Welcome back to the Deep Dive. It's really great
to have you here with us. We are about to wade
into some waters that on the surface might look
a little bit, well, beige. Beige. That's an interesting
choice of color for today's topic. You know exactly
what I mean. We're talking about zoning codes,
rental yields, municipal regulations, you know.
square footage minimums. It's the kind of stuff
that usually gets filed away under dry policy
debates or maybe things I panic about once a
month when the rent check clears. It feels like
homework. I get that. It feels like the kind
of thing you pay someone else to worry about
until you realize you're the one paying for it.
Exactly. But the more I looked at the stack of
research we have for today, the reports from
the Council of Economic Advisors, the case studies
from Vienna to Mexico, the architectural critiques,
the more I realized this isn't just about money.
It's practically the theory of everything for
how our daily lives actually function. It really
is. I mean, when you pull on the thread labeled
housing, you end up unraveling the entire fabric
of society. You hit transportation immediately.
Immediately. You hit public health, you hit education
quality, environmental impact, and even the most
finite resource we have, our time. That's the
kicker for me. It dictates who gets to live where,
how long you sit in a car every single day, and
fundamentally who has access to opportunity and
who is, you know, locked out. Yeah, absolutely.
It determines if you can walk your kids to school
or if you have to put them on a bus for an hour.
And the scale of this is just, it's hard to overstate.
We aren't just talking about expensive apartments
in Manhattan or London. We are talking about
a global structural failure. So here's the mission
for today. We are going to peel back. the layers
of this word affordable, because right now that
word is doing a lot of heavy lifting that the
math simply doesn't support. Not at all. Globally,
we're looking at 1 .6 billion people living in
inadequate housing. And to bring that closer
to home for the U .S. audience, we're looking
at a system where income simply has not kept
pace with costs. I mean, we've reached a point
where half of all renters are what economists
call cost burdened. Which is a polite, very sanitized
way of saying they are broke because of their
landlord. Essentially. It means they're making
tradeoffs between rent and food or rent and medicine.
But the goal of this deep dive isn't just to,
you know, admire the problem. Right. We want
to understand the mechanics of it, the intersection
of urban planning, economics, human rights. We're
going to look at why it's broken, and then we're
going to look at the architectural and policy
solutions that are actually working. But before
we get into the solution, we have to appreciate
the absurdity of the problem. I want to start
with a number from the research that just stopped
me dead in my tracks. It's from a study mentioned
in The Atlantic regarding San Francisco. Oh,
I know the one you mean. This is the Right to
Build study. This is a crucial piece of economic
detective work. It blew my mind. We often assume
houses are expensive because, well, land is finite
and expensive or because bricks and glass and
labor cost money. And those do play a role. I
mean, you can't ignore material costs. Lumber
prices fluctuate. Labor shortages are real. Sure.
But this study tried to isolate the cost of the
bureaucracy itself. Not buying the land, not
paying the construction crew, not buying a single
two by four. Just the paperwork. Just the cost
of permissions, red tape, delays and fees. The
study found that this right to build adds approximately
$600 ,000 to the price tag of a single house.
Let that sit for a second. $600 ,000. That is
the price of a very nice house in almost any
other part of the world. In the Midwest, that's
a mansion. And in San Francisco, that amount
of money buys you nothing. Nothing physical.
It buys you a permission slip. It creates no
physical structure. It provides no utility. It's
essentially a scarcity tax. It is the cost of
navigating a system that is, frankly, designed
to say no. It is the monetized value of meetings,
environmental impact reports that get challenged,
neighborhood reviews, and just the sheer time
value of money while a project sits in limbo
for years. So keep that $600 ,000 figure in the
back of your mind as we go through this. That
is the invisible weight hanging over this entire
conversation. But let's start with the basics.
Let's talk about the math of affordability. Okay.
a place is affordable, is there actually a scientific
definition or is it just, you know, a vibe? There
is a definition, but it's a bit of a blunt instrument.
