The Big Housing Lie

It's a lot more than just NIMBYs and zoning.

I've long been highly skeptical of the narratives surrounding the housing crisis.

Have you ever wondered why, even though we keep seeing alarmist articles about the U.S. population declining, we simultaneously see rents spiking to historically unprecedented levels and hear constant claims that we don't have enough houses for everybody? That doesn’t make sense to me.

What's even more strange is that population growth rates have been shrinking for a long time, and currently U.S. birthrates have fallen to an all time low. Immigration is down, too. Even more puzzlingly, one of the highest spikes ever in birth rates was the so-called Baby Boom. Yet despite this massive bulge in the number of people (which can be clearly seen in this chart), we were able to comfortably absorb it without an acute housing shortage the way we have now, even after several decades of lowered birth rates. In fact, looking at that graph, it feels like we should have glut of houses, not a shortage!

The all-encompassing narrative you read in everywhere in newspapers, Web sites, online discussion forums, blog posts, and, well, pretty much everywhere, is that the housing crisis is caused by two major factors:

1. Zoning and other regulations make it too difficult to build new housing.

2. NIMBYs.

NIMBY stands for "Not In My BackYard" and refers to faceless hordes who fight tooth-and-nail to oppose any new construction in their neighborhoods. They are joined in this effort by their cousins, the BANANAs (Build Absolutely Nothing Anywhere Near Anyone), who oppose construction everywhere, not just in their own neighborhoods; and CAVEs (Citizens Against Virtually Everything), who oppose well, pretty much doing anything at all, including new construction. In other words, there's just too much democracy when it comes to building, and too many damn regulations!

The ultimate cause of the housing crisis, therefore, is because we're not building enough houses and apartments due to these two factors, preventing the Invisible Hand of the Market from solving the problem on its own. That is, it's simply a matter of supply and demand, nothing more. Markets be praised!

The solution, we're told, is to engage in a building frenzy. Throw up houses like there's no tomorrow. Pare back regulations on construction and zoning. Build denser neighborhoods with multistory high-rises—force them down people's throats if you have to. This increased supply, we are told, will automatically take care of the problem. If we build more, the thinking goes, prices will magically come down through a sort of trickle-down effect. Rich people will pull up stakes and move into the fancy new digs, making existing homes more affordable to the middle class, and so on down the line—kind of like hand-me-downs from your siblings.

These ideas are promoted by people who call themselves YIMBYs (Yes in my backward!), who are the opposite of NIMBYs. YIMBYs are people who enthusiastically support more construction, although they might better called reverse-BANANAS because they want to build everything, everywhere, all at once. Not surprisingly, the YIMBY idea is particularly popular with libertarians and neoliberals.

The Long March of the YIMBYs

Now, I should say I'm totally in favor all of those things in principle. In fact, having spent my life as a struggling architect, all of this would be great for me, personally. We do need denser neighborhoods and better urbanism in this country.

But there are a few reasons while I'm skeptical of this narrative right off the bat. One is that I'm not aware of zoning restriction becoming much stricter over the past twenty years, so why would there suddenly be shortfall in housing just because of zoning? It doesn't make any sense. Similarly, people have always been able to have input over what gets built around them. They did just as much when the Baby Boomers needed homes, too, and yet that didn’t prevent them from acquiring sufficient and affordable shelter.

Also, home prices seem to be surging everywhere, not just in the United States or coastal cities. The regulatory apparatus in all of these countries (or between different locales) can't all be the same, nor can the degree of control people have over what gets built (i.e. NIMBYism). Yet, despite these differences, housing and rental costs are escalating worldwide, as well as everywhere in the United States, including in places where neither of these things can be much of a factor.

Recently I've run across a couple of good sources of information that make a case that there's far more going on here that the overly-simplistic NIMBY narrative pushed by economists and the press. One is this podcast by Robert Evans. The other is a video by vlogger Belinda Carr, who is an architect who makes videos about construction and other topics. I'm going to summarize their points, and I'll embed them below. You should definitely check these out (after reading this post, of course!)

This post will be specific to the United States in particular, but some of these factors should applicable to other countries as well, since the cost of shelter appears to be rising unsustainably more-or-less worldwide.

So let's dive in.

