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PaperclipPerfector  6d ago (text post)   2936 thread views

Small-Scale Question Sunday for October 19, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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I've been enjoying asking basic math questions to destroy dearly held beliefs and I would like to continue. This one requires more intuition than cold basic math though, but it's in the same ballpark.

Let's talk about housing. Housing's so fucking expensive. Especially in desirable places! YIMBYs (or maybe abundance democrats) argue we should build more housing. A lot more. But what kind of housing? Who are we trying to help?

Well. Take a town of 150k people. A one bedroom in a decent part of mine is approaching $1600 a month and inventory is also frustratingly low across the board. Before we get to my actual point lets focus on an absurd toy non-solution first. Let's build 1,000,000 Connestoga huts across town and charge $450 a month in rent. This eliminates a lot of housing pressure but anyone but the most hardcore libertarian would recoil in horror at the thought because it would mean the town would be flooded with poor single people. Per capita tax revenue would plummet while per capita demand on public services would likely increase. Traffic would explode. Parks would be overrun with trash. Police would respond to calls by lottery. This would turn the town into a nightmare.

But we don't have to get this absurd! My contention is, because of progressive taxation, public services are diminished even if you build housing that the median income family can afford!

Looking at federal income tax, the top 1% pay almost 50% in federal income tax. The top 10% pay about 75%. State and local income taxes are structured in similar progressive style. What about sales tax? More tax is paid by people who spend more, and things that are considered essential (like food and cheaper clothes) are usually exempt. Property tax? Lots with higher assessed value and luxuries are taxed at higher rates. Public service spending is carried by the affluent.

For another intuitive look at this, a family with two kids in public school will consume $3000-7500 per month(!) in state expenditure. Public education costs alone dwarf the entirety of taxes most families pay (of which only a small amount is even earmarked for education).

Not just education. The Medicare and Medicaid we all know kicks in at the federal poverty line, but the thresholds for some kind of subsidies are high enough that a family can earn as much as $85,000 in a city like NYC and still qualify for some assistance.

This means every municipality has an economic incentive to refuse newcomers that aren't making potentially 90%ile household income. This means sure, build housing, but only 90%ile housing, or become poorer.

I would like to be wrong about this! It's frightening to think of every newcomer to your town as making it per capita poorer unless they're very affluent!

One weakness in this rationale is we don't have a solid accounting of all of the transfers. E.g. if 90% of education was funded through federal and state revenues, you could imagine purpose building a town just to have a lot of schools so that people with small kids move to it and pull funds from the rest of the country and state. But I think that number is more like 60% and a lot of the "state" funds are likely a matter of appropriation and will be distributed ~right back to where they came from.

I'm kind of surprised nobody else is pointing this out! Am I hitting on some truth neither side really cares to acknowledge because it doesn't support their favorite platitudes or am I just smart enough at economics to twist myself into a gnarly retarded knot?

EDIT: oh! one argument that I've heard from a grimacing YIMBY is that he is forced to admit I am correct, but that's why we can't do this on a local level. Instead we must mandate more housing be built on a nationwide basis (e.g. a federal #NoZoneZone authoritarian order) so any one town or city would be protected from all of the poor not affluent people rushing to it at once and ruining it. This seems like a solution but I am still not convinced I am describing a true real and local deficiency.

The obvious problem with this is that marginal costs of new people aren't at all linear, and your model assumes that they are.

Adding, say, an additional train to a prexisting route is a tiny expense compared to the cost of the route. Adding a new student to an existing school is basically zero cost (and comes with extra funding!) until you get so many new students that you need a new building or something.

Different things have different levels of nonlinearity.

So as places get bigger some things (public transit, road quality, library funding, etc) get better funded, while other things are more linear (or even superlinear -- knowability of a random person on the street, for instance) and get worse.

Which is why cities, as opposed to towns, are good for some things and bad for others.

The vast majority of normies (and probably still a majority of non-normies) lack a coherent answer to the simple question, "Should housing be more expensive or cheaper?" They want too many different competing things from one aggregate number.

What they want is housing to be affordable, but that's not a function of the price number (alone). Of course, if you try to optimize a complex problem by only concentrating on a single variable and asking "should it be bigger or smaller" - nobody would be able to give you a coherent answer, because there isn't one.

Much words have been said about how people bury incoherence in the phrase "affordable housing". What do you think it means?

I'd tentatively define it as a situation where a typical family (yes, I know it's a fiction but that's the only way to create a generally applicable definition) can eventually pay for a culturally adequate housing without incurring catastrophic long-term financial risk or heavy financial hardship.

