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This is why I continually advocate for a Land Value Tax (LVT): https://www.lianeon.org/p/just-tax-the-land

We could, gradually, flip the tax burden off of the structure and weight it toward the land itself. That would drive down the purchase price of land and free up land that is not used efficiently (parking lots, golf courses) for more development.

When is your next book coming out? I'd love to read it.

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By next book, do you mean my third book? My guess is that it will be sometime in 2024.

My second book, "Promoting Progress" comes out at Amazon Oct 1, but I think that you mentioned you have already read it.

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Yes, I meant the third book.

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Interesting perspective - I enjoyed reading this.

I wonder: how much of the higher cost with multi-story buildings is driven by building codes? For example, the multiple stairway requirement for buildings with more than 3 stories adds significant cost (two stairwells, central connecting corridor = less usable space). It also forces larger units (because only the outside can be living space (bedrooms, living rooms) and there is more dead, dark inside space (closets, bathrooms). This difference explains why there are more family-sized units in multi-family dwellings in Europe where this rule doesn't exist.

More here from a great recent article: https://www.thesisdriven.com/p/the-case-for-single-stair-multifamily

I also wrote about this a while ago from my perspective having grown up in Europe and lived in these multi-family, single-staircase buildings: https://heikelarson.substack.com/p/why-are-european-apartments-better

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Jan 25·edited Jan 25Author

Thanks for the comment.

I am sure that building codes play a role, but I have not seen any solid financial stats from builders. My guess is that it would be very difficult to build beyond the 3rd story without a serious increase in costs per square foot. Remember that apartments tend to be significantly smaller than single-family houses, so the “cost savings” actually come from smaller living space.

The real problem, though is not construction costs, but the cost of land underneath the housing.

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I think based on what I've read (e.g., on Micheal Eliason's excellent site, LarchLab) that the cost difference is around 8-10%, which is huge.

But more importantly--usable European apartments for families can be smaller and more cost effective because they don't have as much dark interior unusable space. So the cost per 3BR apartment is much lower, in proportion to the lower square footage needed--and the apartments are much nicer with windows on multiple sides (vs. the one-side-only windows in our hotel-like building with the code-mandated central corridor).

I think any serious exploration of housing needs to look at this closely because it's such a US anomaly.

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I agree with you about eliminating the regulation, but the 8-10% savings you quote is very small compared to the much higher costs of building vertical that I mentioned in the article.

"Once you start building the third floor... increase costs by 30-50%...

A fourth story...doubles the construction costs per square foot...

The fifth story triples or quadruples construction costs.

Those figures comes directly from builders:

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Hey Michael, this is a misreading of Yimbyism's theoretical understanding of the world and its policy aims -- with the caveat not every activist believes/wants exactly the same thing.

(1) Infill is about allowing people to reduce their consumption of (expensive) land. Density is just the means to that end. Wood frame construction gets as tall as ~6 stories. Many multi-family developments are wood frame. Also, a single-family home can be 4 stories w/o an elevator. You are correct, however, about the cost jump once you build tall enough to require steel frame construction, but that happens when / where building taller (consuming less land) versus building wider (consuming more land) financially pencils.

This short post from Alain Bertaud is the classic comment on that dynamic and how most Yimbys understand the phenomenon: https://marroninstitute.nyu.edu/blog/density-is-not-a-design-decision

(2) WRT multi-family housing ... developers don't build more of it due to regulations. If they could build it always and everywhere, we might get large developments near things like schools and therefore have sufficient demand to build more units that families want to own (case in point, everyone who owns a unit in New York). As a rule, I don't think the revealed preference argument holds any weight in the existing U.S. housing market.

(3) Developing on the periphery -- it's fair to say that some YIMBYs are against this for essentially New Urbanist kind of reasons. But what Yimbys are against, at the core, is building detached single-family homes spreading outwards away from job centers. This pattern of development results in super commutes, it's bad for the environment, and isn't financially sustainable w/o massive federal subsidies. https://www.strongtowns.org/journal/2020/8/28/the-growth-ponzi-scheme-a-crash-course

So, use cheap land on the outskirts of urban cores to build housing? All about it. Not allow infill and mandate that peripheral construction only be in the form of large lot SFH? Strongly against.

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Do you believe that the most important goal of housing policy should be Affordability?

I do.

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Oops, and I almost forgot to mention:

Americans have shorter commutes than most nations

Those who commute by car have significantly longer commutes than those who use transit.

Those who live in dense urban cities have longer commutes than those that do not.

So if you are concerned with "super-long commutes", you should oppose Density.

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Totally, people who commute via transit probably have longer commutes than those commuting by car. And transit is a more viable solution in places with relatively more density, no?

For an extreme example, Hong Kong's MTR rail system works because it's embedded in a super dense urban environment where something like 40% of the population lives within walking distance of a stop. I juxtapose my experience there with having lived in a place like San Jose, CA which tries to do transit (busses, light rails), but is still so suburban that transit is a total pain -- so everyone drives and there's pretty terrible traffic.

Also, when I think density, I think about having the ability to walk to the places I need to go -- grocery, the bank, the dentist, etc. Making walking a viable transit mode also seems important.

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It is much easier and cheaper to just build houses on the outskirts of metro areas than to build entire transit systems on very expensive dense urban land.

Trying to redesign metro areas so people "having the ability to walk to the places I need to go" will be extremely expensive and only make housing less affordable.

At some point, you are going to have to choose between:

a) Promoting Density, or

b) Making housing Affordable.