1.) Interest rates

I'm putting this one upfront because it's one of the most obvious and well-known reasons why housing prices have exploded in the last decade. After 2008, interest rates were pushed to very low levels in order to "stimulate" the economy by deliberately pumping up the value of financial assets. As Belinda Carr notes in her video:

Over the last 30 years, low interest rates have driven up home prices. From 2008, up until 2021, the 30 year fixed rate mortgage was below 6%, a historic low. No money down, ultra-low interest rates, and easy qualification gave individuals the ability to buy much more home for their money. It was also cheaper to buy as opposed to rent, which created additional demand.

Typically, the entire cost of housing is not paid upfront, but amortized over time. This cost includes the principal (i.e. the actual cost of the house at time of purchase), and interest (the cost of the money lent by the bank). Lower interest rates didn't lower the price of housing—the principal just grew to compensate, meaning that overall mortgage costs remained the same even as the price of houses inflated. It's less clear how this affects rents, though.

Another factor is that cheap money made it economically viable for large corporations and the investor class to get into the landlord business by buying up large pools of housing in a way it wasn’t during the previous era of higher interest rates. This meant that buyers now had to compete against large institutional investors for houses, increasing the price of housing. We'll talk more about that later.

Seen this way, the high interest rates of the 1960s and 1970s kept housing prices low and affordable for the middle class and prevented landlords from buying up everything in sight. Government subsidies (like the mortgage interest deduction and loans) and COLA (cost of living adjustment) contracts by unions helped too. If inflation were higher than the interest rate on a mortgage, banks would actually eat part of the cost for the Boomers’ houses.

Note that this has nothing at all to do with zoning laws or NIMBYs.

2.) Labor and Material Shortages

As Robert Evans notes in his podcast, in many cases the reason housing construction has lagged behind population growth is because the labor to build houses simply is not there, or is in very short supply.

Evans quotes from the following NPR article, which describes what happened to construction industry workers in the aftermath of 2008:

There's never been such a severe shortage of homes in the U.S. Here's why (NPR)

After the housing bubble burst, the demand for construction workers fell drastically. Because it was a boom-and-bust cycle, construction activity fell below where it should have been, forcing people in the construction industry to look for other lines of work. Many went into other fields which didn't require a great deal of training like law enforcement (where they can now roust and bully unsheltered people who can't afford housing anymore). In other words, we have a labor misallocation. Evans concludes:

[13:54] “So, more cops, less construction workers, nobody to build the houses that they want to have built, which is not a problem that you can lay on zoning or NIMBYs. It's because there was a fraudulent banking industry that existed to sell people subprime loans on houses that were low quality, massive, and built in terrible locations. And when that fell apart, suddenly all of these people had to find something else to do. You can't blame that on the fucking NIMBYs in San Francisco.”

In other words, now that the construction workers are needed, they're simply not there. We can't build houses if we don't have the labor and know-how to build those houses, regardless of zoning laws. Of course, those workers were simply responding to market conditions, as indeed they must.

We could have done something else, of course. Modern Monetary Theory argues that unemployed workers are a valuable economic resource that should not go to waste. The Job Guarantee proposed by MMT would have given these workers something to do to after the 2008 crash to make sure they didn't have to leave the industry. Instead, neoliberalism insists we should just let workers fend for themselves (even while bailing out the banks and the financial sector). So people did what they had to do and went into alternative occupations, and now we’re collectively paying the price. As MMT notes, we can never have a shortage of money we ourselves create, but a shortage of actual materials and labor cannot be overcome with any amount of money, nor by removing zoning laws or everyone suddenly becoming YIMBYs.

There are additional problems with the construction industry that Evans does not mention, for example, material shortages and supply chain issues. In the aftermath of the pandemic, lumber prices soared to extreme highs because industry consolidation shut down a lot of "unnecessary" sawmills that weren't unnecessary after all. This wreaked havoc on the homebuilding industry. Later those prices came crashing back down again in a "bullwhip" effect. This podcast from Odd Lots last year dives into some of these issues.

The guest points out that a lot of houses are started but can't be completed due to supply chain issues. Industry consolidation plays a huge role here, too. He notes that, as an example, 80 percent of truss plates are manufactured by just two suppliers, and they can't be easily substituted.

