published Sep 12, 2018, 6:30:12 AM, by Noah Smith
(Bloomberg Opinion) —

According to official statistics, Americans have been getting slowly richer since 1980. Real median personal income growth slowed in the 2000s and took a big hit in the Great Recession, but has now recovered and is at an all-time high. But this number is calculated by measuring income relative to a broad range of consumer goods. If you look just at rent — the biggest item on most people’s monthly budget — it turns out that median income hasn’t been keeping pace since the turn of the century:

To the typical American, being able to afford more cars and smartphones and Netflix subscriptions might be cold comfort given the increasing difficulty of paying for housing. The security of knowing that you’ll be able to keep a roof over your head is one of humanity’s most basic physical and psychological needs, and right now the U.S. economy isn’t meeting that need as well as it used to.

In recent years, as the problem has gotten steadily worse, politicians have begun casting about for solutions. At the state and local level, some are pushing for rent control. At the national level, some Democratic leaders are suggesting tax credits for low-income renters. Both of these approaches have their advantages and drawbacks — rent control helps older long-time tenants at the expense of younger and prospective lower-income renters, while tax credits will let landlords raise rents.

Another idea is to simply build more housing. At the block or neighborhood level, building fancy new apartment buildings can sometimes raise rents, as it attracts high earners to a suddenly trendy area. But at the state or national level, more units on the market will lead to lower prices.

It’s hard to build more housing city by city. Development tends to be restricted by powerful incumbent homeowners — or Nimbys, for “not in my back yard” — who want to restrict supply and keep out low-income residents in order to raise their property values. Often these exclusions have a distinctly racial tinge. That’s why in order to really build more housing all across the land, state or national government will probably have to take charge.

Incredibly, there now seems to be a slight chance that this will happen. Ben Carson, secretary of Housing and Urban Development, has begun to talk about using federal power to discourage cities from using zoning to keep out poor people.

Many American cities now use zoning codes to prevent or severely limit apartment buildings and townhouses from being built in many residential areas. This blocks poor people, who often can’t afford big single-family houses with lawns. On Aug. 13, Carson proposed requiring that cities that receive federal housing grants reduce their use of exclusionary zoning.

If Carson ends up following through on that idea, it could be a game-changer. It wouldn’t be enough to simply target zoning — rules mandating big yards, or allowing repeated regulatory challenges that hold up construction projects, would also have to be discouraged. But if implemented right, HUD power could be key to easing the country’s housing shortage, and increasing the amount of housing that the typical American can afford.

In an odd twist, Carson’s attack on exclusionary zoning might come as part of an attempt to forestall government efforts to promote neighborhood racial integration. The Barack Obama administration had been moving to implement the provisions of the Federal Housing Act of 1968, which required that cities receiving federal housing funds actively work to reduce segregation. That rule was never really implemented, which is one reason de facto segregation has endured. Obama was preparing to change that, but then Donald Trump got elected. Now, Republicans are strongly pressuring Carson’s HUD to back off. Carson is complying with that pressure. But instead of simply sending the rule back to regulatory limbo, he appears to be reinterpreting it as a mandate to fight Nimbyism in general.

The upshot is that Carson’s proposal could lead to even greater racial desegregation than Obama’s efforts. Exclusionary zoning isn’t the only force keeping America’s towns segregated, but it is one factor — and importantly, it’s an easy factor to attack. Although cities ordered to actively foster desegregation could conceivably drag their feet, the elimination of exclusionary zoning rules is easy to verify at the federal level.

Unfortunately, a HUD attack on exclusionary zoning will probably face stiff political opposition. Although some conservatives want to fight zoning on libertarian grounds, others are sure to balk at the possibility of letting poor people flood into more affluent neighborhoods. And liberals, despite their general commitment to racial integration and equality, often tend to balk at dense new developments in their own back yards.

But while Carson probably won’t manage to conjure a bipartisan consensus and change the U.S.’s dysfunctional urban development patterns overnight, his proposal shows that policy makers are looking in the right direction. The rent has just gotten too high to keep doing nothing.

oah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
To contact the author of this story: Noah Smith at nsmith150@bloomberg.net
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