You cannot have it both ways. Which is exactly why current YIMBYism is guaranteed to fail. They must reject Density as a goal (which is exactly the point of my article).

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Thanks for the comment.

I don’t claim to be an expert on YIMBY thinking, but your reply appears to reinforce the main points of my article (and the others in the series). My guess is that part of your confusion is that you did not read the full series of articles (that are excerpts from my book).

1. Every YIMBY that I have ever met or read is pre-density, which I strongly believe undermines a far more important goal of housing affordability.

2. Glad that we agree that taller buildings are more expensive per square foot. You also do not mention that they are built on more expensive land, which is the primary driver of housing unaffordability. That is exactly why dense in-fill is not a viable strategy for housing affordability. Nor are SFH infill.

3. This fact completely undermines your second point. If land is cheap, then why bother to build up, particularly when there is no evidence that people want it? Developers could easily build tall in rural areas and small towns, but they do not because they know that no one will want to live there.

4. “I don't think the revealed preference argument holds any weight in the existing U.S. housing market.” It is a little hard for me to take you seriously when you make a statement like that. It is not just based on revealed preference (which is very powerful evidence). It is also based on polling data. If everyone were clamoring to live in tall buildings, the regulations would change very fast. Regulations are increasingly trying to force the construction of taller buildings.

5. “But what Yimbys are against, at the core, is building detached single-family homes spreading outwards away from job centers.”

Yes, now we are getting to the core for why I have serious concerns about YIMBYs. The vast majority of Americans live in suburbs and work in other suburbs. “Job centers” are largely a myth. The percentage of jobs in urban cores are typically single digits. Only six cities have more than 250,000 jobs in the city center. Jobs like houses are spread out. Efforts to force job density will inevitably fail, because employers will move where they want to.

6. “This pattern of development results in super commutes, it's bad for the environment, and isn't financially sustainable w/o massive federal subsidies.”

This is just a list of incorrect reason that supporters of Density use to justify their failed policies. Urban areas make up only about 4% of land. They could double in size and have very little impact on the environment. They are absolutely economically sustainable and do not require or receive federal subsidies. They are being constrained by local and state regulations.

7. I never said “mandate that peripheral construction only be in the form of large lot SFH”

8. Your comments only further reinforce my beliefs that until YIMBYs abandon their quest for density, they will never achieve their goals nor do anything about housing affordability.

9. I encourage your to read the entire series:

https://frompovertytoprogress.substack.com/t/housing

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Jan 12Liked by Michael Magoon

There's a lot here and in the interest of really trying to clarify myself and really hearing what you have to say, I'm not going to try to tackle all of it :)

But..to try to represent my position on density, I'm not pro-density as much as I am anti(anti-density). We should stop prohibiting densification. That's to say, we should mandating that people have to consume a minimum amount of (often expensive) land, or not have access to certain housing markets.

With respect to consumer demand, I don't think polls are representative information. In places where we've legalized denser housing types -- inner ring Houston and Seattle are two great examples -- there's abundant demand for housing on smaller lots. These are often (but not always) 4 story duplexes and rowhouses.

Emily Hamilton just released a working paper on this topic as it pertains to Houston, might be of interest: https://www.mercatus.org/research/working-papers/effects-minimum-lot-size-reform-houston-land-values

I don't want to force anyone to do anything. I want us to stop prohibiting alternative types of (often denser) buildings, and allow people to make the tradeoffs about land consumption that they need to make.

In any case, thanks for the back and forth, I look forward to reading more of your thoughts in the future.

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Jan 12·edited Jan 12Author

I generally agree with you here, but I do not think that is representative of what I understand as YIMBYism.

As I see they want to roll back regulations against in-fill and densification within metro areas (which we both apparently agree on). If people want to live there great, but much new regulation is forcing people to live there. That is not consumer demand. That is regulation.

But YIMBYs also are either opposed to or are silent on the far more effective strategy of building on the outskirts of metro areas. This was a proven strategy for decades for keeping housing affordable. Until this view changes, YIMBYism will fail to make housing more affordable.

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Apr 9·edited Apr 9

I would be more open to greenfield development if the homes being built resembled those of yesteryear rather than the monster SFHs being built now. That would be the compromise position. Greenfield development consisting of smaller SFHs, townhouses, multi-plexes and mid-rises.

Density has benefits other than saving farmland and natural areas. Cheaper servicing costs and more interesting character, more opportunities for community etc.

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Apr 9·edited Apr 9Author

I think it is best to build the type of housing that people want to live in. In the USA that is single-family residences. Right now the average new house is about 2400 square feet. I see no problem with that, particularly is they are two story.

Builders and urban designers should not decide what people should want, they should react to revealed preferences in their purchasing decisions. Designers trying to force preferences is what got us into this problem in the first place.

And in terms of sprawl, it is lot sizes that matter more than the square foot of the house. I would have no problem with mandating SFHs have maximum lots of say 5000 square feet.

And I think the types of housing that you suggest can also be sprinkled in based on demand.

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I see what you’re saying. It’s the legitimate externalities that I’m concerned about that don’t figure into individual buyer and seller decisions.

Also, do you think developers really are just building what people want or are they building to the lowest common denominator? For example, maybe many more people want to live in new urbanism communities but developers much prefer the simplicity of cookie cutter tract development so the option is rarely presented. Doesn’t it seem strange how generally uniform new housing is given how diverse people’s taste can be?

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