Best I can tell, this is just a less specific version of the response that @disk_interested gave, which was followed up by agreeing that if we hold wages constant for a conversation about the price of housing, then it just cashes out as saying that the aggregate number for the price of housing should go down. Should I be interpreting it differently?

I'm not sure "agreeing that if we hold wages constant for a conversation" makes sense. I mean, sure, if you exclude everything but house prices, then it's house prices. But that feels like hollowing out the problem's complexity. These things are inter-related, and the relationship is not uni-directional - the house prices influence wages and the structure of other expenses. And most of the normies can not really appreciate the full extent of all those factors - I am not sure I truly can, for example. I just want to be able to live in a decent house and pay for it from my earnings without working three jobs or trying to win the lottery. How to arrange wages/prices/costs/regulations to achieve this is quite complex, and I don't think "just make houses cheap!" is going to answer it.

Do you think it doesn't make sense to do this for any other product, either? Like, we can't talk about healthcare prices or education prices, or car prices, or apple prices, without discussing every other aspect of the economy? Or maybe it's that we must at least discuss wages to talk about apple prices? I'm really just not sure how I'm supposed to think about this.

In some very theoretical and "well, akshually" sense yes, the price of apples is connected to everything else too, just less strongly. But we can say close to 100% of adults participate in housing marked in one way or another (maybe excluding prisoners, the military and such, but these exceptions are tiny) and for an average family, housing costs influence daily life and family budget significantly more than apples. Same for employers - many large employers literally have separate pay scale for "high cost of living areas" - which is mainly driven by housing costs. Discussing whether this arrangement is good or not will take us too much off course, but the huge influence of housing prices must be obvious. Not so with apple prices. If by some quirk of economy the apples become prohibitively expensive, you can just eat something else. If housing becomes prohibitively expensive, you have a society-wide problem on your hands. Having no access to apples for a year is barely an inconvenience. Having no access to housing - even for several days - would be catastrophic to most families. So if we approach it practically, housing is not "any other product" due to its oversized importance in the life of an average family and the society as a whole.

And sure, if we lived in an alternative word where you could buy a house (or any housing solution, however you call it) for the price of the week's wages (you still could buy a car for $1-2k - it'd be an old crappy car but it will get you from point A to point B for a while) then the picture would be completely different. But we aren't living in that world.

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My progressive liberal friends steelman it as wage to housing ratio is such that everyone outside of the lower class can eventually own

In practice, I’ve heard this described as pretty much everyone outside of poverty can budget for 3-10 years to afford a down payment and total monthly payment for a duplex, condo, detached house, etc. Currently, the issues are: the number of people near the poverty line has increased massively, and wage growth outside the upper middle class seems stagnant. I’m not an economist, so I’m not familiar the recent stats here, but I agree with my friends on affordable housing being about ratios in essence. Regardless, bad policy can easily hide in the term “affordable housing”.

In this case, I think that if we hold wages constant for the conversation about the price of housing, what distinguishes this from what I think the summary of it is: the aggregate number for the price of housing should go down?

I agree. That is essentially what the argument boils down to.

I prefer the ratio framing, because it frees us from the anchoring bias, which is especially confusing given recent inflation. To have a serious discussion on this issue, we all need to keep the relevant variables in our minds, and given that the complexity of the entire economy is in play here, most people are unable to think seriously about this issue, let alone have a discussion about policy.

The thing is, though, I think if you simply reword what they're saying in this way: "So, uh, you want the aggregate number for the price of housing to go down?" you are unlikely to get a simple "yes". They also want other things, don't know how to process it, and likely do not have a coherent position.

I have yet to meet a progressive liberal in the PNW who has a coherent position here.

"Should housing be more expensive or cheaper?"

Yes.

This analysis looks wrong to me too, and I think I'd go further than @fmac and say that there are ways to make anyone a net productive citizen. There are probably barriers to accomplishing it, but its theoretically possible.

Adding a homeless / jobless beggar may seem always net negative. But if you can manage to rope in federal funds, or sympathetic donations from other areas you can turn that homeless / jobless beggar into a net bringer of wealth to the town. Or at the other extreme a single billionaire living in a town of ten thousand people. The billionaire basically pays all the taxes of the town. But that tax revenue gives the billionaire enormous leverage over all policy and enforcement. They can get out of just about any legal trouble in the town. They can get any building or new business approved for their friends, or denied for people that they don't like. Those are the theoretical reasons why I think your analysis breaks down.