The gold standard in the U .S. and Canada is
the 30 % rule. Okay, walk us through that. It's
pretty simple on paper. Housing is considered
affordable if it costs less than 30 % of your
gross household income. Gross, so before taxes.
Before taxes, yes. And that includes your rent
or your mortgage, plus your utilities like heat
and water. 30%. It seems so neat and tidy. But
where did that specific number come from? Was
it brought down from a mountain on stone tablets
by an economist? Hardly. It's actually been a
moving target historically. If you look back
at Canada in the 1950s, the rule was 20%. 20
%? That sounds like a dream. Imagine keeping
80 % of your paycheck. It does, doesn't it? Then
it crept up to 25%, and by the 1980s, it settled
at 30%. So it's not a law of physics? No, it's
just a reflection of what we've collectively
decided to tolerate. In India, for comparison,
lenders often use a 40 % rule. So we've just
slowly accepted that we should pay more and more
of our paycheck for a roof over our heads. It's
like the boiling frog experiment, but with our
bank accounts. That's the trend line. And while
30 % is a useful baseline for banks to decide
if you're a risk, it is deeply flawed when you
try to apply it to real people's lives. Why?
Because it looks at housing in a vacuum. Great.
It assumes that if you pay 30 % for your house,
the other 70 % of your income is just free to
do whatever. But life doesn't work that way.
Not at all. The location of the house dictates
how you spend the rest of that money. Exactly.
It completely ignores the interaction between
where you live and your second biggest expense.
Which, for most Americans, is the car. Transportation.
And this is where the data gets really, really
interesting. There's an index developed by the
Center for Neighborhood Technology called the
H plus T affordability index. H plus T housing
plus transportation. Exactly. They are arguing
you can't separate the two. And they are right.
You cannot separate where you live from how you
get around. I mean, think about it. If you find
a chic apartment, let's say it's $800 a month,
but it's 50 miles from your job and nowhere near
a bus line. No, my rent is low, but my gas bill
is astronomical. And my car maintenance goes
through the roof because I'm putting 20 ,000
miles a year on it. Precisely. And the data bears
this out. It's not just a gut feeling. If you
look at U .S. neighborhoods using just that standard
30 % rule for housing costs, about 55 % of neighborhoods
look affordable. Okay. They passed the test.
Slightly more than half. That's not great, but
it's not catastrophic. It sounds manageable.
Right. But if you factor in transportation costs
alongside housing costs, using a 45 % threshold
for the combined two, that number drops from
55 % to 26%. Wow. Hold on. So nearly 30 % of
neighborhoods are what? Fake affordable? That
is a great way to put it. They are affordable
only if you never leave the house. Once you factor
in the commute, the model shows that you effectively
eliminate nearly 60 ,000 neighborhoods from being
truly affordable. And this explains that phenomenon
known as... Drive till you qualify. Drive till
you qualify. I've heard this phrase. It sounds
like a bleak reality show title. It's the standard
operating procedure for the American middle class.
It's the idea that you keep driving away from
the city center. Away from the jobs, the culture,
the density. Until the bank says, OK, at this
distance, the house prices have dropped enough
that your income qualifies for the mortgage.
So you get the house, you get the mortgage, but
you've just signed yourself up for a two hour
commute each way. And people often fail to calculate
that the long commute eats up all the financial
savings they made on the house price. It's a
classic trap. It has to be. You save, say, $200
on the mortgage payment, but you spend $300 on
gas, tires, and vehicle depreciation. You're
actually poorer. Not to mention the time cost.
That's the hidden tax on your life, isn't it?
That's the one you can't get back. If you're
spending two hours a day in a car, that's 10
hours a week. You aren't working, aren't with
your family, aren't sleeping, you aren't exercising.
It's a massive degradation of quality of life
that doesn't show up on a bank spreadsheet. It
also disconnects you from your community. If
you leave at 6 a .m. and get back at 7 p .m.,
you aren't volunteering, you aren't going to
the PTA meeting. You're just sleeping there.
