Why housing reforms stall even when the fixes are known

America has a housing problem – we seem to agree on that – but little else.

We don’t have a shortage of ideas about how to fix it – we have a shortage of political will to act on the ones that actually work.

I was reminded of this recently when I testified before two state housing subcommittees. Two bills had been submitted to legalize small lots and lot splits across the state – modest, proven reforms. I gave my three minutes and then, along with the other speakers, fielded questions from the committee. What followed was a masterclass in how not to think about housing policy.

“You can’t intend for this to apply to my district? We have half-acre lots, and my constituents already are short of parks and amenities.” This legislator’s district sits within a reasonable commute of several job centers.

Apparently, we don’t want to put housing on underutilized land close to where people work.

“If you allow small houses next to ‘regular’ houses, won’t that crush the values of the existing homes? We can’t allow that.”

Leaving aside the lack of academic evidence to support the idea that attractive new small homes hurt the value of nearby older homes, this objection pairs perfectly with the next one.

“I see nothing here that would prevent these from being small luxury homes too expensive to be affordable.”

So, if I understand this correctly, we can’t use underutilized land, and the small homes can’t be expensive but also can’t be affordable.

A Venn diagram with no overlap.

I don’t mean to ridicule these legislators, and I’m not impugning their motives – I don’t know them and won’t speculate. But taken together, the logic of the conversation is simply incoherent.

Unfortunately, this subcommittee did not have a monopoly on muddled thinking. Across the country, housing policy is paralyzed by a set of completely incompatible goals:

New housing can’t be built near anyone (no “character change” allowed), but it also can’t be far from work (due to climate change).

It can’t be priced so low as to affect nearby existing home values, but it must be affordable for households earning at or below the median income. Oh, and we should commit to a price before knowing our costs.

We can’t waste water, but we have to have big yards.

We absolutely support homeownership, but not construction-defect reform or single-family homes.

We need more housing! But not if a builder is going to make money from an upzoning.

We need more housing! But not enough to bring prices down. Yet how does anyone expect housing to become more affordable if home values must keep rising?

Property tax increases will force our constituents out of their homes! But we want their prices to rise! I guess the goal is higher prices but lower property taxes?

We’re happy if we build lots of apartments and rent falls! We’re sad if home prices fall!

We can’t change the character of neighborhoods (never mind that they changed in the past to become what they are today), but we can’t sprawl either. And we won’t define sprawl as low density – we’ll just label anything that isn’t infill as sprawl, even when it’s denser than the city it sits next to.

For years, whenever the argument has been made that large institutional funds drove up home prices, I’ve countered: “Then you must believe they’ve also driven down rents.”

Fewer homes available to buy means higher prices. More homes available to rent means lower rents. The economic illiteracy embedded in our housing debate is staggering.

I would argue that the big funds did put a floor under prices when they began buying. In Atlanta, when prices were in free fall after the Global Financial Crisis, institutional buying made a real difference. Consider what that actually accomplished.

First, did we want home prices to fall further? I thought we were trying to protect home equity? Second, the funds snapping up short sales and foreclosures pushed buyers toward new construction, which finally started to pencil out, since new-build costs had been well in excess of existing home values before that. I thought we wanted more homes?

I could go on, but all of you live this. There is no realism in our housing discussions about choices and consequences. Until that changes, we will continue on the path we’re on –homeownership rates drifting down, prices drifting up – at least until demographics catch up with us.

It’s not complicated, mysterious, or in need of “new ideas.” You want to solve our housing problem? Do the following:

1. Allow higher density near job centers and transportation networks
2. Allow flexible styles of units – boarding houses, SROs, etc. The reflexive objection that SROs aren’t good enough ignores the alternative: a tent on the sidewalk.
3. Allow ADUs by right everywhere and allow lot splits so they can be for-sale or for-rent.
4. Allow small lots by right everywhere. There is a proven template: Houston’s Chapter 42 is the single most successful housing reform I’ve seen.

We know what works because we’ve done it before.

America once had affordable housing. When it did, we allowed a wide variety of housing types and let entrepreneurs risk their own capital to meet the housing needs they saw in the market. No grand government program. No years of “piloting.” Just the freedom to build. We could have that again. The solutions are sitting right in front of us. All we have to do is choose them.

P.S. Both bills made it out of committee but died later. We can’t preempt local control!

Except that’s how we got into this mess.