On April 2, 2014, a protester in Oakland, California, mounted a Yahoo bus, climbed to the front of the roof, and vomited onto the top of the windshield.
If not the year's most persuasive act of dissent, it was certainly
one of the most memorable demonstrations in the Bay Area, where
residents have marched, blockaded, and retched in protest of San
Francisco's economic inequality and unaffordable housing. The city's
gaps—between rich and poor, between housing need and housing supply—have
been duly catalogued. Even among American tech hubs, San Francisco stands alone with both the most expensive real estate and the fewest new construction permits per unit since 1990.
But San Francisco's problem is bigger than San Francisco. Across the
country, rich, dense cities are struggling with affordable housing, to
the considerable anguish of their middle class families.
Among the 100 largest U.S. metros, 63 percent of homes are "within reach" for a middle-class family, according to Trulia.
But among the 20 richest U.S. metros, just 47 percent of homes are
affordable, including a national low of 14 percent in San Francisco. The
firm defined "within reach" as a for-sale home with a total monthly payment (including mortgage and taxes) less than 31 percent of the metro's median household income.
If you line up the country's 100 richest metros from 1 to 100,
household affordability falls as household income rises, even after you
consider that middle class families in richer cities have more income. [The graph below considers only the 25 richest US metros to keep city names moderately legible within the computer screen.] Rich Households = Unaffordable Houses? Trulia
The line isn't smooth—and there are exceptions—but the relationship is clear: In general, richer cities have less affordable housing.
But there's a second reason why San Francisco's problem is emblematic of a national story. Liberal cities seem to have the worst affordability crises, according to Trulia chief economist Jed Kolko.
In a recent article,
Kolko divided the largest cities into 32 “red" metros where Romney got
more votes than Obama in 2012 (e.g. Houston), 40 “light-blue” markets
where Obama won by fewer than 20 points (e.g. Austin), and 28
“dark-blue” metros where Obama won by more than 20 points (e.g. L.A.,
SF, NYC). Although all three housing groups faced similar declines in
the recession and similar bounce-backs in the recovery, affordability
remains a bigger problem in the bluest cities.
Super-Liberal Cities, Super-Unaffordable Houses Trulia
"Even
after adjusting for differences of income, liberal markets tend to have
higher income inequality and worse affordability,” Kolko said.
Kolko's theory isn't an outlier. There is a deep literature tying
liberal residents to illiberal housing policies that create
affordability crunches for the middle class. In 2010, UCLA economist
Matthew Kahn published
a study of California cities, which found that liberal metros issued
fewer new housing permits. The correlation held over time: As California
cities became more liberal, he said, they built fewer homes.
"All homeowners have an incentive to stop new housing," Kahn told me,
"because if developers build too many homes, prices fall, and housing
is many families' main asset. But in cities with many Democrats and
Green Party members, environmental concerns might also be a factor. The
movement might be too eager to preserve the past."
The deeper you look, the more complex the relationship between blue
cities and unaffordable housing becomes. In 2008, economist Albert Saiz
used satellite-generated maps to show that the most regulated housing
markets tend to have geographical constraints—that is, they are built
along sloping mountains, in narrow peninsulas, and against nature's
least developable real estate: the ocean. (By comparison, many
conservative cities, particularly in Texas, are surrounded by flatter
land.)
"Democratic, high-tax metropolitan areas... tend to constrain new
development more," Saiz concluded, and "historic areas seem to be more
regulated." He also found that cities with high home values tend to have
more restrictive development policies.
One could attempt tying this together into a pat story—Rich
liberals prefer to cluster near historic coastal communities with high
home values, where they support high taxes, rent control, and a maze of
housing regulations to protect both their investment and the region's
"character", altogether discouraging new housing development that’s
already naturally constrained by geography...—but even that interpretation elides the colorful local history that often shapes housing politics.
I asked Kahn if he had a pet theory for
why liberals, who tend to be vocal about income inequality, would be
more averse to new housing development, which would help lower-income
families. He suggested that it could be the result of good intentions
gone bad.
"Developers pursue their own
self-interest," Kahn said. "If a developer has an acre, and he thinks it
should be a shopping mall, he won't think about neighborhood charm, or
historic continuity. Liberals might say that the
developer acting in his own self-interest ignores certain
externalities, and they'll apply restrictions. But these restrictions
[e.g. historic preservation, environmental preservation, and height
ceilings] add up, across a city, even if they’re well-intentioned. The
affordability issue will rear its head."
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