Out for Growth

A new report on housing decries the fact that many unaffordable housing markets have gotten even less affordable in the last few years. The report’s solution is in the name of the organization that published it: Up for Growth, as in “grow up, not out.”

Click image to download a 24.0-MB PDF of this report.

The reports calls for cities to identify what neighborhoods to build in, “the appropriate increase in density for each location,” and the “optimal housing mix,” in other words, the mix of single-family vs. multifamily housing, for each neighborhood. Where people actually want to live and whether they prefer to live in single- or multifamily housing are not to be considered.

Ironically, the report specifically decries the high housing prices in places like San Francisco and Seattle. Yet these cities have arguably followed the up-not-out process for several decades. The density of these two urban areas have both significantly increased since 1970. The San Francisco-Oakland urban area had less than 4,400 people per square mile in 1970; as of 2020 it was more than 6,800 people per square mile.

Based on median home prices, family incomes, and population densities for the nation’s 200 largest urban areas in 2021. Correlation = 0.7.

That increase in density was not accompanied by an increase in housing affordability. In 1970, median home prices in the Bay Area were 2.3 times median family incomes. As of 2022, prices were 7.7 times incomes. As shown in the above chart, there is a strong negative correlation between population density and housing affordability.

In short, the up-not-out principle is bankrupt. Though the report gives lip service to racial equity, it places a premium on “Consuming less land relative to each new unit of housing built.” In other words, stick the blacks, Latinos, and other low-income minorities in stack-and-pack apartments while the elites get to live in single-family homes.

More generally, we know that top-down planning doesn’t work, especially not for housing. The most recent example is from my home state of Oregon. The first thing the current governor did when she took office last January was to pledge to build 36,000 new homes–mainly apartments–per year. Now, ten months later, comes the news that apartment construction is down. Maybe she should have pledged to reduce construction.