. interventions Shearer mentions as part of its distinctive "post-neoliberal" approach to housing are policies that lots of cities that don't build nearly as much already have.
It's true, for instance, that D.C. Mayor Muriel Bowser set a housing production target for the city to build some 40,000 units in 2019. But lots of cities set housing production targets.
It's also true that D.C. has an affordable housing production trust fund. Close to 600 cities in the country have a similar trust fund.
Other D.C. policies Shearer name-checks, from planned unit developments to tax increment financing, are also common across America.
The thing that's distinctive about D.C. isn't that it has all these policies. It's that it has actually built a lot of housing and kept rents lower as a result.
Why has D.C. succeeded at building where places with similar government interventions have failed? I'd hazard to argue that it was because the city upzoned more aggressively than other places, and upzoned areas where economic conditions were ripe for new housing production.
In other words, it was the hands-off part of its hands-on policies that actually got homes built.
Emily Hamilton notes in a Works in Progress piece from 2023 on "how D.C. densified" that most of its new housing went in upzoned formerly industrial areas, where land-hungry, low-rent businesses could be replaced with higher-rent apartment buildings.
It's to the city's credit that it upzoned these areas. But a "bottom-up" upzoning without a bunch of taxes and subsidies would have produced a similar result.
Indeed, the bulk of Hamilton's article on D.C.'s densification is about Arlington, Virginia, which led the way with the upzoning of commercial areas near Metro stops and saw a similar development boom as a result.
One would assume that development subsidies, of the kind that D.C.'s housing production trust fund provides, would increase housing production even more. The D.C. fund has received praise from builders for the number of affordable units it's helped create.
On the other hand, the city's production trust fund doesn't appear to have avoided the common problem of massively inflated affordable housing construction costs. The Washington Post reported recently that city-subsidized affordable housing units in D.C. were costing $1.2 million apiece, which is far more than what some market-rate developers were spending.
Moreover, the supply effects of those subsidies are counterbalanced by other taxes and mandated "community benefits" D.C. imposes on housing developers—both of which Shearer praises in his article.
The one government intervention in D.C. that few would argue has helped kick off D.C.'s housing boom is the construction of new Metro rail stations. That's made new apartment development much more viable.
Nevertheless, a number of cities have built new rail lines without seeing much in the way of new housing construction near those stations. That's because they didn't allow much new housing near the new rail stops.
Again, zoning reform is a necessary precondition of new housing development, even if one wants to argue that it's not a sufficient precondition.
It's worth noting, too, that while the government currently monopolizes mass transit construction and operation, this was not always the case.
The streetcar lines that gave the early "streetcar suburbs" their name were private, for-profit ventures. It's not hard to imagine a libertopia where private developers once again build and operate transit lines as part of their real estate business.
America's cities have done so much to constrain housing development that it often seems like anemic growth is a natural state of affairs.
That gets people to underestimate just how much housing the market would produce if we slashed red tape with Randian abandon. It also means that people will often interpret the success of deregulation as a product of government interventions that accompany it.
In truth, there's little reason to assume that "post-neoliberal" government planning and intervention is truly necessary to get America's cities building again. A "pre-post-neoliberal" (let's call it libertarian) approach to housing policy of deregulation and not much else would work wonders for housing production if we let it.