Scott Sumner  

Very bad news on housing

Income, Sex, and Moral Equival... Henderson on Leland Yeager...

This is depressing:

"Have you considered the racket and the lights and the crowds and the traffic, and everything that's going to happen to those of us who live here?"

It is a familiar sight in America: the public meeting, the angry residents, the housing developer trying to explain himself over the boos.

"Take the money you've got and get out of here," one person shouts. A chant begins: "Oppose! Oppose! Oppose!"

Except this is not San Francisco or L.A. or Boston. It is Boise, Idaho.

And it is a preview of the next chapter in the housing crisis. Rising rents, displacement and, yes, NIMBYism are spreading from America's biggest cities to those in its middle tier. Last year, according to an Apartment List survey, the fastest-rising rents in the country were in Orlando, Florida; Reno, Nevada; and Sacramento, California. Another survey, by RentCafe, found exactly one city with a population greater than 500,000 ― Las Vegas ― in the top 25.

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Although Boise is the fastest growing city in America (growing 3% per year), it is issuing fewer than half as many building permits as in 2007. The problem is NIMBYism:

This is where Boise starts to look depressingly familiar. In the last few years, as the city's growth has become more visible, NIMBY groups have taken over the political conversation. Of the 21 speakers at a town hall meeting last month, only two said they welcomed more growth. Signs reading "OVERCROWDING IS NOT SUSTAINABLE" are showing up in front yards. Some local residents, taking a page from the San Francisco playbook, are trying to get their neighborhood classified as a "conservation district" to block new buildings from going in.
These building constraints are contributing to a rapid rise in inequality:
The Treasure Valley is growing quickly in myriad ways, and with that has come a massive leap in the gap between the Boise metropolitan area's richest and poorest households, according to a Bloomberg analysis of Census Bureau data.

The business news site analyzed average income among the top and bottom 20 percent of households. It found that the wealth gap in the Boise area widened by $44,400 from 2011 to 2016. That is so much that it rocketed Boise from No. 76 on Bloomberg's ranking of disparities in the top 100 metro areas to No. 7.

Idaho is one of America's least densely populated states. If building restrictions are turning even Boise into a "closed access city", what hope is there for the rest of America?

On a related note, file this under "Make Argentina Great Again":

The capital cost of a new petrochemical plant is at least 50% higher in America than in China today, estimates IHS Markit. Because of its many fallow years, the American chemicals industry has lost a generation of talented field managers, welders and other workers. Labour shortages are a big headache and expense.

The darkest cloud, though, is politics. Consider Mr Trump's tariffs on imports of Chinese steel and aluminum. Dow says that the steel tariffs alone will add $300m to the cost of its new plants in Texas, and threatens to build its next facilities in shale-rich Argentina or in Canada instead. The ACC observes that China imports 11% of all American plastic resins, noting with alarm that 40% of the American products to which China has assigned retaliatory tariffs are chemicals. This tit-for-tat may, in the end, prove mostly bluster. However, it would be rum indeed if Mr Trump's efforts to support local heavy industry ended up derailing the ongoing revival of America's once-moribund chemicals sector.

Comments and Sharing

CATEGORIES: Regulation

COMMENTS (16 to date)
Mark Z writes:

Oy vey. Overcrowding is just about the most sustainable thing there it.

I speculate that (I have no numbers on this; if I were an economist, it's one of the topics I'd most want to research) the most energy efficient (and environmentally beneficial) things we could do as a society is allow for denser building. Significant reductions in commute times, land use per person, and transportation distance for goods could reduce CO2 emissions a great deal, as well as save us a lot of money. I like to think it would even do far more than most proposed environmental policies would.

Dylan writes:

I had a friend who did real estate development in Boise in the early 00s. I believe Boise was one of the fastest growing cities in America back then as well, but there were a lot of places in the heart of downtown on lots that were half an acre and up. The city was trying to manage the growth without turning the place into the land of eternal sprawl, so my friend made a nice business of buying up some of these big places and subdividing the lots and putting up multiple houses. A business that did not make him popular with the neighbors, who would do their best to try to fight every proposed split.

As I get older, I can't say I really blame them that much either. I've lived for a decade in an industrial neighborhood near a big city. When I moved in there were few legal places to live, so people moved in illegally. This was great, because most people didn't want to live under the constant threat of eviction so there were just enough people around to support a couple of decent restaurants and a bar...but few enough that after the premix place shut down the neighborhood felt deserted. Then the city went ahead and saw what was going on and did the sensible thing and retroactively rezone plus allowed for a lot more new residential development nearby. Now I've got a ton of neighbors, rents have skyrocketed, and there are like 6 yoga studios within a 5 minute walk. Change sucks and I'm all for legislating it out of existence when it benefits me.

Mark Z writes:

"Change sucks and I'm all for legislating it out of existence when it benefits me."

Well, you can't really blame someone who would benefit from change saying (while nodding toward your building), "the status quo sucks and I'm all for legislating (and bulldozing, thanks Kelo!) it out of existence."

john hare writes:

NIMBYism sums up as "I've got mine, so clear off!" I have listened to a radio station bemoan inequality and new development in the same sentence.

