Municipal zoning in California is getting a much-needed kick in the ass

It’s like Christmas all over again for Bay Area YIMBYs 🎄

Some truly wild stuff is going down in California; certain cities are having their residential zoning codes suspended by the state. Seriously. 

I am not and have never claimed to be a policy wonk, so check out this excellent piece by Darrell Owens of The Discourse Lounge, Bay Area Cities to Lose ALL Zoning Powers in 2 Days. It succinctly outlines the legal apparatus surrounding the zoning upheaval without being overly technical. There’s still a decent amount of technicality, but that’s just how these things go. This column won’t make much sense if you don’t read the piece linked above, so please do so before reading on.

Development? In my backyard? It’s more likely than you think.

First things first: what the hell does YIMBY mean? YIMBY (plural YIMBYs) is an acronym that stands for “yes in my backyard,” referring to a person’s or group’s support for development, i.e. construction of new housing. They stand in opposition to NIMBYs, an acronym for “not in my backyard,” who hold more or less the opposite view regarding new construction. Why and how people sort into one camp or the other is a colossal can of worms, but you can read about it any time you want by searching either term on Twitter (be sure to explore the replies so you can see just how heated these things can get).

This new development in California is a huge win for YIMBYs since developers are now able to bypass municipal residential zoning laws (laws that were implemented and maintained by NIMBYs). As expected, cities whose residential zoning was suspended by the state have seen a spike in approval for proposed developments, which in theory should monumentally increase the housing supply in these cities.

Supply and demand: surely this time it’s not a massive oversimplification

According to the central tenet of YIMBYism, this will go a long way in solving the housing affordability crisis. It’s basic economics, after all: housing is unaffordable since demand is high and supply is low. Flip that on its head by increasing supply and voila, prices go down and housing is affordable again. Easy peasy, right? We’ll see! At the end of the day, this will be a stress test for YIMBYism, an opportunity to put their theory to the test and see just how much of an effect this zoning deregulation will have on affordability. It probably will make housing more affordable, but just how much remains to be seen.

For the record, I think this is good and will very likely improve the housing situation in California. I’m not a NIMBY, I swear. But there’s a reason not everyone buys into the idea of housing being a simple supply and demand question.

So why wouldn’t everyone be a YIMBY?

For one thing, check out Rebekah’s piece The housing crisis: a nightmare with 13 parts. There most definitely is a housing supply crisis, but it’s not the only aspect of the problem and the other crises won’t be solved or even mitigated by simply adding to the housing supply. An example: adding to the housing supply won’t solve the eviction crisis and could even worsen it. Construction is expensive and the early bird gets the worm in a building frenzy like this one, meaning those with more access to capital are going to end up in charge of constructing (and likely owning) the majority of these new units. I talk a bit about it here, but corporate ownership is correlated with higher eviction rates. 

Herein lies one of the most common arguments against YIMBYism: heedless development typically leads to increased financial and/or corporate ownership of rental housing. Will this be the case in California? Once again, we’ll see! But it’s a distinct possibility and could be cause for legitimate concern given the eviction trends observed in Indianapolis and Atlanta.

Another critique of the YIMBY position comes in the form of a question: what happens when supply outstrips demand? This is a question we may see answered quickly in California. Look at Santa Monica in the Owens piece. “A town which in the last eight years approved 1,600 new homes and within a week, saw a dozen development proposals filed that put 4,000 new homes in the pipeline…” That’s an almost unfathomable increase in construction (I was going to do the math and calculate the percent increase in approved units per week but have chosen not to for reasons I assume are obvious).

Given how drastic this increase is, supply eclipsing demand seems like a real possibility. So the question remains, what happens then? Will we just have a ton of units sitting vacant? Is anyone going to maintain those units in the meantime, or will they fall into disrepair? Will developers cut their losses and abandon construction when it becomes clear the financials won’t pencil out by the time the building is finished? I have no idea! No one does! Maybe developers will start selling land once it’s more profitable than waiting around for renters to fill units, or maybe the state will seize the units in an unprecedented revival of public housing. Anything is possible.

Plenty more issues remain. Foremost in my mind is what happens when 4000 new units are filled and the city’s transportation infrastructure is overwhelmed. People closer to the industry than I have said there’s also a building material and construction labor shortage, so approving thousands of new units will be significantly easier than actually building them. It’s going to take years to build and fill these units, and even longer before their market effects are felt by regular people.

Conclusion: I have no idea what’s going to happen but neither does anyone else

This residential zoning revolution is going to ask and answer a ton of questions. And while the potential downsides are great, I’m inclined to be positive about it. We should also keep in mind that these downsides can be mollified or avoided outright by robust proactive state intervention on behalf of renters. On one hand, I’m encouraged by the fact that these zoning changes were triggered by active state intervention. On the other hand, we must keep in mind these changes were put in place on behalf of developers (the legal mechanism is literally called the Builder’s Remedy). 

I don’t know enough about California state politics to say whether their state government is willing to intervene for tenants on a similar scale. I hope it is, but if not then I hope tenants will be able to consolidate enough political power to force their government’s hand. If we know one thing about the housing system, it’s that we can’t trust profit-driven interventions to create long-term solutions for anyone but landlords and Wall Street. Whatever happens, though, housing advocates need to keep a close eye on the zoning situation in California.