[Electronic-LAN] Vox.com: The pro-housing consensus that wasn’t

Sat Dec 7 08:18:19 CST 2024

Eric, Kyle, Bryan, Sheri and all,

Let me try to address your questions as best I can.

Expansion of the Lawrence Budget

There is little doubt that the budget is growing. I follow Chad Lawhorn’s stories on the overestimation of expected sales tax revenues.  But municipal budgets are not my expertise.  Like all residents of Lawrence, we expect our property taxes to grow over time, but the growth should remain in sync with the growth in incomes.

Did Minneapolis add more units and lowered rents as a result

The numbers in this chart look suspect. I checked the American Community Survey (ACS) numbers for 2018 to 2023 for Minneapolis and Kansas City. The ACS is a 1% survey conducted by the Census Bureau each year. It is very reliable. The time period in the chart is a little doubtful because it contains the pandemic years which created turmoil for the housing industry.  Volatile numbers make it possible to compare a non-normal peak with a non-normal valley to get a false reading. Ignoring that issue, rents in Minneapolis rose by 27.7% over this period while they rose 31.4% in Kansas City. Inflation rose by 31.8 percent.  Thus, rents rose comparable the growth in prices in KC while Minneapolis rose about 4 percentage points below the pace of inflation. This is good for Minneapolis, but it is hardly a large difference,  Rents remain 10% higher in Minneapolis.  Thus, even with a small drop in rents, they remain high.  On the growth in the stock of units, the KC metropolitan area expanded its stock of units at a pace that was 14% higher than the growth in households; Minneapolis grew a little less rapidly at 12% faster than household growth.    These numbers do not suggest to me that Minneapolis expanded its stock faster or caused its rents to fall significantly as a result.  I recently read a study indicating that the revised zoning in Minneapolis resulted in a home price increase due to the expanded development options in the formerly single-family zones.  As I mentioned earlier, it will take years to assess the true effects of the Minneapolis upzoning program.

Has my work been critiqued?

Yes, the paper that Alex Schwartz and I wrote was published in Housing Policy Debate as a forum piece which means 4 experts were asked to review the paper with their reviews published after the article.  Alex and I were given the opportunity to respond.  None of the reviews agreed with us, but none found fault. Each seemed to make arguments suggesting that multiple and varied definitions of a shortage exist. We agree that many definitions of a shortage can be devised, but the core of the concept of a shortage is too few units to house the population.  Since at least 2000, the housing stock has grown faster than household formation which has grown faster than population. Households can form faster than population growth only where the housing supply is adequate. If the stock expands slower than population growth, households could not form, household size would increase, and overcrowding would worsen. None of these have happened. The affordability problems we face result from high prices and low incomes, not a scarcity of housing.

Would a better measure be the units available for sale?

The answer depends on the question being asked. If the question asks if we have enough units to house the population, the units for sale does not answer this question. If the question asks if we have enough units to permit those seeking to buy a home a large array of choices, then the units available for sale is the better measure. Since the pandemic, the pace of growth of new units has been slowed by high interest rates, labor shortages and supply chain issues. This is a problem for households seeking to buy a new home because they have fewer choices now than in the past. This problem is compounded by fewer existing homes offered for sale because of the recent spike in mortgage rates.  If you have a 3% interest rate on your mortgage, it makes sense not to move because a new mortgage will cost 6.5%. However, that prospective homebuyers do not have as full an array of choices does not mean that they do not have a home. We do not have a shortage of homes, but we do have fewer homes on the market compared to the past. To a realtor, this is a shortage.  To me, it is a short-term problem for which the Harris campaign proposed good solutions, and the Trump campaign did not.

What about Short-Term Rentals (STR) such as AirBnB?

The research on this issue is scant. There is no high-quality database on the STR stock. I have done a quick search on Google Scholar on the impact of STR units on prices and find little. Most of the research looks at the impact of STR units on hotels. I could find no research indicating that banning STR units lowers home prices or rents. Most of the research is conducted in tourist destinations with high demand. None seems to be very instructive for Lawrence.