Scott Sumner writes:

Dylan, You said:

"Change sucks and I'm all for legislating it out of existence when it benefits me."

If everyone in America had that attitude we'd be Somalia.

Dylan writes:

@Scott and Mark

I really thought about putting a ;) after that line, but it felt somewhat unbecoming for Econlog, so I refrained and hoped the not even half serious proposal was understood as not serious. All I meant is that I understood the instinct, because people build something nice for themselves and would like to do what they can to keep things as they are, including inventing bogus reasons for why some development makes a lot of sense, just not right here.

But I'll have to admit to being surprised to hear that Somalia's problem is an excess of regulation aimed at making sure things don't change.

Alan Goldhammer writes:

I think NIMBYism is prevalent in virtually every community. It certainly is alive and well where I live in Bethesda where every single development is attacked for "ruining our quality of life" whatever that means. About a mile from my house is a former 'high end' shopping mall that has been leveled except for one lone holdout, a Lord & Taylor store that had a long term lease and refused the buyout offer. The property is now the key parcel of land being offered to Amazon for their 2nd headquarter. I don't know if Amazon accepts the land and all the cash and tax abatements the state is offering but I do know that the value of my property will probably increase by 10% the day Amazon were to accept that deal.

A mile in the other direction is downtown Bethesda which is now being slowly leveled and repopulated with high rise offices, condos and apartments. The condos are very expensive, probably $1.5M for a large two bedroom which is pretty steep. Personally, I don't mind all this development as it's being done is a fairly responsible way. that view is not shared by a number of my neighbors.

David R Henderson writes:

@Alan Goldhammer,
Personally, I don't mind all this development as it's being done is a fairly responsible way. that view is not shared by a number of my neighbors.
Good for you, Alan. It's refreshing to see someone advocate allowing others to have what they have.

John Aiton writes:

Yeap same people complain about affordable housing, living wages , hunger gap , Medicaid gap,...

Boise has become the Soviet of the Sagebrush (I moved here in 81 ).

Viking writes:


"But I'll have to admit to being surprised to hear that Somalia's problem is an excess of regulation aimed at making sure things don't change."

I believe Scott took a big picture view. The common denominator between narrow scope legislation with specific winners/losers and Somalia is anti social behavior.

Have no doubt, if a legislature writes law which is so narrow that it applies to only one or a couple of businesses in a state, they are not much different from a warlord or pirate that select a specific target for redistribution of wealth.

Tom DeMeo writes:

So homeowners are using their political, legal and economic resources to protect their narrow self interests, and this sometimes works to the detriment of the larger society.

Thank God you don't see that sort of thing in other markets. A system like that would never work.

Dallas writes:

Many decades ago, the concept of "property rights" didn't allow your neighbor to tell you what you could do with your property. Supply of and demand for housing could stay in balance with about a year time delay for construction. Now, with modern zoning and political control over your property rights, it can take half a decade or more for a bump in housing demand to be supplied.

A note on physical reality is that feedback control systems, like what operates to bring supply and demand to equilibrium, have delay times and if the time delay equals the natural oscillation rates (business cycle rates and natural real estate cycles) the system becomes unstable (pure mathematics) and becomes a boom and bust cycle with growing sizes. When the supply can't respond, the prices keep going up until even a small response will create a huge price crash.

Mark Z writes:

Tom DeMeo,

I'm not sure what your point is. That homeowners using their political power to suppress markets is proof of the ineffectiveness of markets? I'd say it's proof of exactly the opposite: that the suppression of markets creates inefficiencies.

Scott Sumner writes:

Dylan, You said:

"But I'll have to admit to being surprised to hear that Somalia's problem is an excess of regulation aimed at making sure things don't change."

It isn't. Or is that also meant as a joke? :)

Viking, Exactly.

Tom, You said:

"Thank God you don't see that sort of thing in other markets. A system like that would never work."

We do have it in other markets, and it doesn't work there either.

GU writes:


Common law doctrines such as nuisance have been around since the Founding. See also easements, covenants, and the like. I'm not an expert in zoning laws, but the idea that politicians were totally hands off until the 1950s, or that neighbors had little effect on your enjoyment of real property, is hard to believe, especially considering the historical importance of property rights and real property in Anglo-American society.

I'm not exactly enthusiastic about busybody shutting down reasonable property developments, but even granting your factual premise, perhaps the rules which worked for an agrarian society in a virtually empty continent don't work as well for an urban society of 350 million people.

Dylan writes:


I admit that my comment was a little tongue in cheek, but I also was earnest in that I didn't really understand what your point was. Viking cleared that up a little, but I still think it is a poor analogy. I'm sure you've seen the reaction to a host of libertarian type proposals suggesting that the person would be better off in Somalia. I'm not a fan of that type of argument, and find it equally poor in this case.

I absolutely agree that NIMBY laws are bad, I'm in favor of open borders, denser cities, etc. But I think it's important to understand that the people who are going to be impacted by those changes really would be impacted, and their quality of life will go down. So while I think these policies improve aggregate welfare, they are not Pareto improving, and that's not something I've seen much mention of from supporters.


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