How to build abundantly

0:01NPR

0:11This is The Indicator from Planet Money. I'm Darian Woods. And I'm Adrian Ma. People are facing pretty steep housing costs in big American cities like New York. You're paying$2 million to get a little band box. How do people even do it? It shouldn't be that expensive. The median age of a first-time homebuyer is now 38 years old. That's up from around age 30 in the 1980s. And you'll hear a range of explanations for why housing is so expensive. Everyone wanting to move into the city. We're seeing all these high-rises get built without really accounting for where lower-middle-income housing is going to go.

0:48You're going to do it, and if you're going to pay for it, we're going to keep charging you that much. Derek Thompson's a journalist and co-author of a new book called Abundance. He and his co-author Ezra Klein are self-described progressives, and they think their fellow progressives share a lot of the blame. We have rules that constrain supply. And as your listeners know, in any market where there's rising demand and supply is constrained, prices have only one direction to go, and that is up.

1:19Today on the show, how to build housing affordably. We visit a San Francisco apartment complex that managed to overcome those rules that are driving up house prices.

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2:11As a leading threat intelligence company, Recorded Future cuts through the noise with precision intelligence. That's why top banks and governments trust them. Because security leaders don't just react. They foresee spotting the signals that others miss and acting before threats become setbacks. Recorded Future. Know what matters. Act first. To build so-called affordable housing in San Francisco, it can cost a million dollars per unit. Well, at that point, you're no longer building affordable housing. You're building incredibly expensive housing that you then need to subsidize. Writer Derek Thompson says high housing costs are pretty typical across the U.S., especially in high-earning cities in democratically-led states, which makes the success of one apartment complex in San Francisco surprising.

2:59In the spring of 2022, then-mayor of San Francisco, London Breed, posed with a red ribbon in front of the new building.

3:10She was there for the opening dedication of what's named Tehanan, 145 studio units for homeless people. Derek says that Tehanan illustrates what can go right when building housing. Affordable housing units in the Bay Area typically take around six years to build. But Tehanan went up in three years for less than$400 ,000 per unit. The first problem that Tehanan overcame was zoning. Zoning is a way that cities regulate the size and use of buildings in different neighborhoods. Some might restrict buildings like Tehanan. It wasn't zoned for affordable housing, and so it needed a new law passed to fast-track this construction.

3:51And they were in luck. In 2017, California eased regulations on building affordable housing. That meant the city of San Francisco could make faster decisions on permitting. And the city could not deny the permit based on fuzzy criteria like neighborhood character. It also substantially reduced requirements for community input or challenge, also known as nimbyism. And nimbyism is problem number two, but cutting down on nimbyism has a cost. How is the issue of Democratic voice dealt with if there's going to be fewer opportunities for citizens to stop construction in their neighborhoods? Well, here's the profound irony.

4:29A lot of times we think about local government being the most democratic government. Sometimes if the city wants to add a development and there's a city council meeting, you're talking about a city council determining whether to add new housing based on the testimony of 40 people who just happen to show up on a random Tuesday. So in many cases, I think these local elections where decisions are made about whether to add or deny new housing aren't as democratic as we think they are. Restrictive zoning is not just a liberal thing. It's popular in many conservative areas, too. But Derek Thompson's point is that you'll see inclusive values expressed on a liberal Californian's yard sign.

5:12Kindness is everything or no human being is illegal. And yet in places like California, restrictive zoning rules do push out many people from being able to afford to live there. Houston is in a Republican state and does not have traditional citywide zoning. And you can see that reflected in the numbers. Houston permitted about 50 ,000 single-family homes in 2024. New York City, for example, issued only 20 ,000 housing permits total. That means higher housing prices for places like New York and increased calls for the government to subsidize housing. That brings us to problem number three, rules around taxpayer money, which a lot of affordable housing projects use.

5:53If you build using public money, you typically have to abide by a bunch of public requirements. In San Francisco, this meant a law favoring small contractors. Derek says there are also local hiring requirements, a review from the mayor's office on disability, and that's a layer on top of the usual Americans with Disabilities Act. Then there is an Arts Commission review. Which, you know, you could argue that there are good reasons for each of these things to exist, right? San Francisco is a beautiful town, and I guess people want it to stay that way. But there are a lot of extra layers on the process.

6:29It becomes so difficult and so onerous, and it takes so long to build public housing that it takes hundreds and hundreds of thousands of dollars to build each unit. Your co-author Ezra Klein calls this everything bagel liberalism. Yes, everything bagel liberalism is this idea that, you know, in many cases, progressives will take a law and fill it with so many progressive priorities that to check the box of all of those progressive priorities, you can't actually fulfill the purpose of the law itself. Yes, everyone loves everything bagels. Are you one of those, Adrian? Yeah, I'm more of a blueberry bagel person.

7:08I'll take it. Derek is saying, though, that you can have too much of a good thing. So in the movie Everything Everywhere All at Once, one of the characters creates the ultimate everything bagel. A bagel. The ultimate everything bagel that included every single known thing in the universe would become a black hole. And in many cases, these progressive laws become black holes when it comes to achieving their own outcomes. Derek says the Tehanan apartment complex avoided many of those everything-bagel liberalism requirements by saying no to public money. Instead, it was financed largely from a$65 million grant from philanthropists Charles and Helen Schwab.

7:52Derek and Ezra's book, Abundance, is more than just about how to build housing. They want to build more wind turbines and nuclear power plants. They want a science funding system that creates more breakthroughs. And a theme again and again through the book is how government in the U.S., under any political party really, has been failing to build as bureaucratic roadblocks get in the way. Frustration with red tape spans the political left and the right. In the Trump administration, you have people like Elon Musk, who came in leading the Department of Government Efficiency, or DOGE, which aimed to slash a lot of government spending and what they claimed is a lot of government bureaucracy and waste.

8:34So we asked Derek whether the recent shakeups have revealed anything that would align with his abundance philosophy. The degree to which Doge has found ways to move quickly might offer a bit of inspiration to liberals and aggressives, but I really don't want to overstate the case here. I see DOGE overwhelmingly as a disgrace and a catastrophe. I don't think the folks working at the Department of Government Deficiency have given much thought to the G and the E of their acronym. Right. The Government Deficiency, Pat. If you're going to go across government with a machete, you better understand the bushes and the trees that you're hacking away at.

9:19And what I see with DOGE is quite the opposite. They are hacking first and asking questions later. Derek is asking kind of the same question, though. Do we need all these rules that constrain building? Now, Derek does not have a chainsaw like Elon Musk, but he does have a whole book indicating where he might cut.

9:43This episode was produced by Julia Ritchie and Lily K. Ross. It was engineered by Gilly Moon. Fact-checking was done by Sierra Juarez. Cake and Cannon edits the show, and The Indicator is a production of NPR.