[22:30] "We think about supply and demand as these two lines that cross, and we know that there’s a lot of demand for homes...but one part doesn't come and the house doesn't work. If you don't have faucets, you can't live in a house. So you could have major demand for housing and lumber and still no actual orders being placed because you’re missing a part."

I happen to be working on a multifamily housing project near Green Bay at the moment. We were informed by the contractor that the electrical switchgear required would not be not available for ONE YEAR. We called around to other electricians and suppliers to no avail. There was literally no way to get the equipment in anything under a year, and of course you can't live in a house without electricity. Industry consolidation has also weakened the position of homebuilders, forcing them to take on more risk. This also provides less incentive to build:

[34:30] "From what I can observe, the homebuilder has less bargaining power an leverage than they had this whole cycle from 2008 onward because the supply chain has consolidated around them. Their suppliers have consolidated, so they're not in a great position."

So there are lots of other problems with the construction industry besides NIMBYs and zoning, but you’ll never hear about them in the mainstream media for some reason.

2.) Housing construction is actually in line with the growth in households/population

In the years leading up to 2008, housing construction actually outpaced the growth of either population or households. This was due to a massive housing bubble, which we all knew about but ignored before 2008. Houses were built as gambling chips for people to buy and flip, rather than as places to live. Many were poorly built and in remote locations as part of a speculative frenzy fueled by corrupt lenders and mortgage executives (who never faced any jail time). In other words, the idea that the U.S. is short 'X' number of houses is based on the unsustainable homebuilding rates of the decades leading up to the financial crash of 2008.

So if you compare the rate of new housing construction prior to 2008 to more current rates, of course they will be lower. But they should be lower, because before 2008 they were unrealistically elevated due to a massive Ponzi scheme. As Evans notes, "The problem isn't that housing construction didn't return to previous levels, because those levels were insane and fundamentally based on irrationality."

Such comparisons are behind the oft-repeated claim that "we're not building enough housing." But if you look at housing construction compared to population growth, they actually track pretty closely. Kevin Drum is policy wonk who looked at the numbers and concluded that the housing shortage appears to be bogus:

...it's true that housing construction plunged in the late 2000s and never returned to its bubble peak. But should it have? That was a bubble peak, after all...During the early aughts, housing supply grew far faster than population. After the bust, household formation caught up by around 2013, and since then housing supply has matched household growth and has exceeded population growth.

So do we have a housing shortage? Everyone keeps saying we do, and the housing groupies keep yelling at me that my chart is meaningless. But why? It sure looks right to me.

We don’t have a housing shortage (Kevin Drum)

Belinda Carr points out in her video that when you look at the ratio of housing starts to population, the picture is quite different than what you normally hear and read in the media. Faced with sharply lower population growth in the decades ahead, we may end up with too many houses rather than too few:

According to the US Census Bureau, the country’s population grew by fewer than one million people in 2021, slower than during the Spanish flu pandemic of 1918 and World War 1. Permits for single-family homes declined from a peak of 1.7 million in 2005 all the way down to 400k in 2010, a massive 70% drop. Even in 2020, the number of permits issued was only 1 million, far lower than 2005. However, overlaying this graph with the population growth graph tells a very different story.

The ratio of population growth to new housing permits should be around 1.5, meaning 1.5 people added for every 1 permit. In the mid-2000s, right before the last housing crash, the Population/Permitting Ratio dipped below 1.5. Fifteen years later, we’re back in the same danger zone. 0.8 people were added in 2020 for every 1 permit. For the first time in US history, more units were permitted than the population grew. This means that we’re heading towards oversupply, NOT a shortage.

Drum points out that the U.S ranks quite well on housing according to OECD stats, but I would argue that this is distorted by the vast oversupply of cheap houses in economically depressed areas of the country like the Rust Belt (where I live) and the Deep South. The real problem is that houses are not located where the high-paying jobs are, as this commenter to Drum's article points out:

Overall we may not have a shortage of housing, but we do have a mismatch between where high paying jobs and affordable market rate housing is. If you want to work/live on the West Coast or the Acela corridor, housing in the Rust Belt won't help you.