In practical terms the story of the billionaire is usually more indicative of why towns are happy to add more people. Policy and policy enforcement can be carefully tailored in such a way that tax contributions and government services can be very equally balanced. Wealthy neighborhoods are often full of people who know how to manipulate the levers of local government, and are also full of people that are actively running the local government. Running governments requires human capital, and human capital tends to align with wealth and resources over time. Wealthy neighborhoods get better response times from emergency services, better access to public parks, and those parks are more likely to be kept clean and patrolled by the police. Their roads get repaved and fixed sooner. The schools get more oversight and quality. Successful businesses fill in the commercial space around those neighborhoods. The effects go on and on. The common phrase "you get what you pay for" applies to local government. Its hard to quantify it, but if you live in the different areas it just becomes very noticeable.

One major and obvious problem with your analysis that I saw in the discussion with fmac is that you are way over-counting the cost of schooling for a very simple reason: people aren't in school their entire lives. You need to offset the cost of school based on the number of years of their life that they will be in school. Just like if a road needs to be repaved every three years, you don't count the one time cost of repaving on every year's budget. You divide that spending across the three years. This does method does not even assume any benefits to schooling. To make the math easy lets just say people are only in school for 1/4 of their lives. So if the per student per year cost for a district is $20,000 you should instead think of it as $5,000.

there are ways to make anyone a net productive citizen

Not if they are young or old enough.

73% of Americans not in paid work are either under 18 or over the Social Security retirement age. Admittedly some of the people over retirement age could work, although blue-collar workers are getting a lot slower at this age, and "net productive citizen" is making the stronger claim that they could work enough to, in expectation, pay for their own healthcare. The other groups of non-workers are the working-age disabled (9% - again most could do some work, very few could work enough to pay for their own healthcare), students (5% - these are people who society is already investing in to make them net productive citizens in the future), SAHMs and other carers (7% - most of these people are net contributors, but not in a way that is legible to the GDP statistics), and the stereotypically unproductive (6% across "temporarily unemployed", "early retirement" and "other").

The vast majority of able-bodied working-age people already are net contributors (40 hours a week at the going rate for reliable low-skill labour is enough almost everywhere across the first world). This is obfuscated by measuring contribution at household level - a typical household contains net-contributor parents and net-leech kids.

The US has federalised the cost of subsidising olds and undergraduates, but mostly localised the cost of subsidising kids. This means it makes sense for communities to try to attract retirees and students (the "eds and meds" strategy) and the federal subsidies that go with them, but to try to keep families with children out. This isn't true in other countries where more of the cost of schools is nationalised and more of the cost of social care for the elderly is localised.

The threshhold for a net productive citizen is very low in my mind.

There is a concept in economics called the velocity of money. Basically money doesn't just disappear when it is spent, it usually get reused and spent on other things. Higher velocity things usually cause more spending and re-spending.

I have lived in a couple towns. In both, existing residents have complained that high-income new residents are bidding up the price of housing, so it seems like the problem you are describing does not exist that much. Things probably change when you get to poor immigrants, refugees, etc, but few families with an $85k income would even consider moving to high-cost cities like NYC.

Another thing that your argument is missing is that many muni services have very high fixed costs. As you correctly point out, growing cities indeed run into traffic problems, crowded classrooms, etc, as population rises but before they do the next big capital infusion. Sure, it is annoying, but it is far better than the opposite problem of spreading the same fixed costs across a declining population, especially since the latter usually means an increasingly poor population.

Another thing that your argument is missing is that many muni services have very high fixed costs.

An even more important point is that paying existing debt is a fixed cost. Most governments (at all levels and almost everywhere - blue state municipalities in the US are just particularly bad) have marginally-payable debt (if you include implicit debt from underfunded pension liabilities, which you should) and adding a net zero-contribution new resident improves their finances by reducing debt per capita. This is a Ponzi process (the population needs to grow exponentially to keep the government solvent) but one that can be kept going for longer than a human lifetime, so a growing city is more sustainable than most phenomena that exist nowadays.

I'm kind of surprised nobody else is pointing this out! Am I hitting on some truth neither side really cares to acknowledge because it doesn't support their favorite platitudes or am I just smart enough at economics to twist myself into a gnarly retarded knot?

There's a direct line from that argument to strict immigration policies on a national level. The high housing price areas are also all very liberal so making basically assures they'll never listen to you.

Yeah this argument felt much more like "why bother YIMBYing if it's just a bunch of low tax per capita extremely unproductive Guatemalans?"

You can have both good housing policy and good immigration policy. I actually think that should be the baseline expectation for a western country but our politicians seem to disagree.

high housing price areas are also all very liberal so making basically assures they'll never listen to you.

In a way they are, given they're allergic to building stuff.

Yeah this argument felt much more like "why bother YIMBYing if it's just a bunch of low tax per capita extremely unproductive Guatemalans?"

No.

Those people are obviously problematic looking enough that it's not even worth debating. I mean some people will debate it but that's not interesting to me.