You are. You're just a resident, not a neighbor.
So the 30 % rule is flawed because it ignores
location and transportation. Are there other
ways to measure this that make more sense? There
are a few. The World Bank and the UN use something
called the median multiple. This is more of a
macroeconomic view. Okay, how does that work?
You just divide the median house price in a city
by the gross annual median household income.
So it's a ratio. Simple division. Right. It's
a broad stroke to see if a market is healthy.
A balanced market means a median income family
can afford a median house. Historically, that
ratio was around 3 to 1. Three years of income
to buy a house? That seems reasonable. It was.
But in places like Sydney, Vancouver, or Hong
Kong today, that ratio can be 10, 15, or even
20 to 1. 20 to 1, which just confirms that the
market is broken. It basically says you need
to work for 20 years just to pay the principal,
ignoring interest. Exactly. It's a good diagnostic
tool for a sick market, but it doesn't really
help the individual renter figure out their budget.
So what does? For the individual, I prefer the
residual income approach. This is used in Australia,
and it's very, well, it's very human -centric.
How does that work? It flips the equation. Instead
of saying you can spend X percent on housing,
it says, housing is affordable if, after paying
for it, you still have enough money left over
for basic necessities. Like food, health care,
and education. Exactly. That feels much more
grounded in reality because percentages can be
really deceiving depending on how much you make.
Right. If I make a million dollars a year and
I spend 50 percent on a penthouse, I'm technically
cost -burdened. By the percentage definition,
yes. But I still have half a million dollars
left for groceries. I'm going to be fine. I'm
burdened on paper, but I'm rich in reality. But
if I make, say, $20 ,000 a year and spend 30
% on housing, that's $6 ,000. I have $14 ,000
left for the entire year. For everything. That
might not be enough to feed your kids. Precisely.
Oh. The percentage impacts people differently
at different income levels. A strict 30 % rule
hits the poor much harder than the rich. The
residual income approach forces policymakers
to look at the actual cost of living, not just
a ratio. There is one more nuance to the math
I want to touch on from the notes. We often lump
renters and owners together when we talk about
these cost burdens, but the economic reality
is different, isn't it? Oh, it is night and day.
If a homeowner is... say they're paying 40 %
of their income into a mortgage, they are certainly
cash poor. They might be eating ramen noodles.
For sure. But they are building equity. That
money is technically still theirs. Right. It's
just locked up in drywall and land. It's a forced
savings plan. Whereas a renter who is burdened.
is simply losing that income. It's gone. It dissolves.
So the long -term impact of that affordability
crisis is much more severe for renters than for
owners, even if the monthly balance sheet looks
similar. The owner comes out the other side with
an asset. The renter comes out with nothing.
Exactly. Okay, so we've established the math
is messy, the 30 % rule is a bit of a lie, and
transportation is the silent killer of budgets.
But let's get to the why. Why is it so expensive?
We touched on the $600 ,000 price tag for permission
in San Francisco. That brings us to the economics
of scarcity. At its core, yes, it is supply and
demand. But whenever someone says just build
more houses, they are missing the complexity
of supply. It's not just about whether there
are enough bricks or enough construction workers.
No, it is about land value and, crucially, overregulation.
This is where we get back to that right to build.
You mentioned the Harvard and Atlantic Monthly
study earlier. Can we dig a little deeper into
how they actually calculate that? I mean, how
do you put a price tag on bureaucracy? It's a
fascinating methodology. The economists, Edward
Glazer and Christina Tobayo, they looked at the
cost of single -family homes on quarter -acre
lots versus half -acre lots. By comparing those,
they could figure out the marginal land price,
basically what is a square foot of the land itself
actually worth. So they isolate the land value.
They separate the dirt from the house. Exactly.