That is indeed a problem, but it's different than the simplistic "we're short three to five million homes" narrative pushed by the media. Many of these cities have only so much buildable land, after all, and much of that land is already used. Many of these cities already have massive sprawl issues. The real problem is that prosperity in this country has shrunk to a tiny handful of “winner-take-all” metro areas due to economic developments. But you’ll never hear about that in the media, either.

Drum also points out that, according to the OECD, the U.S. is second-to-last when it comes to the affordability of low-income housing. This is a more accurate measure and less distorted by stranded assets in flyover country. Also note that building too many homes in these cities could backfire if remote work continues to take off.

3. Previous homebuilding was elevated due to household size changes

What does a statistic like "We're short three million houses" really mean?

When you start to study this stuff, you find that there are two interrelated factors: population growth and household size. Household size is the number of people living under one roof—for example, a husband, a wife, and their two kids. The smallest household size you can have is one, where everybody is living alone. In that scenario, population and household size would be nearly identical. At the other extreme, people could be crammed into windowless dormitories and converted basements. Somewhere in between lies the reality.

Household size changes are independent of population growth. If population remained steady but people who used to live together suddenly decided to move out, average household size would decrease, creating additional demand for both housing and rental units. So, to accurately gauge housing demand, then, you need to look at BOTH household size AND population growth, rather than either one in isolation.

The reason housing construction was so elevated during the years 1960 to 1980 is because the average household size fell quite dramatically during that period. To compensate for this, we needed to build a lot of additional housing because there were fewer people per household. But from 2001 to 2020, household size (i.e. the number of people per house) was more-or-less stable, and has been ever since. Therefore, it doesn't make sense to compare today's homebuilding rates to previous eras. This is statistically misleading, making it seem like there is more of a housing shortfall than there really is. If you want the numbers, you can read this post by Brian Potter:

Is There a Housing Shortage or Not?

In addition, Carr points out that the relatively small household size in the United States contradicts the idea that there is a housing shortage, because if that were the case then we would expect to see an increase in household size:

When times get tough and there’s a true housing shortage, people turn to shared housing to help make ends meet. If we were truly facing a housing crisis, the number of people per unit in the States would be extremely high, between 5 and 8 people per house, not 2.49.

Although I would point out that this is exacerbated by the fact that the U.S has relied almost elusively on building single family homes since World War Two, rather than a mix of multifamily and apartment buildings as in other countries and before the War. It’s difficult to have multiple people or families living in one detached, suburban house. Cultural factors play a role here, too. People may want to live in multifamily and shared housing, but it's simply not available. It’s also notable that the number of young adults living with their parents is the highest since the Great Depression.

4. There is no correlation between price increase and housing shortfalls

Another thing Potter points out is that if rising rents were merely caused by a shortfall in the number of housing units required, we would expect to see a correlation between the amount of rent increase and the amount of that shortfall. Maybe not 1:1, but at least somewhere in the ballpark.

In fact, we see no such correlation. So, for example, the shortage of units may be the same in Atlanta as in San Francisco or Houston, yet Atlanta’s rent increase was much smaller.

And you can do these comparisons between different metro areas across the country: many places currently have a shortage of housing units, but there is no correlation between the degree of that shortfall and the degree of local rent increase. That's not what we would expect if rent increases were being driven solely by a lack of housing units. This strongly suggests that there must be additional factors behind rent increases:

The most straightforward way of thinking about a housing shortage is of too many people chasing too few homes. Housing cost increases, then, seem like they would at least in part be driven by a failure of homebuilding to keep pace with regional population growth. As population growth outpaces new construction, the supply of available homes shrinks, and prices increase.

This sort of analysis of the gap between population increase and housing increase is fairly common...Unfortunately, in practice this metric seems to be hilariously non-predictive...There is essentially zero correlation - the metros with the largest rent increases had added population / added housing ratios no different than metros with smaller rent increases...This lack of correlation seems to remain no matter how you slice the numbers...We don’t see much evidence that a mismatch between population growth and housing construction is responsible for housing price increases, though we’re very far from being able to rule this out.