The point of my post is to advance the premise that even (e.g.) well-meaning white families with jobs who follow the law and don't have high medical burden might also be social dead weight.

How do you calculate the cost of education, though? Yes the family's likely social dead weight when the children are growing since they're being subsidized, but at a certain point that child's going to become economically productive etcetera.

The point of my post is to advance the premise that even (e.g.) well-meaning white families with jobs who follow the law and don't have high medical burden might also be social dead weight.

Thank you for the clarity

But what kind of housing? Who are we trying to help?

Market rate; society

But we don't have to get this absurd

Why did you get this absurd then? Kind of feels like you started this off with a nice strawman to anchor on a certain tone.

"Oh you want to build housing? What if it was a shanty town?!?!?!? Anyway let's talk about this."

My contention is, because of progressive taxation, public services are diminished

I understand this to be your core thesis, although if I'm incorrect please let me know

Taxes

You are conflating progressive income taxation with municipal taxation, which is much less progressive. You also don't demonstrate that "lower per capita tax receipts" = "funding shortfall for services" you just assume that.

Federal or State income taxes being progressive does not tell us much about the marginal fiscal impact per new household in a city.

The focus on per capita tax revenue is also somewhat myopic. You could also look at tax revenue per acre/sq kilometer/sq mile and that would go up. Also the average doesn't matter, the margin does. As long as people are marginally economically net positive, you're ahead.

Property taxes account for 72% of municipal revenue. They are pretty regressive, which is why many cities have many carve outs for old people, etc.

Property taxes in my experience typically have lower mill rates in dense cities versus suburban/exurban cities. Because:

Services

The provision of almost every public service is made more efficient when provided in a more densely built area, all else equal. This is due to both physics (less meters of road/pipe/wire per person) and economies of scale.

A quick google tells me that NYC spends $36,293 per student per year which is 91% above the national average. That's $3000 a month at the highest end. Also not entirely sure why we're focusing on educational costs specifically here.

Similarly I have no idea what medicare has to do with building stuff? If Medicare is a bad system that's a federal level society problem, and not a reason to not build more homes.

Additional economic activity

You completely neglect the fact that more people = more demand for stuff and more people to work at jobs to supply that stuff = more 1%s who own the new businesses that supply the stuff so even if you want to fixate on the progressive tax brackets you'll get more of that too. Plus more 10%ers to be accountants and lawyers to support the new businesses, etc

Closing thoughts

Your argument seems to rest on the concept of "tax net takers are bad in large numbers" which is obviously true.

Your argument seems to ignore the fact that NYC, SF, Chicago, LA, London, Hong Kong, Shenzhen, Tokyo, Ruhr corridor, etc are all massive economic engines and the most productive and prosperous places in all of human civilization.

As stated above, building more results in simultaneous increases in demand/supply for everything while also bringing down marginal service costs, with the one assumption that you are in fact adding productive adults, which any non-failed civilisation should be capable of doing (given this paragraph basically summarizes 10,000 years of human economic development).

If you'd instead like to discuss how the US education system is ridiculously expensive per student (it is) or that the US healthcare system mis-allocates vast amounts of capital, much of it taxpayer's (it does) by all means do so. But don't wrap incredibly expected value positive construction in with that. You can walk and chew gum at the same time.

My contention is, because of progressive taxation, public services are diminished

Also, how did the USA's various urban areas come to dominate it's economy if this held? How did they ever work if they, according to you, should have had their tax base average down into insolvency?

But we don't have to get this absurd

Why did you get this absurd then? Kind of feels like you started this off with a nice strawman to anchor on a certain tone.

"Oh you want to build housing? What if it was a shanty town?!?!?!? Anyway let's talk about this."

Because there's two debates we can have.

  1. Is it even possible to have a line where adding people below it makes the town richer or poorer?
  2. Oh wait actually of course there is, now lets just debate over where the line is

If I don't include the absurd Connestoga huts example people get lost in believing that everyone you add to a town that's not a homeless alcoholic like Million Dollar Murray enhances it with their unique specialness. But it's pretty clear even just poor people that aren't mentally ill and are simply of modest means would also make it poorer. If you accept that, then you should be open to the idea that the line might be higher than "Connestoga Charlies" and it may in fact be people of median means.

A quick google tells me that NYC spends $36,293 per student per year which is 91% above the national average. That's $3000 a month at the highest end. Also not entirely sure why we're focusing on educational costs specifically here.

Now look up the national average. It is almost always an enormous amount of cost per household with kids that is almost certainly not paid by the median household.