Then they look at the construction costs. labor
and materials. So let's say the land is worth
$100 ,000 and the construction costs $200 ,000.
Theoretically, in a free market, the house should
sell for roughly $300 ,000, maybe a bit more
for developer profit. Makes sense. Cost plus
margin equals price. But if that house is selling
for $900 ,000, that massive gap, that extra $600
,000 is the cost of the regulatory tax. It represents
the scarcity created by the government's refusal
to let people build. It is the premium people
are willing to pay just to get into a market
where a supply is artificially capped. That is
wild. It's an invisible markup. It's money you
pay for the absence of housing supply. And a
huge part of this comes down to zoning, right?
A huge part. I feel like zoning is one of those
words that makes people's eyes glaze over, but
it seems to be the villain in this story. It
often is. I mean, the zoning laws were originally
created to keep loud factories away from quiet
homes. That makes sense. We don't want a tannery
next to a kindergarten. Of course not. But over
the last century, they have morphed into a tool
of exclusion. Give us an example of a zoning
rule that hurts affordability. Okay, take minimum
size requirements. Many cities have laws mandating
that a housing unit must be at least, say, 400
square feet. Right. Or they limit how many unrelated
people can live together in a single unit. Which
sounds like they're trying to ensure quality
of life, right? The argument is usually, we don't
want people living in shoeboxes. That is the
stated intent. But the result is that you effectively
outlaw the bottom end of the private market.
If you cannot legally build a small, cheap unit,
you simply don't build it. You build a luxury
unit instead. Build a luxury unit instead. Because
that's the only way to make the math work with
those size constraints. It forces people who
would have rented a small 200 -square -foot studio
into a much more expensive market. Or worse.
Or worse, onto the street. It's like saying,
to prevent hunger, we are banning the sale of
any food cheaper than a steak dinner. That is
a perfect analogy. You aren't ensuring everyone
eats steak. You're ensuring a lot of people starve
because they can't buy a sandwich. By banning
the bad housing, you don't magically create good
housing. You create no housing for that segment
of the market. And then there's the issue of
parking. I read this in the notes and I couldn't
believe it. The cost of a parking spot. Oh, parking
requirements of the silent budget killer. A 2021
study in California found that parking requirements
mandating that developers build a certain number
of spots per unit. Per apartment, yeah. Added
up to $75 ,000 per unit in places like Los Angeles
and San Francisco. $75 ,000 just to house a Toyota
Camry. That's more than the car is worth. Think
about the geometry of it. A parking spot is about
300 square feet once you include the drive aisles.
That is bigger than some studio apartments in
other countries. So we are prioritizing housing
for cars over housing for humans. We are literally
giving the cars more square footage than some
of the residents. Explicitly. And that cost gets
passed directly to the renter or buyer. It forces
developers to use valuable land for cars. If
you didn't have to build that parking garage,
you could have built another floor of apartments.
It creates a direct competition. And in many
U .S. cities, the cars are winning. And this
regulatory stranglehold doesn't just make rent
expensive for millennials with good jobs. It
pushes people off the bottom rung entirely. It
does. This leads us to the most visible and heartbreaking
symptom of this crisis. Homelessness. It does.
And it is important to view this as a spectrum.
Affordability isn't binary. It is a continuum.
At one end, you have homeownership. Then market
rental. then social housing, transitional housing,
emergency shelters, and finally, homelessness.
It's a funnel or maybe a ladder with missing
rungs at the bottom. Exactly. When you squeeze
the top of that funnel with high costs and regulations,
people get pushed down rung by rung until they
fall out of the bottom. We have a report here
from the Council of Economic Advisors, the state
of homelessness in America. published in 2019.
It gives us a snapshot of the crisis just before
the pandemic reshaped everything. Right. And
the numbers were already stark. On a single night
in the U .S., over half a million people were
homeless. Half a million. And almost half, 47
% of all unsheltered people were in California.
That geographic concentration is interesting.