5. A few outlier cities are distorting the picture

Rent increases have been the most dramatic in certain places like New York, San Francisco, and Seattle. Because so much of the housing and rent cost increase has been concentrated in those big cities, coupled with the fact that so many people want to live in those cities, it distorts the overall picture across the rest of the country. So while zoning and NIMBYs may indeed be a major factor in places like San Francisco, Seattle and Silicon Valley, they are much less of a factor in other cities across the country which are also experiencing significant housing and rent cost increases, as Potter summarizes:

In general, housing trends are largely driven by a small number of outlier metros. In particular, Bay Area metros are housing trend outliers, and will give the appearance of stronger trends than actually exist if you just look at a small number of metro areas that includes them.

6. Housing stock is being held off the market

You often hear that there are enough houses in the country to provide everyone with shelter.

And while that may be true, there is a difference between the number of houses and apartments, and number of vacant houses and apartments. Vacant houses and apartments are ones that are empty and available for rent or purchase. Right now, regardless of the actual number of houses across the country on paper, the vacancy rate is quite low.

The evidence indicates that one reason vacancy rates are so low is because many homes and dwelling units are sitting empty, and the reason they are not being rented out or occupied is because their owners are using them instead as rentals for AirBnB or Vrbo:

[24:58] “When we're talking about "missing" housing, were not talking about a lack of houses. You'll hear people say there's 'X' number of empty houses in the United States—more than enough to [house everybody]. And that is true, but that's not necessarily vacant housing.”

“Vacant housing is housing that is on the market and available for people to purchase. Right now the U.S. does have a historically low vacancy rate, so there are fewer houses available per capita for people to rent than there have been in the past—even though there [are] plenty of actual empty houses, because if those houses aren't available to be rented they aren't vacant. And a big reason why there's so much empty housing that is not technically vacant is AirBnB. So that is major factor here.”

We clearly have a lot more dwelling units than vacant units, distorting the "not enough units available" metric that is constantly pushed in the media. Of course, this restriction on supply drives up prices for the remaining available houses and apartments. Also note that this has nothing at all to do with zoning or NIMBYs.

7. Corporations and investors are buying up houses

When the housing market crashed after 2008, this enabled Wall Street to get into the rental market in a big way by buying up foreclosed properties on the cheap, and they never looked back. Across the country, institutional investors have been snapping up homes, including private equity firms like BlackRock. As ProPublica notes, “Private equity is now the dominant form of financial backing among the 35 largest owners of multifamily buildings.” Many of these investors are able to pay cash upfront, out-competing ordinary homebuyers, especially first-time ones. As Belinda Carr describes in her video:

According to Redfin, investors purchased a record $64 billion worth of homes in 2021, the most in at least two decades. That’s an average of 15% of homes sold in many metropolitan areas. The percentage is much higher in certain cities like Washington, Atlanta, Charlotte, Miami, Jacksonville and Phoenix where 25% of homes were bought by investors.

And according to the Washington Post:

Last year, investors bought nearly one in seven homes sold in America’s top metropolitan areas, the most in at least two decades, according to the realty company Redfin.

Those purchases come at a time when would-be buyers across the country are seeing wildly escalating prices, raising the question of what impact investors are having on prices for everyone else. Investors were even more aggressive in the final three months of the year, buying 15 percent of all homes that sold in the 40 markets.

Investors bought a record share of homes in 2021. See where. (Washington Post via Archive.org)

In her video, Carr points out that this factor is almost never mentioned in the mainstream media, and when it is, it is summarily dismissed in favor of the official narrative of the "housing shortage." For example, take this article from Fast Company. While the article points out that:

The share of homes sold to investors during the first quarter of 2022 averaged 28% per month, which is an increase of 9% from the first quarter of 2021...Between 2017 and 2019, that figure was 19%. 

Further, home flipping—a process that entails purchasing a property, making some upgrades, and then relisting it at a much-increased sale price—is also on the rise. During the first quarter of the year, nearly 115,000 single-family homes were flipped, comprising almost 10% of home resale transactions...

But in the end, the same article concludes:

The question, though, is who’s to blame? Investors and home flippers, attracted to the market due to low borrowing costs and appreciating home values, make for an easy target. But they may not be the right target...

Again, it comes back to the imbalance between supply and demand. In 2021, there was a national housing shortage of 3.8 million units, according to Freddie Mac. That shortage—combined with homebuyers with cash to burn and low borrowing costs (up until recently)—is the primary driver of housing prices, not merely investors and house flippers.