Some may conclude from my work that government need not act.

All researchers suffer from this problem. Any piece of research can be misinterpreted.  My work is focused on designing the solutions to the affordability problems of our housing markets.  Too many people conclude that affordability problems are fueled by high prices which are due to scarcity.  They see the solution as building more units.  My work says that affordability problems are fueled by high prices and low incomes but not by a scarcity of housing units.  I see the solution as attacking high prices and raising wages with no need to build units any faster than we have over the last few decades.

I hope this helps.

All the best,
Kirk

Kirk McClure, Ph.D.
Professor Emeritus
Urban Planning Program
University of Kansas
mcclure at ku.edu<mailto:mcclure at ku.edu>

From: Eric Kirkendall <kirkendall1 at gmail.com>
Sent: Friday, December 6, 2024 1:58 PM
To: ELECTRONIC-LAN <electronic-lan at lists.ku.edu>; McClure, Kirk <mcclure at ku.edu>
Cc: Kyle Thompson <kthompson at sunflower.com>; Bryan Mann <bmann4 at gmail.com>
Subject: Re: [Electronic-LAN] Vox.com: The pro-housing consensus that wasn’t

Kirk, thank you very much for sharing actual data about Lawrence housing.  If the City Commission would make fact-based decisions, we would all be better off.

Perhaps we could even slow the incredibly fast growth in the city budget (driven in part by foolish subsidies to apartment developers) but I won't hold my breath.

Here's my swag at recent budget increases. The data is buried and very hard to find in City of Lawrence records, so I can't guarantee it's 100% correct and would appreciate better info if anybody has it.

Regards, Eric

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On Thu, Dec 5, 2024, 4:39 PM Bryan Mann via Electronic-LAN <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>> wrote:
Hi Kirk,

I have a few questions about your housing units vs. the population change numbers you shared.

What if the units are not used for long-term housing but for other purposes, such as Airbnb? Wouldn't a better measure be the available supply for homeowner purchase? How do other forms of housing commodification (like short-term rentals) affect pricing? It must have an effect, but I have yet to do any research to learn what that effect might be. Can you point me in the right direction to find work like this? Does banning Airbnb in cities (it has happened around the world) ever put downward pressure on pricing?

Thanks,

Bryan Mann

On Thu, Dec 5, 2024 at 4:18 PM kthompson--- via Electronic-LAN <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>> wrote:
HI,

Let’s try attaching my chart!

Thanks,

Kyle Thompson

kthompson at sunflower.com<mailto:kthompson at sunflower.com>

785-331-5783

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From: Electronic-LAN <electronic-lan-bounces at lists.ku.edu<mailto:electronic-lan-bounces at lists.ku.edu>> on behalf of kthompson--- via Electronic-LAN <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>>
Date: Thursday, December 5, 2024 at 3:42 PM
To: McClure, Kirk <mcclure at ku.edu<mailto:mcclure at ku.edu>>, Listserv of the Lawrence Association of Neighborhoods (LAN) <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>>, Sheri Ellenbecker <sheriellenbeck at hotmail.com<mailto:sheriellenbeck at hotmail.com>>
Subject: Re: [Electronic-LAN] Vox.com: The pro-housing consensus that wasn’t
HI Kirk,

Has your work been critiqued by any groups like Strong Towns or any of the large coterie of urbanists?

According to this chart, something is happening in Minneapolis. My understanding is that it is predominately Transit Oriented Development and not infill duplexes and triplexes. Note: Minneapolis is a college town.

I think people will cite your work and say, “See we don’t need to build more housing”, without looking at your concerns about zoning and subsidizing certain forms. I do believe that only through more density, sprawl can be contained and more affordable housing can be built. Since LAN is concerned about the LDC, do you have criticisms of it or are you generally in favor of it.