It challenges the idea that homelessness is evenly
distributed. The report breaks down four main
drivers of homelessness. Let's run through them
because I think they bust some myths. The first
one is exactly what we've been talking about.
Housing price and regulation. The report actually
ran a simulation. They calculated that if you
deregulated the housing markets in 11 of the
most constrained cities, places like San Francisco,
Boston, NYC homelessness would drop significantly.
How significantly? In San Francisco, the estimated
deregulation alone could drop homelessness by
54%. 54%. That is a massive number. It suggests
that homelessness isn't just about mental health
or drug addiction. It's largely a math problem.
There just aren't enough places to be. Precisely.
If you create more supply at the lower end, People
don't fall off the ladder. But the second driver
complicates things. Climate. This explains the
California statistic. It does. Warmer cities
have higher unsheltered rates. Not necessarily
higher homeless rates overall, but higher unsheltered
rates. Because if it's 20 degrees below zero
in Chicago, you find a shelter or you die. If
it's 60 degrees in Los Angeles, sleeping outside
is physically survivable. Exactly. It affects
the tolerability of being unsheltered. It doesn't
mean weather causes homelessness. People are
homeless in cold cities, too. But it dictates
where the homeless are most visible. OK. Then
there is the third driver, which is a bit of
a paradox. Shelter supply. This one is controversial
from what I've read. It is. Places like New York
City and Massachusetts have a legal right to
shelter. Meaning the government is legally obligated
to provide a bed if you ask for one. Yes. And
the report suggests, and this is their argument,
not ours, that because the quality of these shelters
is higher, with guaranteed beds and certain standards,
they can become a viable substitute for housing
for some people. Wait, so the argument is if
you make shelters too nice, people will choose
them over renting. That seems harsh. The economic
argument is about substitution. If the shelter
is safer and cleaner than the cheapest available
dangerous illegal basement apartment, a rational
person might choose the shelter. Okay, I see.
Paradoxically, this can keep the demand for low
-end market housing lower and shelter usage higher.
It's a very difficult policy needle to thread
because obviously you want shelters to be humane.
Right, you don't want to make shelters terrible
just to force people into apartments they can't
afford. But we can't talk about homelessness
without talking about the human element. The
fourth driver. Individual factors. This is mental
health and substance abuse. The data shows that
about 20 % of the homeless population has a severe
mental illness and 16 % suffer from chronic substance
abuse. Weak social ties are also a huge factor.
But here is the nuance that I think gets lost
in the public debate. The vast majority of people
with mental illness or addiction are not homeless.
Correct. That is a critical point. They have
families or they have cheap apartments or they
live in areas where the rent is $500 a month.
They become homeless when you combine those vulnerabilities
with a housing market that is too expensive to
navigate. It's a forced multiplier. If rent was
$300, you might be able to scrape by even with
a struggle. If rent is $3 ,000, you crash out.
Exactly. High rents remove the margin for error
in people's lives. You lose your job or you have
a medical episode. And because the floor is so
high, you fall right through it. Now, we focused
a lot on the U .S., but this is a global deep
dive. We mentioned 1 .6 billion people earlier.
We have to look at the developing world. We have
to talk about slums. In the developing world,
the affordability crisis looks different. It
doesn't always show up as homelessness. It manifests
as informal settlements. The notes mention the
world's largest slum, Nezachalco Itza, in Mexico.
It houses nearly 4 million people. 4 million!
That's larger than the population of Chicago.
That's a metropolis. It is a city within a city.
And these form because of rural to urban migration.
People move to cities for jobs. That's a global
constant. But the legal housing market is completely
out of reach. He can't afford it. So they build
their own. They squat on land and build with
whatever they can find. Cinder blocks, corrugated
metal, scrap wood. And over time, these settlements
become semi -permanent. They steal electricity
from the grid. They truck in water. But the projection.
is what is truly terrifying. What is it? By 2030,
one in four people on Earth will live in a slum
or informal settlement. That is a statistic that
needs to sit with us. One in four people. It
really highlights that this isn't just a policy
failure or a zoning issue. It's a humanitarian
crisis on a planetary scale. It is. And it connects
back to the labor market. If workers cannot afford
to live near the work, the economy suffocates.