The point of mentioning this is to give an example of how even modest families that aren't blatantly poor or problematic are more costly than the revenues they directly produce. You should be thinking "fuck, these hard working people who pay their taxes and aren't an obvious drain on society are actually a net drain on society" (at least if we look at direct receipts/expenses).

Your argument seems to ignore the fact that NYC, SF, Chicago, LA, London, Hong Kong, Shenzhen, Tokyo, Ruhr corridor, etc are all massive economic engines and the most productive and prosperous places in all of human civilization.

I do. But at least these places in the US were built over centuries over a variety of different economic and political climates. Lets talk about today. In case we haven't noticed, NYC isn't going out of its way to build housing that people earning $70,000/year median income can afford ("market rate" bros in shambles). If you go to any town or city's subreddit where some new development is approved you find rage that these are not anywhere close to affordable and appear to just be catering to the affluent.

I doubt the city council has economists explicitly standing up showing slide decks with a line between dead weight citizen and productive contributor near the top, but they are clearly internalizing this on some level.

You completely neglect the fact that more people = more demand for stuff and more people to work at jobs to supply that stuff = more 1%s who own the new businesses that supply the stuff so even if you want to fixate on the progressive tax brackets you'll get more of that too. Plus more 10%ers to be accountants and lawyers to support the new businesses, etc

How do we look at it? What tools do we have to measure this? This just seems like a hand-wavey way of smuggling in "Connestoga Charlies are all net contributors, too!" :hugging_face: but you were skeptical of me even bringing that type of person up at all so I assume you believe, again, there's a line somewhere. Where is it?

Great response. Thanks for following up.

But it's pretty clear even just poor people that aren't mentally ill and are simply of modest means would also make it poorer.

I think one disconnect here is that I don't entirely understand why you're so focused on the "average wealth" (so to speak) of a hypothetical city/town. I don't really care if my town's GDP (can substitute GDP with income, or net tax receipts, or whatever) per capita drops a small amount while the overall GDP goes up. The overall "line go up" benefits me greatly as the demand for the services my job provides will increase, and the supply of shit I can spend my money on will also increase. Also the amount of money I spend on housing should decrease, which means I can spend more money on funkopops or whatever. Also also ideally the provision of city services should both increase in scope and quality due to economies of scale.

That all being said yes, there is absolutely a line that if you fill up a city with impoverished people, it will go to shit. Detroit is I think a good example of this. Although the mechanism of action here was different, it had the same result of what happens when your tax base is of extremely low quality. And even then, after the exogenous shocks, it is bouncing back now I understand, kind of showing that cities are profound economic engines thanks in large part due to their scale alone. And also how lower residential and commercial rents present a much more vibrant ecosystem for capitalism to thrive.

If you accept that, then you should be open to the idea that the line might be higher than "Connestoga Charlies" and it may in fact be people of median means.

I absolutely accept that, but I am not convinced on putting it so high we're including the "median taxpayer" so to speak.

I think if the median/average adult was a net economic drain, industrial society/economy would not work. The whole of human civilization works because adults create more value than they consume, which results in the ever expanding pool of infrastructure, knowledge, and productive capacity that we've been piling on top of itself for the last 10,000 years.

You should be thinking "fuck, these hard working people who pay their taxes and aren't an obvious drain on society are actually a net drain on society" (at least if we look at direct receipts/expenses).

This may be true, given Western governments all love to run infinite deficits. This is however a top-level society problem. If our society is unsustainable, we need to fix that (it is, we do). But I don't see what that has to do with making building easier and cheaper. I would even posit that basically any fix to Western society's issues basically mandatorily has to include making building shit easier to help us un-fuck everything.

If you go to any town or city's subreddit where some new development is approved you find rage that these are not anywhere close to affordable and appear to just be catering to the affluent.

These people are stupid and don't understand how anything works. They are literally the "no take, only throw" meme.

How do we look at it? What tools do we have to measure this? This just seems like a hand-wavey way of smuggling in "Connestoga Charlies are all net contributors, too!" :hugging_face: but you were skeptical of me even bringing that type of person up at all so I assume you believe, again, there's a line somewhere. Where is it?

This is a really interesting question I don't have a great answer to.

I definitely don't believe "Connestoga Charlies are all net contributors, too". As a resident of Toronto, sympathy for the homeless is at rock-bottom, even amongst the libs I inhabit this city with.

I was skeptical because tying YIMBYism to homeless people is 1) a pretty unfair comparison (I don't want to spam low income housing, I just want the free market to work) and 2) deeply ironic given homelessness is robustly connected to the fact we don't build enough housing.

