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PaperclipPerfector  6d ago (text post)   2972 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.

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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.

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