Whether that's a barista in San Francisco or
a factory worker in Mexico City. The city is
an engine. And housing is the fuel. If you run
out of fuel, the engine stops. Okay, we've laid
out the problem. It's expensive, it's regulated
to death, it's hurting millions, and it's global.
I want to pivot to solutions. Good. If regulations
are the problem, can design be the fix? Can we
build our way out of this with clever architecture?
There are definitely architectural movements
trying to hack the system. If you look at the
US landscape recently, you might have noticed
a very specific type of building popping up everywhere.
Oh, I know exactly what you mean. They're usually
five stories tall, look a bit boxy, maybe have
different colored panels on the outside. They
feel like they're built out of Lego blocks. They
are everywhere in every mid -sized city. They
all look kind of the same. Those are called five
-over -ones. The name refers to the construction
style. Five stories of wood framing sitting on
top of a one -story concrete podium. And the
podium usually has parking or a Chipotle in it?
Usually retail or parking, yes. The reason these
are everywhere is that they are a code hack.
A code hack. Explain that. Well, international
building codes change to allow wood frame construction
up to a certain height, usually about five or
six stories, as long as you have sprinklers and
fire safety measures. Okay. By putting the wood
on a concrete pedestal, developers can maximize
density without having to build with steel and
glass. Because steel and glass are expensive,
wood is cheap. Exactly. It allows them to hit
a sweet spot of density and cost. It's not the
most beautiful architecture in history. Architects
often hate them, calling them fast, casual architecture.
But it is incredibly effective at creating supply.
It's the Honda Civic of apartment buildings.
Reliable everywhere gets the job done. And right
now, we need reliable transportation, not Ferraris.
We need units. What about reusing old buildings?
I love the idea of turning an old factory into
lofts. It feels very romantic. Adaptive reuse.
This is huge. The greenest building is the one
that is already built. We have all these underused
structures, old factories, and now especially
empty office buildings and motels. Right. The
post -pandemic office apocalypse. We have all
these empty glass towers. Can we live in them?
It's harder than it sounds. Plumbing is a nightmare
in office buildings because the bathrooms are
all in the center core. Oh, right. Whereas apartments
need... bathrooms in every unit. But it is scaling
up. There's a forecast that suggests 90 % of
U .S. real estate growth by 2033 will involve
adaptive reuse. 90%. That is a complete takeover.
It makes sense. We have a surplus of retail space
and office space and a shortage of housing. In
Los Angeles, for example, they passed legislation
allowing motels to be converted into affordable
housing regardless of the zoning. That is smart.
Motels already have plumbing in every room. They're
basically studio apartments already. Exactly.
It bypasses that right to build cost we talked
about because the building already exists. It's
a massive shortcut. I saw a note here about a
soap factory in Brussels. Yes, a great example.
An architectural firm took an old soap factory
and turned it into a mix of lofts, studios, and
massive six -bedroom apartments. It's energy
efficient, it preserved the history, and it added
density to the city without knocking anything
down. And it gives the city character, which
those five over ones sometimes lack. It does.
I have to ask about shipping containers. I feel
like 10 years ago, every design blog was saying
we'd all be living in shipping containers by
now. Is that still a thing? It's complicated.
The cool factor is high. It looks industrial
and chic. But the reality is that standard shipping
containers are metal boxes. Which means they
turn into ovens in the summer and freezers in
the winter. Correct. They are terrible at temperature
control. By the time you insulate them, cut holes
for windows, which compromises their structural
integrity so you have to reinforce them, you
often haven't saved much money compared to just
building a normal wall. So it's more of an aesthetic
choice than a practical solution. Often, yes.