There's that ubiquitous "three million missing units" number again! Carr argues that the reason why institutional investment is downplayed in the media and the "not enough houses" narrative is pushed instead, is because these media companies are themselves owned by wealthy investment firms¹. I tend to agree. It's also worth noting that, according to OpenSecrets, members of Congress invest more money into real estate than any other industry. I don’t think it’s a coincidence that a lot of reporting about other reasons behind the housing crisis is done by independent and non-profit journalists like ProPublica.

And while you'll often hear that only 3 percent of U.S. houses are investor owned, this is a deliberately misleading statistic. It’s looking at nationwide statistics. But the U.S. is a very big country, both in terms of land and population. There is not a lot of institutional investment in places like Omaha or Terra Haute or Rockford. There IS a lot of investment in Sun Belt cities where people are disproportionately flocking to which generate high returns like Phoenix, Austin, Miami and San Antonio. In these metro areas, a not insignificant number of houses are bought up by institutional investors and corporations every year, driving up prices of housing and rent in these cities for everyone else. In Atlanta, for example, investors own about one in five single family rentals and are amassing more:

Robot Landlords Are Buying Up Houses (Vice)

8. The “missing middle” is missing

Not only do we not build enough multifamily and rental housing, but the houses we DO build are getting larger and larger, and are targeted exclusively to affluent buyers (presumably to maximize profits for homebuilders). It seems like every new home in my city is a bloated suburban McMansion with turrets and a lawyer foyer. Houses have gotten a lot bigger, even as the average household size over the same time period has gotten smaller as we saw above. According to one study, the median home size for newly constructed houses has increased by 150% since 1980, even as the median household size has decreased 16 percent since 1940. This is significantly larger than other countries.

I liken it to automobiles. Car makers usually have a range of cars for buyers at different price points. They may have a small, cheap compact car, a mid-size family sedan, and so on, going up all the way to their finest luxury vehicles like the Toyota Land Cruiser or the $150,000 Cadillac Escalade.

Now imagine if all car makers everywhere stopped manufacturing anything but their high-end luxury vehicles. A lot more people wouldn't be able to to afford cars anymore (or get loans for them). But people still need to drive (at least in the U.S.) so they would have no alternative but to turn to the used car market. Since they aren't making any more used compact cars or mid-size sedans, the cost for the existing ones would soar.

Basically, the same thing has happened with housing. Most people—especially first-time home buyers—can't afford the supersized homes being cranked out by the homebuilding industry for the very affluent, so they are all competing for the fixed pool of normal-sized houses which were built before 1980, bidding up prices. Note, once again, that this has nothing whatsoever to do with zoning or NIMBYs—it’s a product of our perversely unequal society (although minimum lot sizes in suburbs exacerbate the situation).

Adam Tooze @adam_tooze

The disappearance of the home priced at less than $300k in American markets, is a striking development of recent years. thedailyshot.com/2022/08/24/ser…

9. The rental market is being gamed

This is the crux of Evans' podcast. You can listen to it for the gory details, but basically algorithms have been developed over the past decade to enable landlords to game the rental market and reduce competition. This led to software like Yieldstar and Lease Rent Options (LRO), which eventually merged. These softwares have enabled landlords across the country to essentially act as one national landlord cartel that coordinates pricing. This method of price collusion first emerged in the airline industry in the 1980's to raise fares, and was the subject of government investigations. According to one lawsuit against this practice:

Beginning in approximately 2016, and potentially earlier, Lessors replaced their independent pricing and supply decisions with collusion. Lessors agreed to use a common third party that collected real-time pricing and supply levels, and then used that data to make unit-specific pricing and supply recommendations. Lessors also agreed to follow these recommendations, on the expectation that competing Lessors would do the same.