Thanks,

Kyle Thompson

kthompson at sunflower.com<mailto:kthompson at sunflower.com>

785-331-5783

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From: Electronic-LAN <electronic-lan-bounces at lists.ku.edu<mailto:electronic-lan-bounces at lists.ku.edu>> on behalf of McClure, Kirk via Electronic-LAN <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>>
Date: Wednesday, December 4, 2024 at 10:39 PM
To: Sheri Ellenbecker <sheriellenbeck at hotmail.com<mailto:sheriellenbeck at hotmail.com>>, ELECTRONIC-LAN <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>>
Subject: Re: [Electronic-LAN] Vox.com: The pro-housing consensus that wasn’t
Sheri and all,

Good questions.

Households versus families.  Terminology is always tricky.  In the housing field, we all stick with the definitions used by the Census Bureau.  A household is one or more persons who occupy a single housing unit.  A family is two or more persons related by blood or marriage.  A family usually lives in a single housing unit, but a family can be spread across multiple units. A household may or may not be a family. A household can be a single individual living alone, or a household can be 2+ people who may not be related by blood or marriage.

The “missing middle” and the “entry level home.”  It is true that low-cost starter homes, duplexes and townhouses are not being built in great numbers.  Some people blame zoning. Minneapolis recently eliminated single-family zoning in an attempt to promote greater mixing of housing types and price levels.  It will take years to see how much, if any, effect the elimination of single-family zoning will have.

NIMBY.  The sad reality is that existing homeowners do not want low-cost housing built in their neighborhoods out of fear that the low-cost units will lower the value of the existing higher-priced units. Whether through zoning or other means, existing homeowners will fight to protect the value of their homes.  This is a political roadblock that is hard to overcome.

Subsidies for developers.  It is very costly for the government to subsidize builders to construct lower cost housing units. It is nearly always less expensive for the government to help low-income households purchase units already in the market.

New units versus existing units.  New units are only a very small part of the total housing stock, and very few households ever own a new home.  Existing units in good shape can meet the needs of the low-income at lower cost to the taxpayers.  It is generally more cost effective and easier to overcome NIMBYism to subsidize low-income homebuyers purchase and renovate existing homes than it is to subsidize homebuilders to build new homes for low-income homebuyers.

Raise wages.  I have often said that nothing fixes a rooftop better than a paycheck.  The single most effective housing program is raising the minimum wage.  California recently adopted a $20 per hour minimum wage.  Housing analysts will be watching because when a household earns $40,000 or more, affordability problems tend to go away.

I hope that this helps.

All the best,
Kirk

Kirk McClure
Professor Emeritus
Urban Planning Program
University of Kansas
mcclure at ku.edu<mailto:mcclure at ku.edu>
________________________________
From: Sheri Ellenbecker <sheriellenbeck at hotmail.com<mailto:sheriellenbeck at hotmail.com>>
Sent: Wednesday, December 4, 2024 3:06:20 PM
To: McClure, Kirk <mcclure at ku.edu<mailto:mcclure at ku.edu>>; ELECTRONIC-LAN <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>>
Cc: Gary Webber <gkwebber at gmail.com<mailto:gkwebber at gmail.com>>
Subject: Re: [Electronic-LAN] Vox.com: The pro-housing consensus that wasn’t

Thanks. That is very enlightening data that you’ve shared. Some incomplete thoughts that I have had are that often a family has two houses because the family is not one unit. Does that count as two household then? Another thing that has been in the back of my mind is that there is no incentive for the builder to build a moderately priced home. They make a lot more money on more expensive homes I think. so the little slab ranchers that we rented when we were first married are no longer being built. The bedrooms were small. The bathrooms were small and they had an eaten kitchen. That served us nicely then it seems like those are not even being built now as single-family dwellings. And I do believe that most people want to have a single family dwelling as opposed to an apartment when they have a family.  Maybe that is something that is no longer possible in America. But I think in small town America like Lawrence Kansas that is what people want. Am I right in that? I think that if there was a way for the city to offer an incentive to build these types of homes , maybe more people could afford them. Also, there’s another way to look at this and that would be to raise wages.

