Abundance

The High Cost of Housing

This chapter argues that restrictive housing policies in desirable cities limit economic opportunity and exacerbate inequality. The rising housing costs are no longer worth it for most people since the city's wealth is being drained, making it harder for people to build a better life.

Readers will:

• Understand how housing scarcity hinders economic growth and widens income inequality.
• Learn why liberal cities often have the most restrictive housing policies.
• Know the history behind the housing crisis.

Core Content:

1. The role of cities: engines of innovation and mobility.

• Cities concentrate talented people, fostering innovation and creativity.
• They traditionally offer upward mobility for residents, but: high housing costs are making cities unaffordable, disrupting that mobility.
• This creates a "great divergence" where talented individuals move away to seek affordable housing.

2. The consequences of housing scarcity

• The result is a housing crisis of staggering proportions, almost 30% of Americans spend 30% or more of their income on housing.
• Restrictive zoning and building codes limit housing supply and drive up prices.
• There is reduced economic dynamism because people cannot afford to move to high-opportunity areas.

3. Zoning regulations limit housing density

• Cities often restrict the construction of multi-family homes.
• These regulations drive up housing costs and reduce the supply of affordable housing.

4. Resistance to new development

• Existing homeowners often oppose new development.
• They fear that new housing will lower their property values.
• They also often hold concerns about traffic or overcrowding of schools.

5. "Lawn-Sign Liberalism"

• Symbolic liberalism, but operational conservatism prevails in blue states. It's the idea that people advocate for liberal policies (BLM), but also resist construction of new homes that would benefit diverse communities
• Many blue states and cities have high levels of income inequality
• The high cost of living drives residents to Texas and Arizona

Q&A

Q: Why are housing costs so high?

A: High demand in desirable cities + regulations that restrict housing supply => drive up prices.

Q: What is the "great divergence" in economic opportunity?

A: Increased housing costs bar people to move, and there has been a decline in economic convergence between richer and poorer states.