Rent Going Up? One Company’s Algorithm Could Be Why. (ProPublica)

One of the tactics this system allows is holding rental units off the market in order to drive up prices. Previously, empty rental units were seen as a waste of resources by landlords. But gaming the market via algorithm allows independent landlords to make up for empty unit losses by the increase in prices for the remaining occupied units. This leads to keeping more units off the market (the vacancy rate) and higher prices for everyone else. ProPublica—a non-profit news organization—has done the most reporting on this issue. In their latest article, they report that the DOJ is currently looking into these software companies for price collusion:

Department of Justice Opens Investigation Into Real Estate Tech Company Accused of Collusion with Landlords (ProPublica)

Once again, please note that neoliberals and the corporate media don’t ever talk about any of these issues, preferring instead to blame the rise in housing prices exclusively on a shortage of housing—in other words, zoning and NIMBYs². Just like Carr's insinuation about the media above, there seems to be a lot of pressure to spin a particular narrative, regardless of the actual facts. As Robert Evans concludes:

[23:49] “I think the point here is that there's a lot of money in convincing you that this problem is simple and that the only thing to do is deregulate. If we deregulate construction, if we deregulate zoning restrictions, that will solve the problem...”

[33:05] “The people who just say this is all about zoning or this is all about housing construction are trying to fuck you. They are trying to enable others to fuck you and you should not take them at their word...Capitalists have found a bunch of different ways to fuck with housing in the last fifteen years, and it's not just a construction issue or a zoning issue.”

Conclusion

It's true that zoning regulations can have negative effects on housing construction in certain locales. Zoning reform is a laudable goal. And it's true that wealthy upper-class people can often throw sand in the gears of efforts to construct more affordable housing. Those factors are particularly relevant in "booming" cities where lots of people want to live like San Francisco, New York, Seattle, Boston, Phoenix, Miami, and so on. These are important issues, and we can't dismiss them entirely.

But the argument that these are the only causes of the housing crisis is deliberately misleading. The real picture is far more complex. That means that the "just build more" solution is unlikely to be adequate to solve the problem. Note that many of the factors listed above simply didn’t exist when the Baby Boomers needed homes—homes which they eventually got. A lot of the problems with the housing market today started after the 2008 meltdown, and the laissez-faire attitude of “let the market sort it out” promoted by the media and neoliberals has allowed housing to be turned into an asset class to funnel money to wealthy investors while destroying everyone else and causing a homelessness crisis. Of course, the 2008 meltdown was itself caused by the market.

The reason this false media narrative is so successful is precisely because it isn't entirely wrong. Any good propaganda always contains elements of truth, otherwise it would be ineffective. But propaganda is deliberately designed to lead us away from certain conclusions by adding misleading facts and omitting others, and I think that's what we’re clearly seeing here. It’s easy to write stories about rich assholes opposing public housing or developers stymied by zoning laws. The media can scour the earth to find isolated examples of these and serve them up to the public (which they do regularly). But those don’t give you the whole story.

I can't help but notice a striking similarity with the inflation debate. That debate also ignores the complex, real-world reasons why prices are going up in favor of a simplistic narrative of the M-2 money supply (and not, for example, supply chain issues, adverse weather events, consolidation, energy prices, or corporate price gouging) to be cured by interest rate hikes and austerity (which will conveniently raise unemployment and squelch wage hikes). Once again, this is the narrative favored by neoliberal economists and their allies in the corporate media.

And note that both are “solutions” which abdicate citizens petitioning their elected representatives in government to do anything at all about these urgent, pressing problems and instead sit back and “let the market sort it out.” I don’t think that’s a coincidence. It’s the religion of our times.

1. Some easy Google searches reveal that Fast Company is owned by billionaire Joe Mansueto, who is the founder and majority owner of MorningStar Inc. which is an investment firm that manages a wide array of investments. Their annual report states (emphasis mine): "The introduction of non-traditional asset classes such as cryptocurrencies, private debt, real estate, structured products and collectibles, which lack a historical record of performance akin to traditional assets, into our investment research and strategies and managed assets may result in adverse outcomes and headline risk if they fail to perform in the manner that we anticipate."

2. The cynicism of this take is hard to overstate. Silicon Valley oligarch and prominent libertarian Marc Andressen claimed for years that NIMBYs were the fundamental cause of the housing crisis. But when affordable housing was proposed near his mansion, he fought tooth-and-nail to stop it:

Jerusalem @JerusalemDemsas

Yesterday, I came across a peculiar public comment, signed by Laura Arrillaga-Andreessen and Marc Andreessen, violently opposing updating the Town of Atherton's proposal to make it possible to build multi-family housing in America's richest zip code.

It's probably a good metaphor for most of Silicon Valley's diganoses of our societal problems and their proposed “solutions” (which always somehow benefit them).