I assume the metric I'm looking for (imagining? Inventing?) is "net economic contribution" which would be some blend of tax collection vs social spending, and some type of dollar/economic gain for the additional stimulation of the economy via demand for goods/services, and the additional stimulation of the economy from using one's labour to produce more goods/services for others. Then subtract any crime/chaos/suffering that one inflicts on others and society. Connestoga Charlies are obviously deeply negative here.

Instinctively, I think the line for when this "net economic contribution" is positive is actually pretty low. Presumably somewhere around "working near full time at minimum wage job".

While the laptop class (lawyers, accountants, consultants, finance, tech, etc) capture a huge % of the economic value of society, they obviously are not the primary drivers of the massive prosperity we enjoy. They instead exist because of it.

I say this as one of the laptop class, while my skills are economically valuable, they obviously contribute very little to the production of shoes or carrots, which is what our wealth ultimately actually comes from. My job would be worthless in a society that didn't have legions of people who put shingles on rooves or whatever (as that society would be starving and falling into anarchy), even if I contribute an order of magnitude more tax dollars than they do.

Ultimately, I think the "anti-YIMBY" people (I am not even sure if you are?) need to present their solution, not just nitpick YIMBYs. Because the status-quo of western construction/the ability to build shit in response to human needs is profoundly and fundamentally broken. This is causing massive issues across society. The status quo is unstainable, full stop (unless you disagree, but that's a different argument).

So given the status quo is fucked, and if you don't like the idea of "let people build things on their land that other people want/need", what do you propose to do about it?

While the laptop class (lawyers, accountants, consultants, finance, tech, etc) capture a huge % of the economic value of society, they obviously are not the primary drivers of the massive prosperity we enjoy. They instead exist because of it.

The laptop class includes the software engineers who generate most of the marginal value which makes Americans richer than Europoors.

Connestoga

It would be nice if you were to stop consistently misspelling "Conestoga".

State and local income taxes are structured in similar progressive style. What about sales tax?

Most state and local income taxes are much flatter, specifically to avoid the sort of problems that you're talking about here. For example, in Maine (not a red state), the top tax bracket is anything over $58,000. Sales tax is a little more complicated, but usually poor people pay a higher share of their income on it, because not everything is exempt and most people aren't carefully strategizing to avoid paying sales tax.

For what it's worth, as a renter I didn't pay property tax, whereas as an owner, I have to. If you count people who are renting as residents of the area, per capita tax income (at least on the local level) has to increase. Note that I'm in Canada, so it may not work the exact same way as it does in the states.

You also have the option of...not building 1,000,000 homes, and instead building a much smaller number. There are certain phenomenon that only occur when the number gets super large. Imagine, for example, that the town has a university that admits around 30,000 students at a given time. Instead of having them all as renters, you could build student housing for cheap up to say 15,000 units, and capture the value of people who would be there anyways. Regardless of what you think about universities, the modal university attendee is probably better behaved than the modal low income newcomer (and they would have a lot of incentive to capture those properties, as they are there anyways).

Now, if you're willing to use #unethicalLifeHacks (which as a government, you always are), you can pull some whacky shenanigans to capture extra value out of 'low income' housing. A very simple approach would be to make the 'market value' of the house be much greater than the value that it was sold for (for example, the government offers the house for sale at $100,000, which comes out to roughly a $600 monthly payment at 5% interest. After a year, the property assessment claims that it would be worth $600,000, which at a tax rate of 1% would be $6000 a year, or $500 a month. $600 + $500 < $1600 for rent, so you've managed to transform the rent seeking behaviour of the landlord into rent seeking for yourself, instead - and if there's one thing a government loves, it's more money.)

as a renter I didn't pay property tax

Yes you do, abstractly via your rent price

The Ontario Trillium tax benefit even pays you back for some of it

I'm actually not sure this is correct. The steel-man case for YIMBIsm is for market rate new construction, not incentivizing a bunch of Connestoga huts.

The marginal new construction unit is typically purchased by people above the median income in a given location.

This is obvious at an aggregate national level. The median sales price for new houses sold in the United States is $413.5k. At 20% down, prevailing 6.48% interest rates, and 30% of gross income spent on housing, this is a household income of $98.6k which is well above the ~$83k national median income.

In areas with higher housing prices the marginal income of home purchasers is also higher. For example the media sales price of all homes in California was $833k. While in Santa Monica the median sale price is $1.9MM. Connestoga huts are not competing for developer dollars in an area where the marginal sales price is in the millions. Because of Prop. 13 those purchasers are also paying far more in local property taxes towards local schools than people who were already locked in.

The nice married family with two kids moving into the new built house down the street is well above the average income, and therefore definitionally increases the per capita income. At the national level for example, married family households have a median income of $122.5k, again well above the unconditional median.

