For decades, rising home prices have been an engine for middle-class wealth. Now a growing movement wants to slow — or even reverse — that trend, so more people can afford housing. But the politics around new housing development inherently stacked against them?
Late last month, President Trump held a Cabinet meeting at the White House. Sitting at a long, mahogany table, surrounded by his administration’s top officials, he broached the subject of housing.
“There's so much talk about, ‘Oh, we're going to drive housing prices down,’” Trump said, seemingly referencing a nationwide movement to make housing more abundant and affordable. But not him, Trump made it clear. “I don't want to drive housing prices down. I want to drive housing prices up for people that own their homes. And they can be assured that's what's going to happen.”
Say what you will about President Trump, but the man has a knack for understanding the fears and anxieties of a large swath of American voters and speaking bluntly to reject liberal and libertarian ideas that could potentially scare them.
For more than a decade now, a “YIMBY” movement has been working to bulldoze the rules and regulations that have been holding back new housing development. A central goal of this movement — which declares Yes In My Backyard to more development — is to make housing more plentiful and affordable for Americans who are often priced out of owning or even living in the communities they want to.
But the flipside of lower priced and more plentiful housing is … lower priced and more plentiful housing — and, for a large percentage of middle-class Americans, homes are their most valuable source of wealth.
How irreconcilable is the clash between maintaining or building middle-class wealth on the one hand, and making housing more affordable to a wide swath of renters and would-be owners on the other? Are the politics just inherently stacked against meaningful development efforts that would make housing more affordable? In other words, is the YIMBY movement doomed to fail?
Today in the Planet Money newsletter, we hear from a bunch of housing experts and YIMBYs to get their perspective on the thorny political economy around housing policy.
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Why politics is stacked against YIMBYs
There are some brutal political realities that the YIMBY movement has to contend with. Almost 66% of American households own their homes. Many of those households have not just one, but at least two voters. Homeowners are more likely to vote than renters, and they’re also more likely to be civically engaged.
Katherine Levine Einstein is a political scientist at Boston University who studies the politics around new housing development. Back in 2019, she co-authored an eye-opening book, Neighborhood Defenders: Participatory Politics and America’s Housing Crisis.
“Basically, what we argue is that America's land use regulations have created processes that empower small and privileged groups of neighbors to stop and delay new housing development,” she says.
Einstein and her colleagues, studying Massachusetts, found that homeowners are much more likely to participate in the crucial local political and regulatory meetings that govern new housing supply.
And they found these weren’t just any homeowners. The people who showed up were a class of people who had the time and the political will to attend — let’s be honest — pretty darn boring city meetings. They were less likely to work full-time or at all. They were less likely to be students or young professionals. They were less likely to have young kids, with all the time pressures they impose. And they were more likely to be resistant to change in their neighborhoods. In other words, “the people who attend these meetings are way more likely to be older,” Einstein says, and they’re much more likely to oppose development.
So it’s not just the sheer numbers of homeowning voters that YIMBYs have to contend with. It’s also the very structure of our nation’s political institutions, which systematically empowers local homeowners — and a particular class of especially NIMBY homeowners — to shape what gets built and where.
Since Einstein and her colleagues published this book back in 2019, we’ve seen state political leaders increasingly recognize that they need to circumvent or actively fight local antagonists to new housing development.
For example, in California, Governor Gavin Newsom has supported a variety of reforms that essentially imposes top-down pressure on local communities to develop more housing. Einstein says there’s been a similar effort in Massachusetts.
“ So I think, honestly, in some places the answer is yes, that the state just has to impose development,” Einstein says. “There are just some places that are never going to agree to allow new housing. And often those are some of the most privileged places in the country, with really high-quality schools and other public services.”
Top-down approaches come with political risks. Locals know and care a lot more about their communities than outsiders, and attempts by outsiders to impose development could anger some voters. And top-down impositions could also be painted as less democratic, because the state essentially rejects the self-determination of local communities to oppose new developments.
But, Chen Zhao, the head of economic research at Redfin, a popular home-search platform and brokerage, argues it’s not necessarily less democratic because, when you take housing decisions out of local hands and make them at higher levels of government, “it is about taking the interests of more people into account.” For instance, the people who have been priced out of the cities where they work and have to commute into.
“It’s not just the folks who live in Manhattan who have a vested interest in Manhattan,” Zhao says. “There could be someone who lives across the river in New Jersey who would live in Manhattan if it was more affordable to live here. And so the question becomes, do their interests matter?”
But serving constituencies that potentially can’t or won’t vote for you creates some serious challenges for politicians in a democracy. And many municipalities, responding to impassioned NIMBY locals, are actively fighting top-down, state-level attempts to meaningfully move the needle on new housing development.
NIMBYism may be spreading
Of course, not all localities have been opposed to new development. Even the coastal markets known today for NIMBYism were once the sites of a blitz of new housing development after World War II.
In 2005, the economists Ed Glaeser, Joseph Gyourko, and Raven Saks published influential research that found that America’s growing metro areas could basically be divided into two groups.