However, there is a subcategory called reefer
containers refrigerated units. Like the ones
they ship bananas in? Yes. They already have
insulation in the walls, ceilings, and floors.
Those are much more viable for housing because
they solve the thermal problem right out of the
gate. Interesting. Reefer housing. I'm sure the
marketing team can work on the name. Small laugh.
Perhaps chilled living might work. But aside
from the materials, we need to talk about the
type of housing. We have a problem called the
missing middle. This is the idea that we build
single family homes on one side and giant skyscrapers
on the other and nothing in between. Exactly.
We have illegalized the middle. Think of the
triple -deckers in New England. Three floors,
three families. Or duplexes, row houses, cottage
courts. The stuff that makes old neighborhoods
feel cozy and walkable. These used to be the
backbone of affordable housing. But zoning laws
in the mid -20th century largely banned them
in favor of single -family sprawl. Bringing those
back seems like a no -brainer. It fits into existing
neighborhoods without changing the character
too much. It increases density gently. You aren't
dropping a 40 -story tower in the suburbs. You're
just adding a duplex. It blends in. I also love
the self -built concept mentioned in the notes,
the Tasmanian house. Yes. This is a project in
Australia. It's a low -tech approach. They provide
manuals for owners to build their own homes using
local materials. So it's DIY housing. It's assortable
because you are substituting your own labor for
the cost of a construction crew. It empowers
people to solve their own housing needs. It's
a return to how we used to do things before housing
became a specialized industry. It's like Ikea
furniture, but for your entire life. Ideally
with fewer leftover screws at the end. Let's
hope. Okay, so we have the math, the economics,
the human cost, and the design ideas. But none
of this happens without the rules changing. Let's
talk about policy. The big one. What actually
works. Because whenever anyone mentions housing
success stories, one city always comes up. Vienna.
The Vienna model. It is the gold standard for
a reason. Why? What are they doing that we aren't?
In Vienna, housing is not seen as a commodity
first. It is seen as a right. About 46 % of the
city's housing stock is either government owned
or part of a public -private partnership. Almost
half the city. That is wildly different from
the U .S. model. But the key difference isn't
just the percentage. It's the philosophy. In
the U .S. or U .K., public housing is often housing
of last resort. It's stigmatized. Right. It's
where you go when you have failed in the private
market. It's the projects. It's concentrated
poverty. Exactly. In Vienna, it is desirable.
Doctors and lawyers live next to factory workers.
It is mixed income. The architecture is beautiful.
Some of it looks like a palace. So they removed
the stigma by making it high quality and available
to the middle class, not just the poor. Exactly.
When the middle class lives there, the political
will to maintain the quality stays high. Because
the voters live there. It's not something you
do for them. It's something you do for us. That's
a crucial point. If only the poor use a service,
the service tends to get cut. If the middle class
uses it, it gets funded. Singapore does something
similar. Citizens across a huge income range
live in public housing. They call them HDB flats.
It is a mainstream tenure choice, not a safety
net. You aren't looked down upon for living in
public housing. It's the norm. So that seems
to be the secret sauce universality. What about
Germany? I see notes here on Hamburg and Berlin.
They rely heavily on public -private partnerships.
Hamburg has this fascinating agreement where
developers commit to building a certain number
of units, say 3 ,500 a year. But 30 % of them
must be for low - or middle -income households.
That's inclusionary zoning. If you want to build
your luxury tower, you have to build for the
teachers and nurses, too. Yes. And the city helps
by providing the land or simplifying the regulations.
It's a deal. It's not adversarial. In Berlin,
they formed an alliance for housing construction
involving private landlords and public utilities
to agree on targets. It's about getting everyone
at the table rather than fighting in court. Exactly.
Now, bringing it back to the U .S., we've...
Seen some shifts. So we talked about homelessness
earlier. There was a mention of the housing first
approach. Can you explain that? Housing first
is a major policy shift. For a long time, the
model was treatment first. You had to get sober
or get on medication before you earned housing.
