In the latest issue of the Journal of Economic Perspectives, the journal has gone all-in on YIMBY with a three-paper symposium on housing. The second paper is about changes in rates of homeownership and benefits and costs of homeownership. The first and third papers, though, are both basically making the same point: housing is way too expensive in many productive US cities, mainly because of excessive restrictions on building new housing stock, and allowing more housing supply is the best way to solve the problem.
This is the basic hypothesis behind the YIMBY movement - which stands for "yes in my backyard", in contrast with the more familiar NIMBY movement: "not in my backyard". There are local YIMBY organizations popping up all over the country, especially in the cities with very high housing costs like the Bay Area and New York. YIMBY-ites attend local zoning board meetings and argue for loosening housing restrictions, which puts them at odds with some traditional urban/liberal/environmentalist types who for a long time have believed that excessive development is bad for the economy and bad for the environment.
There's a great argument to be made though that restrictions on high-density urban development are pretty terrible for the environment since they shift people away from living in the city - where people are generally more energy-efficient - and into the suburbs. Ed Glaeser made this point several years ago:
In much of the country, cars are the biggest carbon emitters, and density determines driving. Households in areas with more than 10,000 people per square mile average 687 gallons of gas per year, while households in areas with fewer than 1,000 people per square mile average 1,164 gallons of gas per year.
Glaeser is also the co-author of the first paper in the JEP symposium, which nicely summarizes the potential efficiency gains of increased urban development and the political obstacles:
The available evidence suggests, but does not definitively prove, that the implicit tax on development created by housing regulations is higher in many areas than any reasonable negative externalities associated with new construction. Consequently, there would appear to be welfare gains from reducing these restrictions. But in a democratic system where the rules for building and land use are largely determined by existing homeowners, development projects face a considerable disadvantage, especially since many of the potential beneficiaries of a new project do not have a place to live in the jurisdiction when possibilities for reducing regulation and expanding the supply of housing are debated.
The other article on housing supply reinforces this view. Startling (to me) was the fact that the US spends more than twice as much subsidizing homeowners (more typically non-dense, suburban, middle or upper class) than it does subsidizing renters (more typically dense, urban, middle or lower class).
But remember that the federal government spends far more on subsidies for homeowners than it does on subsidies for renters, this in the form of the mortgage interest deduction ($71 billion), the deduction for real estate taxes ($31.4 billion), and the tax exclusion on capital gains from housing ($24.1 billion). Taken together, these numbers from 2015 totaled more than double the combined costs of support for low-income non-homeowners like Section 8 housing vouchers ($29 billion), the low-income housing tax credit ($7.6 billion), public housing ($6.5 billion), and accelerated depreciation ($4.7 billion), which is a tax benefit for rental apartment owners who use federal low-income tax credits.
[BTW While both of these articles focus on the efficiency losses of housing restrictions and the huge potential productivity gains of eliminating them, the effect of the restrictions on the environment is only mentioned in passing.]
