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There are two ways to build enough housing for all the people: The government can do it, or private developers can. One is expensive, and the other is often inadequate. But is there a brilliant grand bargain to be had? Indeed.

From New York to San Francisco, many of America’s biggest and most economically dynamic cities are in the midst of an affordable housing crisis. The lower and middle classes are getting priced out of these cities as rents and home prices rise and rise, far faster than wages. The reason for this is simple: There’s not enough housing. How to fix it is also simple: Build more housing. From there, everything gets complicated.

Why have our cities, to varying degrees, failed to build enough housing to keep up with demand? Well, there’s NIMBYism and historic preservation and laziness and greed and many other motivations, but a prime structural reason is that for the most part there is no formal mechanism to ensure that housing permitting and construction keep up with the growth in housing demand. Talk to a home-owning San Francisco resident about this long enough and you’ll hear some variation of the argument, “They’re building buildings all over the place! Thousands of em! You can’t just build your way out of the problem!” Sure, they built thousands of units—but they built hundreds of thousands of units less than they needed to, which is why rents have risen so much that a San Francisco household making $140,000 is still financially “squeezed.” You can’t rely on your stupid eyeballs. You have to look at the numbers. And the numbers will clearly tell you, “Build more housing, assholes.”

In San Francisco and elsewhere, strict zoning rules make it nearly impossible to build housing big enough or fast enough. In fact, zoning laws—though useful for keeping neighborhoods pretty—demonstrably exacerbate the economic segregation of cities, as well as contributing to an overall lack of housing.

Here you will find a very comprehensive story from the Sightline Institute detailing different methods that different cities around the world have used to build their way to affordable housing. In some places, like Houston, a combination of very few zoning restrictions and room to sprawl has created plenty of housing; elsewhere, like Vienna, the government has played a heavy role, heavily subsidizing housing construction and keeping control of rents—treating housing as something that needs to be provided and regulated like all the other necessities of life.


People on the left tend to want more public housing, and people on the right tend to want to let the free market handle it. I would be satisfied with “whatever actually provides enough housing.” And even these ideological categories fall apart with a little examination. Public housing is a fine thing, but it’s expensive, and for every unit you build you have to already know how you plan to pay for its upkeep for decades to come. The New York City Housing Authority, to take an obvious example from one of America’s most liberal cities, has unfunded capital needs of more than $18 billion. That’s for an agency that oversees fewer than 200,000 apartments. And New York City, by one estimate, needs more than 600,000 new units to reach affordability. Without the creation of a vast new revenue stream, it is simply not practical to build enough public housing to fill the need that already exists.

As for the free marketeers: You want to let the free market meet the housing demand? Fine. But first, stop complaining when someone wants to build an apartment building in your precious suburban neighborhood. (The hypocrisy present in the affordable housing debate is truly elite.) And second, give up your stupid fucking tax break that subsidizes your home ownership.

Yes—the mortgage interest deduction, the tax break for homeowners, definitively makes inequality worse and constitutes a government handout of more than $70 billion a year to people who are almost by definition not poor. It is a stupid, regressive, tax break that only still exists due to naked greed, inertia, and the lobbying of the real estate industry. It is morally indefensible. Politically, however, it has proven almost impossible to get rid of. People want their money no matter how unjustified it is.


Here is where the opportunity lies. An opportunity for a grand bargain to fund affordable housing that will satisfy and possibly enrage both sides of this debate equally. It’s pretty simple: Residents of any city that fails to permit enough housing to meet demand lose their mortgage interest deduction. The money they would then have to pay would now goes into a fund to build public housing.

That’s it! Both sides! To the free marketeers, we say: Fine. If you claim the market works, prove it. Permit the housing. Build the housing. Make the housing real. If your zoning laws are so restrictive that you do not allow enough housing to be built to make your city affordable for middle and lower class humans, you are failing to fulfill your basic obligations to your citizens. As a consequence you lose your stupid tax break. And the extra taxes you will then be forced to pay will be earmarked for housing. Luckily, the cities experiencing housing crises are also the cities where the home values are the highest, so the tax revenue will be high. It will not be as good as abolishing this abhorrent tax break altogether, and it may not be enough to fully pay for your city’s housing needs, but it will have an even more useful purpose: It will be a direct motivation for wealthy people to demand that their cities ensure enough housing can be built. It changes the financial calculation of stingy NIMBY hypocrites.

And to the lefties who like public housing: Here is more money for public housing. The only way this would not provide more money for public housing would be if cities with housing crises suddenly snapped to attention and opened the floodgates and aligned their housing construction with housing demand. In that case, the affordable housing crisis would be greatly eased anyhow. Either way, the situation should improve.


This is not quite as emotionally satisfying as confiscating the pied-a-terres of the rich, but it should create more apartments.