From the archives: How Israel turned homeowners into YIMBYs
A housing success story
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Tal Alster explains how supermajorities and opt-ins won YIMBYs a remarkable success in Israel for Issue 14. Read it online here.
If your country speaks English, it’s sometimes said, chances are that it has a housing crisis. Apparently Israel speaks enough English for this to be true. While it has faced many of the same housing problems as the Anglosphere, Israelis have found an innovative solution that has begun to alleviate the problem. In an attempt to improve earthquake resilience and replace a dilapidated housing stock, Israel created two policies that applied nationwide, allowing small groups to opt in to denser zoning.
These schemes, known together in Israel as urban regeneration, or UR, have been incredibly successful: they now deliver one third of the country’s new homes, and more than half of the new homes in Tel Aviv, Israel’s economic center. Although the scheme has flaws and will be revised, its incredible take-up is a lesson to the rest of the world that opt-ins can break the housing deadlock and allow urban intensification.
Removing veto players to build more homes
What can we do about those who resist new housing?
Building new homes in urban areas has become much harder in the twenty-first century than it was for much of the twentieth century, let alone the nineteenth. Many blame those who supposedly say ‘not in my backyard’ to new housing near them. As housing supply fails to meet demand across the developed world, these incumbents, usually homeowners, see the value of their homes soar. Richard Florida calls them the ‘new urban luddites’; Edward Glaeser ‘the entrenched’; and William Fischel has coined the term ‘homevoters’ All paint a similar picture: older, wealthier homeowners control the political process and support rules that prevent the construction of new housing.
Policymakers and activists have traditionally tried to curtail the power of incumbent homeowners by moving the decision to a higher level of government, where the broader group of people who might benefit (who don’t yet live in the area) can have a say. This strategy understands the problem as one of disenfranchised potential residents. The people who would benefit from more building do not yet live in the neighborhoods where the building would take place, so they have no vote on the local level, but they do at the city-, region-, or nationwide level.
Renters make up a substantial part of the electorate in many cities, in some cases a majority. It is they who have to pay rising rents, so in theory they should have a clear incentive to support more house building.
This correctly identifies the problem: local governments are highly vulnerable to small, noisy groups of swing voters wielding a disproportionate influence on elected representatives to block development. In practice, renters tend to participate less than homeowners in municipal elections and are less active in local politics.
But the proposed solution, widening the relevant jurisdiction, making the planning process a regional-, state-, or even national-level matter, to give these would-be residents political representation, is flawed, for three reasons.
First, local authorities exist to serve a demand. People buy a home in large part for ‘location, location, location’ and generally want to prevent changes that worsen the quality of the local area. Local government is part of what they see themselves as buying: municipalities, especially small and suburban ones, exist to cater to their interests, so they have the strongest incentive not to cede planning powers – which are a major determinant of the character of their area – to higher political tiers. At best, taking those powers away is a difficult tug-of-war for higher levels of government.
Second, even where local authorities do lose the ability to stop development in their area, there is a growing demand in many countries for national rules that stop housing from happening, even if their stated goals are other things – like environmental surveys and reviews, historical preservation, archaeological digs, affordable housing, and excessive building safety (like requirements that apartment buildings over a certain height have two staircases, which provides little safety benefit but significantly increases the land needed for a given block of apartments). This is driven by campaigning from hard-core opponents of development. These can add so much cost that they make otherwise-valuable developments unprofitable to do in the first place.
And third, it is not even obvious that renters support upzoning, especially in high-rent cities. It is far from obvious to many non-economists that more supply means lower prices.
This is why countries with top-down control do not necessarily build more homes. The British housing secretary already has near dictatorial legal powers to rewrite local plans without any local government oversight, to create new by-right permissions to do whole classes of development, and to ‘call in’ individual applications to decide them the way they wish. But England still allows fewer homes per capita than almost every other comparable country. National preemption leads to national opposition, which vocal opponents can often win.
Could there be an alternative strategy, one that harnesses the self-interest of homeowners to promote urban development rather than prevent it? The experience of Israel’s urban regeneration program suggests so.
You can read the rest of this piece here.