First, there were metro areas in the West and Northeast, often near the coasts, in places like California, Washington, New York, and Massachusetts, which were resistant to building new housing in the face of rising demand. That scarcity of housing supply, coupled with lots of demand to live in these markets, created a sort of pressure cooker of unaffordability for renters and would-be owners. At the same time, of course, it created huge financial gains for those lucky enough to already own homes in these markets.
Second, there were what are sometimes called the “Sunbelt” markets, like in North Carolina, Georgia, Florida, Texas, and Arizona, which were building like crazy in the face of rising demand. Instead of skyrocketing prices, they saw skyrocketing population growth and more moderate price increases. Back in 2005, Gyourko says, these places were not seeing an affordability crisis like those in the West and Northeast.
Last year, Glaeser and Gyourko released a working paper that looks at what has happened in the two decades since 2005.
“We continue to undersupply in the big coastal markets,” Gyourko says. “But what’s new, different and alarming is we're starting to undersupply — and have been for the last decade or two — in the high employment, growth markets in the Sunbelt.”
In other words, many of the places that used to build a lot are starting to look more like the NIMBY strongholds on the coasts.
Gyourko and Glaeser don’t offer definitive evidence for why many Sunbelt markets have begun to see lower rates of new housing development. It could be, for example, that after many years of building, they’ve already developed on easy-to-develop land, and now development politics have gotten trickier. Even if that were true though, these localities — like those in other high-demand metropolises — could still build more housing vertically with tall apartment buildings. The economists suggest that locals have begun gumming up new development through rules and regulations, much like those on the West and East coasts. In other words, NIMBYism has maybe metastasized.
Why might that be? Maybe people are curmudgeons and just don’t like seeing their communities change. Maybe something changed demographically in these places, and there’s now more NIMBY-minded homeowners living there.
Or maybe, after decades of development, people are fed up with all of the negative side effects that often come with larger populations, including worse traffic, parking headaches, and more crowded schools or parks. These “negative externalities,” as economists call them, can be at least partially mitigated with smart urban planning and investments in public transportation, but often they’re not — and it’s easy to see why locals could dislike big bursts of new development.
“ I think concentrated development can create backlash,” Einstein says. “And we see this historically, and it looks like it may be happening in some pockets of the South as well, that people respond to this development by opposing new development, and perhaps creating regulatory processes that ensure that they have veto power over future projects.”
Whatever the reason, many metro areas that used to be YIMBY seem to be turning more NIMBY, and housing prices have started rising at a faster clip there as a result.
Austin: A Success Story Or Cautionary Tale For YIMBYism?
But, Gyourko says, there are at least two clear exceptions to all this: Nashville and Austin.
Both, he says, built so much housing in recent years that supply has outstripped demand, and housing prices have begun falling there.
An analysis from Zillow released in December found that Austin is seeing some of the steepest home value declines in the nation. They estimate the average home price has fallen more than six percent over the last year. Other data sources show a similar story of declining housing prices there.
Some might argue that Austin built too much, and that’s a problem. If you’re a home or apartment owner who is now seeing your home value decline, you might feel that way. And you might advise, watch out, other cities, the YIMBYs are coming!
But Einstein sees it differently. “So I guess overbuilding is one way of framing that,” she says. “I might also say that's a success story, where we have seen a market like Austin, which got incredibly overheated and got really, really expensive very quickly, now starting to correct a bit and starting to become more affordable.”
And keep some perspective, she says. “It’s still the case that it is more expensive to live in Austin now than it was ten years ago. So I think it's more that we are starting to see those prices go back to a place that is a little more accessible to more Austin residents.”
Brandon Bell/Getty Images
Austin and Nashville have taken a more free-market approach to housing development than many other localities, and, now, Gyourko says, the market is responding to the reality that supply has outstripped demand. “What’s happened? How does the market correct? They stopped building,” he says. “There’s still strong demand to be in those markets. They’re thriving economically. So the demand will pick up and in two or three years, they’ll likely go back to growing.”
The YIMBY Political Fight
While Austin might be seeing falling prices, other local housing markets are still in a price pressure cooker created by intense housing scarcity. For example, with the AI boom, the already exorbitant San Francisco Bay Area has seen sizable hikes in rents and home prices over the last few years.
Not all housing markets react to new development the same. After deindustrialization, many cities, like Detroit, had long periods of falling home prices. Demand to live there fell. And their problem became that their existing housing stock was too big.
But the Bay Area, for example, is the center of a technological revolution. It has tons of high paid professionals who make a lot of money, and people from around the world want to come there and work. There’s incredible demand to live there, and, after years of ridiculously low levels of building, there’s a deep scarcity of housing. Erecting even a considerable number of new apartment buildings in a market like the Bay Area isn’t likely going to tank housing prices.
Justin Sullivan/Getty Images
Matthew Lewis is the director of communications at California YIMBY, a policy organization aimed at increasing housing development and affordability. He says their big goal is to build many more apartment and condo buildings in urban cores, which they hope will reduce rent prices and make buying apartments and condos more attainable to a wider swath of people. Their focus is apartments and condos, he says, because those will be able to house way more people than single-family homes, and they will make a bigger dent in the affordability crisis.