A marginal change in zoning will lead to a marginal change in the marginal new home purchaser. You might be able to make a reductio ad absurdum argument for the most extreme straw-man YIMBY, but the "official" YIMBY position is more like revise model zoning codes to allow triplexs where duplexs are now allowed.

  1. Zoning should be done at the state level.
  2. Zoning should be more about common sense rules to permit access to shared resources like street parking by mandating additional density, also include increased off street parking.
  3. Reduced immigration and very limited foreign direct investment in real estate
  4. Mortgages should be arms and Freddie and Fannie should be in the business of democratizing access to pay fixed swaps/swaptions.

In my view, the reason housing is such a wealth engine is the 30 year fixed rate mortgate's inflation protection. The goal of housing policy should be to make the inflation protection available to creditworthy citizens without tying it to real estate ownership. Housing should be financed with balloon arms then people with business loans, home loans and other investment asset financing could get pay fixed swaps or chains of swaptions in amounts that match individual liabilities. The goal being to increase ownership and financing of higher return assets than housing.

I’d consider myself financially literate, but I can’t tell what the hell you’re talking about.

The goal of housing policy should be something like “getting more citizens into their own housing.” I don’t see how you’d decouple that from real estate.

Would inflicting “swaptions” on the average family of four actually do anything to achieve that kind of goal?

By lending money for 30 years at a fixed rate we bundle two things together in homeownership. First the purchase of a home, second a massive inflation hedge (because we lock the cost of borrowing the money for 30 years).

In most of the world you buy a home with a floating rate loan or shorter term mortgage. Which means if inflation rises, the cost of financing homes rises everywhere but in the US.

This makes home ownership an excellent investment in the US,, raising both the price of homes and the amount of home people want to buy in the US.

Most business debt is on the same floating rate terms, as non US mortgages, but at international business scale it's inexpensive to buy a derivative to make the net effect act much more like a fixed rate debt product. Freddie Mac and Fannie Mae in the US use these financial instruments to allow them to loan money on long fixed rate terms, too, effectively taking a derivative that's too big for an individual, and splitting it, but only for home loans.

If we swapped them into a pure splitting derivatives to individuals and severed the tie to owning a home, it would make financing that's currently only available to large businesses available to smaller enterprises and let people buy the inflation protection they may want with their home loan, but getting it in a separate rather than bundled transaction. Or getting a smaller more leveraged bet at a higher cost to protect other financial.

The wealth engine of homeownership isn't just the home it's also getting to finance it at a fixed rate for a long time. We should let people who would otherwise prefer to rent not need to buy a home to get long term fixed rate financing.

I'm actually not sure this is correct. The steel-man case for YIMBIsm is for market rate new construction, not incentivizing a bunch of Connestoga huts.

I didn't say YIMBYism was about building lower income housing.

Sorry, I wasn't maximally clear in what I was even responding to.

You asked the question:

But what kind of housing?

My answer is the kind of housing where there is:

  • Strong latent demand
  • By purchasers who will pay market rates
  • Where market rates will support direct constriction costs and marginal infrastructure requirements

With current aggregate zoning requirements, new market rate construction is on average purchased by families well above the median income family. Therefore you can make marginal changes to relax aggregate zoning requirements without reaching the point where

you build housing that the median income family can afford

Further, because of effects from initiatives like Prop. 13, public services are not necessarily diminished by even a median income family making a housing purchase.

My basic math argument is: the marginal elasticity is sufficiently small, and the existing equilibrium is sufficiently far from public service collapse, that marginal changes should not produce a catastrophic phase transition.

My basic math argument is: the marginal elasticity is sufficiently small, and the existing equilibrium is sufficiently far from public service collapse, that marginal changes should not produce a catastrophic phase transition.

Let's say for the sake of argument that sounds fine, but does this make a dent in housing affordability? I'm not sure the people arguing for build build build aren't imagining they're solving the problem of housing is so fucking expensive.

I keep thinking there's a NoTrueYIMBY fallacy.

I'm not sure the people arguing for build build build aren't imagining they're solving the problem of housing is so fucking expensive.

Fortunately, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." That's a counter-intuitive realization (that quote postdates the divergence theorem!) but it's not wrong.

Seems to be working out for Austin, TX, which has built an enormous number of mostly-market-rate housing units in the recent past. The people I know who live there generally think the city is thriving, and rents are actually decreasing. So I think the cities with massive housing issues (e.g. SF, Seattle, Los Angeles, Boston) should at least try Austin's playbook out here.

As I said down-thread I'm not a YIMBY.