On Dec 4, 2024, at 2:58 PM, McClure, Kirk via Electronic-LAN <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>> wrote:

LAN members,

I just want to chime in on the affordable housing issue.  As a former member of LAN from Old West Lawrence, I continue to follow the good work of the association.  I also am a retired professor of urban planning who specializes in affordable housing.

The books mentioned in the Vox.com article are all noteworthy, but they probably are not the best research available in the area of affordable housing.  The authors of these books all come to the field of housing with limited knowledge of how housing markets behave, and these authors have a great many predispositions.  All are predisposed to think that the price of housing is high because the supply is scarce.  In many good and services, this may be true; it is not true in housing.  Careful examination of the data show that there is no shortage of housing in nearly all of the 916 metropolitan areas of the nation, including Lawrence.

Some quick facts from the Census, the most reliable source of population and housing data:

                Item                      2000                     2020                     Change                Percent Change

                Population         80,083                 94,934                 14,851                 19%

                Housing Units  32,792                 43,421                 10,629                 32%

                Households      31,435                 39,688                   8,253                 26%

Housing growth outpaced both population and household formation.  Thus, there is no housing shortage in Lawrence.  But prices are high here as they are throughout the nation.

Prices are high for reasons other than scarcity.  Our building codes demand that housing be built to high standards which increases prices.   Our capital gains tax laws favor investment in owner-occupied homes making homes the single largest component of household net worth which contributes to upward pressure on prices.  As a household’s largest investment, homeowners protect their investments with zoning codes that exclude lower-priced homes contributing to upward pressure on home prices.  Supply chain problems, labor problems and high interest rates have contributed to recent increases in the costs of building new units which also contribute to upward pressure on prices.  The upward trend in prices outpaces the growth of incomes, especially for poor households who tend to be renters.

The housing affordability problems of Lawrence (and nearly all metropolitan markets in the nation) result from low incomes and a housing market that cannot produce housing affordably priced for the low-income households.  What this means is that we cannot build our way out of the housing affordability problem.  Adding large quantities of housing units will not lower housing prices.

We can help to resolve housing affordability problems with rental assistance (Housing Choice Vouchers) and low-income homebuyer assistance (downpayment assistance and below-market interest rate loans).

There are exceptions.  Special needs households and the homeless have problems that are best addressed by building housing that fits their special needs.  However, for the vast majority of the population, the market has already built the housing that is needed; we need to help the poor pay for the housing that already exists.

I hope that this helps.

All the best,

Kirk

Kirk McClure, Ph.D.

Professor Emeritus

Urban Planning Program

University of Kansas

mcclure at ku.edu<mailto:mcclure at ku.edu>

From: Electronic-LAN <electronic-lan-bounces at lists.ku.edu<mailto:electronic-lan-bounces at lists.ku.edu>> On Behalf Of Gary Webber via Electronic-LAN
Sent: Wednesday, December 4, 2024 12:23 PM
To: ELECTRONIC-LAN <electronic-lan at lists.ku.edu<mailto:electronic-lan at lists.ku.edu>>
Subject: [Electronic-LAN] Vox.com: The pro-housing consensus that wasn’t

https://www.vox.com/policy/389431/housing-affordable-homes-yimby-nimby-shortage-construction<https://nam10.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.vox.com%2Fpolicy%2F389431%2Fhousing-affordable-homes-yimby-nimby-shortage-construction&data=05%7C02%7Celectronic-lan%40lists.ku.edu%7C8f916993f3794bf2998108dd16ca0019%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C0%7C638691779025767207%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=Xr9zJD57gscYi%2B7cBapwxIuUiEQjTzLhHdB3w2NoFM8%3D&reserved=0>

I suggest reading this article from Vox (link above), which summarizes 3 new books on housing trends in the U.S. It provides an excellent review of the history of housing that got us where we are today, and the possible paths proposed to improve the situation.

Gary Webber

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