How the US made affordable homes illegal - YouTube

So I spend a lot of time looking at houses on Zillow.

And lately, I noticed that, even in places where houses are usually expensive...

they seem even more expensive.

Like here, in the San Francisco Bay Area. 

What has the last year been like?

For years, the Bay Area has been an extreme example

of how difficult it is to find affordable housing in the US.

It’s where Silicon Valley bus drivers sleep in their cars at night,

because they can’t afford housing near work.

And where school teachers can’t afford to live in the counties they teach. 

But it’s not just the Bay Area.

The lack of affordable housing is a national problem.

And right now, it’s worse than ever.

We've seen, over the last year,

housing prices reach a level they've never reached before in American history. 

They kind of just look like a rocket ship going to the moon:

housing prices reaching a median of $350,000 for the median American home.

Those prices have made rents more expensive,

and have made homeownership less attainable for millions of Americans.

So why is this happening?

And how do we bring that rocket ship closer to Earth? 

We can think of today’s housing prices in terms of a supply-and-demand problem. 

On the demand side, there are a few things happening.

The first is a generational shift in who’s buying homes. 

Millennials are the biggest generation in American history,

and they're aging into their prime home-buying years.

On top of that, mortgage rates are at an all-time low,

which means it’s very cheap to borrow the money needed to buy a house.

That’s enticed more people to buy if they can, making demand for houses even higher.

The problem is that supply isn’t matching that demand.

From 2010 to 2019, there were fewer homes built in the US than in any decade since the 1960s.

In particular, the construction of smaller, entry-level housing,

the kind made for first-time home buyers, has dropped dramatically.

In the 1980s, those "starter" homes made up around 40% of all homes built.

Today, it’s closer to 7%.  

In 2018, one estimate said the US housing market was 2.5 million homes short of meeting demand.

By the end of 2020, it was 3.8 million.

And that's driving a big part of the problem, both for renters

and for people who want to be homeowners.

The shortage is worst in the places where demand is highest,

near good jobs, transit, and schools. 

And one pretty straightforward solution to that

is to just build more homes in those places.

But for years, there’s been one big obstacle to that:

we aren’t allowed to.

Take a look at this map of the Bay Area.

It’s showing something called zoning,

or local regulations that decide what can be built where. 

This much of the region is zoned for residential housing. 

In blue are areas zoned to allow multi-family housing,

while the areas shaded in pink are zoned for single-family housing only. 

That’s 82 percent of all residential land in the Bay Area.

What it means is that you've banned the ability for anyone to build anything

other than a single unit of housing on that lot of land.

And in many towns, like Atherton,

they’ve excluded all multi-family housing from their neighborhoods.

And that doesn't just mean a giant apartment building.

It means things like duplexes, things like fourplexes...

Things like that are illegal in the majority of the country.

 This is an example of something called "exclusionary zoning."

It’s a big part of the reason for the housing supply shortage in the US.

And single-family-only zoning is just one way local laws limit how much housing we can build. 

Many places also employ height restrictions.

In Cupertino, California, some areas are zoned for multi-family buildings,

but they don’t allow any buildings over two stories.

Parking requirements are often written into zoning laws, too.

Cupertino requires developers to set aside space for two parking spaces

for each unit of multi-family housing.

That means, if you were building an apartment complex that had 100 units,

you’d need to find space for 200 parking spots.

Which usually means buildings that size don’t get built at all. 

They lower the number of units they're actually building

so they can save space for those parking spaces.

And then, those units become more expensive

because the land still stays the same cost to the developer.

And you then get a situation where potentially more affordable units

turn into higher-income-servicing units.

Another feature of many zoning laws is minimum lot sizes.

It means builders are legally required to allot a minimum amount of land for each home.

Often a large amount of land. 

In Cupertino, most single-family lots must be at least 5,000 square feet each. 

Starter homes are usually around 1,400 to 1,500 square feet.

And so you've basically banned all that type of housing.

In Atherton, the minimum lot size for homes is one acre: more than 43,000 square feet.

Which makes it virtually impossible to build any kind of affordable home there.

Together, exclusionary zoning laws like this push builders across the country

to focus on bigger, luxury homes,

instead of smaller starter homes, or multi-family housing. 

Essentially creating gated communities in public spaces. 

What you are saying is that you are only allowing people

who have already been able to partake in the wealth of this country,

and to grow their income,

and have access to high opportunity jobs and education,

to live in our neighborhoods.

Historically, some of the first zoning laws in the US were engineered for that exactly:

to block people of color, and in particular Black Americans,

from living in predominantly white neighborhoods. 

Today, the laws don’t explicitly mention race, but they continue to worsen segregation. 

In the Bay Area, the more single-family zoning in a neighborhood, the whiter it is. 

But all this has another effect as well:

By shrinking the pot of new housing getting built, while demand keeps rising,

it drives up the cost of housing for everyone.

Changing zoning laws can be difficult.

And often, the biggest obstacles are the wealthiest residents.

The process is usually defined by who shows up to these public meetings.

And what you have is often a much whiter, wealthier crowd,

the ones who come and say, "I don't want this in my community,"

"I'm concerned about what will happen to my property values."

And then there's this kind of code word, “neighborhood character.” 

Remember those teachers I mentioned,

who can’t afford to live in the counties where they teach?

Well in 2018, one local school district proposed a solution:

building affordable housing units for teachers in San Jose.

It caused an uproar among San Jose parents,

who petitioned against "changing the neighborhood."

It may not seem like a big deal when one wealthy neighborhood

blocks one multi-family development.

The problem is that it happens all the time:

Communities block new housing everywhere. 

People are, when they hear this kind of rhetoric, very confused.

Because they're like, "I don't want to live in a place with ten thousand apartment buildings.

It doesn't make sense to do that."

And they're right. No one is saying that every neighborhood in every city

should be ten thousand-foot apartment buildings or anything like that.

But even small, gradual changes to zoning laws can have an impact.

For example, allowing smaller homes on smaller lots, or simply allowing duplexes,

would double capacity for housing in some areas. 

In recent years, some cities like Berkeley, Minneapolis, and Portland

have taken the huge step of ending single-family zoning.

But the problem is nationwide.

The real fix is going to happen when these decisions start being made, and start being regulated,

at the statewide level or at the federal level in some capacity. 

Today, the Biden administration is attempting to tackle exclusionary zoning

through a five billion-dollar program,

that would give money to localities that remove exclusionary zoning policies.

But even that may not be enough.

This is more than any presidential administration has done on this topic,

either Democrat or Republican.

It is also very small in the face of this problem.

They want to take action, they recognize how big of a deal it is,

but they are not actually willing to create the kind of political blowback

from often very high-value voters living in suburban environments.

Ending America's housing shortage will require real political willpower.  

And it’ll require people across the country to take a look at their own neighborhoods:

what gets built, who gets excluded,

and how to make homeownership achievable for the millions who are shut out.