The closest I've come is not objecting when a neighbor wanted to build a garage that required a zoning waiver because it was 10% bigger than allowed. I didn't object because their property is otherwise adequately sized, I have to live next to him, it doesn't obstruct my view, and it was so he could store his boat. I think it's more attractive than keeping the boat on the drive, and I wouldn't mind being invited out on the boat. If he had wanted to up-zone his lot from R-1 to R-5 you bet I would have broken out all the NIMBY tropes.

Whether a particular policy proposal from a self-identified YIMBY makes sense probably depends on the YIMBY and the proposal.

For the laundromat example, I do think there exists some system where the zoning and permitting requirements do not have to be so onerous. This would still be a small or marginal change to the total cost, but not zero. For example, if the opportunity cost for the zoning of that building was reduced by $3MM, there were 40 residential units built, each with a value of $1MM. That is a 7.5% cost savings. $1MM is not exactly affordable, but 7.5% is 7.5%.

I think it's also clear that the North America, specifically the US, specifically high cost of living US also has other problems. General cost disease being a big one. I don't think just deciding to build will fully solve this. The Golden Gate Bridge cost $630MM in 2024 dollars to build in 1933. The Golden Gate Bridge suicide net cost $400MM in 2023. Currently San Francisco has density of something like Copenhagen. Clearly they can "afford" to do more density as Singapore has much higher density and much lower GDP Per capita. Do I think they can just build their way to Singaporean quality of life? No. Do I think there is some fundamental limit that would cause a public services collapse above current density? Also no. Do I think public services could collapse if people don't get their act together? Yes.

You might be able to make a reductio ad absurdum argument for the most extreme straw-man YIMBY, but the "official" YIMBY position is more like "revise model zoning codes to allow triplexes where duplexes are now allowed".

To be fair, the linked page also includes tenets that go along with the reductio ad absurdum.

  • "Permit backyard cottages (ADUs, accessory dwelling units) in all residential zones." The same organization's The Housing-Ready City document does not clarify, but the International Zoning Code imposes on ADUs a minimum area of 190 ft2 or half of the main house's area, whichever is higher.

  • "Legalize starter homes in all residential zones." The Housing-Ready City clarifies that that means eliminating minimum floor-area requirements, so that houses of 400–800 ft2 can be built. Such requirements are not in the IZC, but I personally have lived in a zone where the minimum area was 1200 ft2.

  • "Eliminate minimum lot-size requirements in existing neighborhoods." The Housing-Ready City does not clarify, but the IZC generally imposes a minimum lot size of 1/6 acre (7260 ft2—e. g., 70 ft × 104 ft), plus setbacks ranging from 5 ft to 20 ft.

So, even with a charitable perspective, this organization can be interpreted as advocating residential zones that are composed of 30 ft × 55 ft (1/26-acre) lots (with 5-ft setbacks on all sides), each containing a 400-ft2 (20 ft × 20 ft) house and a 200-ft2 (14 ft × 14 ft) ADU—and that's without even looking at duplexes and triplexes.

Yeah, I'm not necessarily in favor of any of these things. As an actual property owner IRL, I personally do not want a bunch of shitty development in my back yard. I'm just willing to admit it's down to wanting to protect my own property interests rather than making the argument that it's obviously in the public interest.

You would for sure have to rework the zoning code for those to work.

  • For ADUs, they are currently not allowed in my municipality. If it came down to it I would rather my mother-in-law live in a ADU on my property than put her in a home or live in an attached suit. In that situation my MIL would not put significant additional strain on local traffic, because she would not be commuting to work and would probably share grocery runs. If you allowed rental of ADUs in a car-dependent place on minimal lots I do think that would be bad. Is there a way you could allow the former without the latter, IDK.
  • For starter homes 400 ft2 would still not allow Connestoga huts. I've guess we've already discussed 800 ft2 homes here. I think that could work for utilizing otherwise unbuildable lots if combined with generous setback requirements.
  • The key is eliminate minimum lot-size would be for existing neighborhoods. Again, this would need to be combined with generous setback requirements.

I actually do think the strongtowns people take it too far, but it's a pretty big gap from build 1,000,000 Connestoga huts to allow dense infill where there is latent demand. Might as well the gap to my actual position which is that it should not take 8 years and millions of dollars to get zoning approval to replace a laundromat with medium density mixed use development along an existing transit corridor.

You are of course correct. Isn’t there a tendency for mandated affordable housing projects to be marked for 55+?

Obviously, NIMBY’s don’t want to make this argument out loud but, uh, what did you think ‘neighborhood character’ meant? I mean I personally oppose nearby housing development because they are being built with HOA’s, which normalizes stricter code enforcement. But most opposition to building affordable housing is that it invites people of affordability, and of course, YIMBY’s don’t want to remind people that these new residents will be people of affordability.

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