Restrictive Zoning and Misguided Narratives Constrict Housing Supply

Key Quotes

"The canonical example is the legalization of sports betting where there were just tons of opportunities as the market participants got up to speed on what was what right no one really knew how to price the huge menus of bets there were a bunch of different books opening all the time and you could make money just from bonuses a good amount of the value flowed from the newness of the thing then over time the easy money dried up that's the obvious example but change and volatility and disruption appear in pretty much every story"

The author argues that significant opportunities often arise from disruptions to the status quo, using the legalization of sports betting as a prime example. This illustrates how new markets and evolving regulations create temporary inefficiencies that can be exploited. The presenter highlights that understanding and adapting to such changes is crucial for identifying profitable ventures.

"I mean i've spent 20 years in the land development industry in california and i am not used to the new way of doing business for basically my entire career things would have gone more like this a developer proposes 70 units then the planning staff knocks it down to 60 then the developer meets with neighbors who raise hell and lobby for a reduction to 50 units then at planning commission another 10 units are lost and finally prior to city council the project ends up agreeing to pay for a half a million dollar traffic signal that the project doesn't need except as an inducement to the politicians who were looking for cover"

The speaker, with two decades of experience in California land development, contrasts past practices with current regulations. The presenter explains that historically, development projects involved a lengthy negotiation process with significant reductions in unit count and added costs for political cover. This quote highlights the shift towards more structured, objective approval processes under new legislation.

"The entire basically the entire increase in that uh borrowing was among the richest households households with the incomes in the top percentiles there wasn't an oversupply of housing but the home builders had really become pessimistic before -- well before most other people had -- cancellations increased a lot in 2006 so by the time 2008 happened home builders had had been cutting back on new building for two years nobody was speculatively building homes -- or during that period between the peak and the crisis"

Kevin Erdmann argues that the data from the 2000s housing market does not support the conventional wisdom about the crisis. Erdmann explains that the increase in risky borrowing was concentrated among high-income households, and there was no oversupply of housing. He points out that home builders had already significantly reduced construction before the 2008 crisis, indicating a proactive response to market signals rather than a reaction to an oversupply.

"The undeniable outcome of the various policy choices made after 2008 is that subprime households have gone through this experience first lose their house in the crash second get labeled as losers undeserving of ever owning a home and just generally blamed for the disaster third watch as wall street received bailouts and avoided prosecution for their part in the fiasco fourth get cut off from lending so that while real estate values across the country recovered those households did not participate fifth get increasingly squeezed by higher and higher rents"

The author outlines a series of negative consequences for subprime households following the 2008 financial crisis and subsequent policy decisions. The presenter details how these households experienced foreclosure, societal blame, and exclusion from the recovering real estate market, leading to increased rental burdens. This quote emphasizes the disproportionate impact of post-crisis policies on a specific segment of the population.

"The easiest way to see this is to drive through a subdivision that was built in 1980 and look at the general level of improvements then drive through a new subdivision it will be much nicer with things like spacious landscaped boulevard improvements you know a separated median that in the past might have been just a paved and striped middle turn lane there will be clay tile roofs instead of shingles the forgettable stucco boxes are replaced by for sighted architecture highlighting positive and negative space wood fences are gone in favor of block walls maybe the development will have paseos and trails possibly even a clubhouse if that sounds like things got better in a lot of ways sure of course but all of that stuff also costs something and if the costs are baked in by governments then it creates a floor which new construction cannot go below"

The speaker explains that modern development standards have significantly increased the cost of new construction. The presenter contrasts older subdivisions with newer ones, highlighting the more elaborate and expensive features now common, such as landscaped medians, upgraded roofing, and enhanced architectural design. This quote illustrates how government-mandated or encouraged development standards create a higher cost floor for new homes.

"The politics around building are on one hand really frustrating and on the other hand just endlessly fascinating for example i think that progressive left people really struggle with the idea that we should severely limit the influence of zoning which is kind of crazy when you think about the fact that zoning is sort of like if segregation had better pr but i think that folks on the left want to have some technocratic guardrails and they want some way to slow down the capitalists from that same point they just try to block out that zoning has historically not been done for the quote unquote right reasons"

Ben Bear expresses frustration with the political landscape surrounding building, particularly noting the left's struggle with limiting zoning's influence. Bear argues that zoning, despite its historical association with segregation, is often defended by progressives seeking technocratic control. The presenter suggests that this perspective overlooks the regressive realities and historical motivations behind zoning policies.