The Golden Gates: Fighting for Housing in America

Golden Gates is a tour de force, capturing the many complexities of housing politics within those metro areas where demand for housing keeps growing, while supply does not increase proportionally. Writing in a breezy, journalistic style, Conor Dougherty eschews the rigors of social science methodology, sometimes annoyingly, often engagingly, but still managing to provide cogent analysis along with his colorful anecdotes. He describes the clash of YIMBYists, NIMBYists, advocates for the homeless, leaders of anti-gentrification groups, and environmentalists as they play out in the San Francisco Bay area. Although he does not try to extend his discussion beyond his immediate case, the contradictions he depicts occur in any area where new construction does not keep pace with job creation. The fissures between homeowners, anxious about the value of their principal asset, and champions of affordable housing are familiar to planners, but the divisions within the latter group less so. Advocates of affordable housing construction split between groups who support building high-rise luxury units to cross-subsidize cheaper ones, and opponents of any market-rate construction who contend that it stimulates rent rises in the surrounding area. Dougherty shows the strange alliance between affluent homeowners and low-income community groups, who share the goal of maintaining neighborhood character and thus call for exclusion of outsiders.

The main thesis of the book is that a nominally liberal opposition to unlimited development coalesced into an anti-growth movement that blocked housing construction. Justified by antagonism to rapacious developers, environmental depredation, and sprawl, the outcome was a rate of housing production vastly below the rate of job increase. The impact of in-migration was compounded by demographic change, whereby, bolstered by rises in the number of single-person households and childless couples, household formation exceeded population growth. The resulting price inflation in desirable locations forced low-income service workers to crowd into relatively few, dense suburban areas like East Palo Alto. Although such places provided a labor pool for the services demanded in adjacent communities, they had to rely on their own tax bases, resulting in inferior educational and social services and few amenities.

Dougherty follows the typical journalistic practice of leading off discussions of broader issues with portrayals of individuals. Given that his focus is the San Francisco area, with its extraordinary cast of techies, hippies, radical agitators, civil rights advocates, LGBTQ leaders, and billionaires, he has plenty of characters to feature. Beneath the personal dramas, however, is a deeply insightful examination of the obstacles to producing equitable housing policy where land is a commodity in limited supply. He refers to Glaeser and Gyourko's (2003) contention that zoning regulations are the primary cause of the failure to build sufficient housing that is accessible to employment. According to this argument, restricting development to detached single-family dwelling units on 80% of the land in the Bay Area makes costliness inevitable.

Without disputing Glaeser directly,¹ Dougherty nevertheless shows that simply allowing private investors to do as they please will not result in affordable housing filtering down to low-income households. Developers may build many more units than are produced at the current rate of construction without costs going down at the lower end. If the new construction occurs in places with good access to public transit, it may directly displace poorer residents currently occupying the space. In other words, developers will densify locations currently considered undesirable but by doing so can transform them into good addresses. Furthermore, indirect displacement can occur when new construction, often accompanied by public investment in amenities, attracts higher-income people to older units within the vicinity of new structures – hence the concern of anti-gentrification activists over any additional market-rate units. Dougherty cites studies that identify income inequality rather than land-use regulation or rent controls as the source of failure to construct new units, contrary to conventional economics that attributes constriction of supply to such policies. Dependence on the market to set prices and then relying on subsidies to effect redistribution may make sense within the abstract models of economists, but they are not attainable in practice. Dougherty highlights the political powerlessness of people who need housing but do not yet live in the jurisdictions where housing and zoning policies are made.

The requirement that market-rate production be accompanied by a percentage of affordable housing depends on the availability of subsidy. Typically the number of affordable units constructed by requiring developer cross-subsidies is vastly inadequate relative to demand. At the same time, affordable housing reliant on government subsidy is also exiguous. Dougherty points out that tax subsidies for homeownership are politically acceptable and not subject to periodic legislative review, while programs supporting renters require legislative mandates with each new public budget. Public housing is particularly unpopular. He describes the problems arising from relying on the low-income housing tax credit (LIHTC), which is the principal national program for below-market housing development in the United States. This program offers tax credits to corporations in return for their investing in below-market-rate housing, a peculiarly round-about approach to lowering housing costs and subject to annual appropriations by a stingy Congress. Since the amount of money it provides is insufficient to meet the costs of production, affordable housing developers must locate additional funds from a variety of sources including public-sector bond issues, bank loans, and foundations. Thus, “nonprofit developers can spend years, years that they aren’t building, trying to find the perfect overlapping window to get all the money pots lined up” (p. 166). Moreover, once constructed, support for maintenance is rarely available, and the typical tenant is subject to bouts of unemployment and family instability that undermine the ability to meet rent obligations, resulting in eviction. The long history of official and unofficial racial discrimination, even in supposedly liberal northern California, exacerbates the issue.

Dougherty mentions the distinction made by Logan and Molotch (1987) between the use value and exchange value of home. In a capitalist land market, the two diverge. Dougherty contends that for low-income people the worth of their home is measured by sentiment and the basic need for a roof over their head; for the affluent, housing decisions are shaped by calculations regarding the profit that can accrue from property ownership. He briefly alludes to community land trusts (CLTs) as a method for removing parcels from the market, thereby protecting occupants from rising rents or, if they own their domicile, preventing them from achieving windfall profits. Increasing interest in CLTs (deFIlippis et al. 2019) shows that they are having some effect on the availability of housing, but still they remain only a tiny sliver of the overall US housing supply. In fact, unless the coronavirus pandemic results in a general housing market collapse in previously high-cost cities, American metropolises will continue to follow current trends of income segregation and housing inadequacy. Even then, since a collapse of housing prices would likely be accompanied by a similar descent of income, the situation of poor people would not improve. It is only in those areas where the state retains ownership of land (e.g. Stockholm, Singapore, Vienna) that housing remains affordable across the income spectrum. The cyclicity of real estate markets has strong negative effects: in boom times it prices all but the wealthy out of the market; in the downturns it displaces occupants of foreclosed buildings and sends a negative multiplier through the local economy.

Dougherty begins his book with a quotation from Henry George, referring to private land ownership: “It is a fresh and continuous robbery that goes on every day and every hour”. Essentially George’s thesis was that control of a delineated space allowed its possessor to reap unearned gains from development in the area around it. Dougherty’s study of the Bay Area shows how this process plays out in the lives of individuals, the conflicts it produces, and the fundamental injustice of a system that makes decent housing unaffordable to so many. The book is an ideal text for introductory courses in urban studies. Even advanced scholars can learn much from how it shows the nostrums of many planners (for example, for transit-oriented development) and how the dogmatic stances of many progressive housing advocates run up against uncomfortable facts.

Notes

1. There is an endorsement from Glaeser on the book cover.