Creating more apartments and condos in urban cores, he suggests, also results in fewer negative side effects than building single-family homes in urban peripheries. For example, putting lots more residents on the outskirts of urban cores can result in more clogged freeways and undesirable commuting times.
Lewis suggests there isn’t really a tradeoff between single-family home values and the building of apartment complexes, at least in red hot markets like the Bay Area. In fact, Lewis points to studies — including in Alexandria, Virginia and Salt Lake City, Utah — that suggest that adding new apartment complexes in growing urban areas may actually even slightly increase single-family home values.
Lewis argues that more apartments will increase economic activity and business opportunities in booming cities, and that further increases demand to live there, helping to boost single-family home values even while it can reduce rents for apartment dwellers.
“I think that there's a win-win here on the property value question that's borne out by the evidence,” Lewis says.
Gyourko believes the vast majority of the nation’s growing metro areas have so underbuilt for so many decades, the “ latent demand is so strong, prices won't fall,” he says. “Ab sent a recession, the chances of us building so much that we cause a house price collapse — I think it's close to zero.”
On the one hand, that might be solace to homeowners in coveted housing markets. They don’t have to worry about their home value tanking, unless there's a recession or some other calamity. But, on the other hand, that can be super frustrating to those who desperately want housing to become more affordable.
“This actually makes the politics of getting people to accept more housing incredibly difficult because it is an awful political slogan to say, ‘Let's build more housing so price increases aren't as high as they would've been if we hadn't built as much housing,’” Einstein says. “Like, no one wants to run on that.”
But that’s kind of the hope in places like the Bay Area and New York City. They can build and, at this juncture, the amount of building they’re actually going to do could maybe bring down the growth rate of rents and home prices — and, in a plausible scenario, maybe slow them down below average income growth, and so, over time, housing will become relatively more affordable. But we probably won’t see dramatic increases in affordability all of a sudden, especially considering they’re not building anywhere near enough to do that.
Despite the political challenges, YIMBYs have had some important victories in recent years. But, arguably, many of them have been accomplished by appeasing the concerns of the massive and powerful voting bloc of homeowners.
For example, one big YIMBY victory: laws that have allowed homeowners in California and other states to build “Accessory Dwelling Units” (ADUs) on their properties. Think like allowing homeowners to build a guest house in their backyard. That increases the supply of housing in areas where housing is desperately needed. At the same time, homeowners have a big incentive to support it because they get financial benefits from those new developments.
Another strategy: building apartment buildings in urban settings near transit stops while avoiding new developments in single-family neighborhoods, which are sometimes viewed as politically untouchable.
“ I definitely think it is politically easier to just avoid trying to develop in single-family neighborhoods,” Einstein says. But, she points out, that solution could be suboptimal for a variety of reasons. One big one: it may contribute to “ patterns of economic and racial segregation,” where neighborhoods with single-family homes “ remain these isolated enclaves of privilege.”
As we recently covered in a Planet Money episode featuring Harvard economist Raj Chetty, mounting research suggests that economic and racial segregation is tremendously harmful to the economic prospects of disadvantaged kids.
So what should policymakers do?
To make a real dent in affordability in many places, Einstein says it’s not enough to reform and streamline the land-use regulations that have been holding back housing supply.
“ Doing that alone is going to be helpful for building more housing, but it is not going to make housing affordable for people in poverty,” Einstein says. “We're not going to, by building more market-rate housing, solve the sort of housing issues for that segment of the market. That is a segment of the market where you need extensive government subsidy.”
But, Einstein says, streamlining the permitting process for new housing development will also make it easier to build government-subsidized or public housing too.
Einstein says there are reasons to be both pessimistic and optimistic about solving America’s housing affordability crisis.
She says she’s pessimistic because NIMBYs remain politically powerful, especially at the local level. And while there have been state-level efforts to increase housing supply, many of those initiatives have been riddled with loopholes and poison pills that allow local NIMBYs to distort or water down new housing development efforts. Beyond the difficult politics of new development, rising construction prices add an additional challenge.
But she says she’s optimistic because there seems to be a rising YIMBY tide. Boston University, she says, conducts an annual survey of mayors, and over the last several years they’ve asked them about the economics of housing. “ And we have seen over the last four years, big increases in the proportion of mayors who believe that they need to build more housing in order to reduce prices,” she says. “So I think that’s really heartening and suggests the people who hold the levers of power understand this problem more than they did even four years ago.”
And, of course, many homeowners care about issues beyond just their home price. Lewis says the reality is that housing markets have gotten so ridiculously expensive that nurses, firefighters, police officers, and other critical community workers are having trouble living in the cities where they work. And the affordability crisis is affecting homeowners’ family members.
“After a couple generations of people thinking, ‘I don't want it here,’ now we're hearing people say, ‘Oh gosh, my kids had to move three states over.’ ‘My parents can't find anywhere affordable to live for their retirement,’” Lewis says.
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