Which seems incredibly hard to do if you are
sleeping under a bridge and keeping your shoes
on so they don't get stolen. Exactly. It's almost
impossible. Housing first flips it. It says you
can't solve a person's mental health or addiction
issues while they're surviving on the street.
You give them the housing first without preconditions
and then offer services. Stabilize the chaos,
then treat the problem. Right. Although it is
worth noting that during the Trump administration,
there were reforms to this approach that allowed
communities to impose service participation requirements.
Essentially saying, we will help you, but you
need to engage with the recovery process. It
brought a different philosophy to the table regarding.
accountability versus unconditional support.
It's an ongoing debate in policy circles about
which method yields better long -term results.
And we had some temporary relief during COVID,
right? The emergency housing voucher. Yes. The
EHV program was a lifeline during the pandemic.
It showed that when the government puts money
on the table, we can house people. But as per
HUD announcements, that funding is set to end
by 2026. So we are facing a cliff. We are. And
if that support disappears, it could exacerbate
the crisis we discussed earlier. It's a real
moment of reckoning for U .S. housing policy.
But there is some hope on the grassroots level.
We are seeing the rise of the YMBYs. Yes, in
my backyard. The countermovement to NIMBY, not
in my backyard. Exactly. The YMBYs are a coalition
of people, often younger, who are pushing for
upzoning. They are the ones showing up to city
council meetings saying, please build this. And
they argue that we need to build more. everything
everywhere to lower prices for everyone. They
are fighting those parking minimums and height
limits. They're trying to break the scarcity
model. It's a fascinating generational battle,
really. The homeowners who want to preserve their
neighborhood character versus the renters who
just want a place to live. And that conflict
is where the future of our cities will be decided.
So we have covered a massive amount of ground
here. We've gone from the 30 % rule to the $600
K permitting costs to the slums of Mexico and
the social palaces of Vienna. If we had to summarize
this complexity for the learner, how do we wrap
our heads around the solution? I think the takeaway
is that there is no silver bullet. You cannot
just build more if the regulations make building
impossible. You cannot just deregulate without
protecting the vulnerable. It requires a silver
buckshot approach. A mix of everything. Exactly.
You need to deregulate land use fix, that right
to build. You need better transportation so the
H plus T index works. You need innovation like
adaptive reuse. And fundamentally, you need the
political will to treat housing differently like
they do in Vienna. And you mentioned earlier
that this isn't just about charity. It's about
the economy. That's the expert's final takeaway
here. Housing affordability creates what economists
call labor market impediments. Talk to us about
that. If your barista, your nurse, your teacher,
and your firefighter cannot afford to live within
30 miles of your community, your local economy
eventually breaks. It grinds to a halt. Businesses
can't find workers. Schools can't find teachers.
It is a public health issue, an education issue,
and an economic survival issue. It reminds me
of that saying, a city that pushes out its workers
is a city that is dying. It becomes a theme park
for the rich, but it ceases to function as a
city. Precisely. So we want to leave you with
a thought to mull over. We've looked at all the
data, but at the bottom of this deep dive is
a philosophical question. Article 25 of the Universal
Declaration of Human Rights states that housing
is a fundamental human right. But our economic
system... treats it primarily as a commodity.
It is an investment vehicle. It is a retirement
plan. And that is the tension. Can housing ever
truly be affordable for everyone as long as we
also expect it to be a high -yield investment
for owners? Can it be both a basic human right
and a way to get rich? It feels like those two
goals are fundamentally at odds. It's a question
that requires us to rethink what a home is actually
for. Is it a nest egg or is it a nest? On that
note, we encourage you to take a walk around
your own neighborhood. Look at the empty lots,
look at the parking garages, and look at the
zoning. Once you see the matrix, you can't unsee
it. Thanks for listening to The Deep Dive. Stay
curious.