YIMBY-NIMBY sentences to ponder

Sadly, these sentences help NIMBY:

….we find that buying a home leads individuals to participate substantially more in local elections, on average. We also collect data on local ballot initiatives, and we find that the homeowner turnout boost is almost twice as large in times and places where zoning issues are on the ballot. Additionally, the effect of homeownership increases with the price of the home purchase, suggesting that asset investment may be an important mechanism for the participatory effects.

That is from a new paper by Andrew B Hall and Jesse Yoder (pdf).


What a surprise!

This is because we have been brainwashed in believing that owning property / house is the way to build wealth. The rich do not spend a disproportionate amount of their wealth on houses. We do. If 80% of our wealth is equity we own on our property, NIMBY is not a surprising outcome.

The more fundamental brainwashing (which exists as US popular culture in addition to and beyond our natural propensities) is that accruing individual wealth and status is healthy, normal, and feels good.

Wealth and status, like other hedonisms, are pleasant things if they aren’t attached to. However, the moment fear and desire start taking over, wealth and status become misery-producing. & that’s what happens to us 99% of the time.

As the Buddha noted ~2500 years ago.

Owning a home is a way to build wealth for the simple reason that not paying rent allows people to keep a substantially larger share of their income. If you want to eventually not have to pay rent, then you have to buy a home.
Now, it would be better to buy a cheaper smaller home and pay it off, but that's extremely hard to do when everyone out there operating on the philosophy that people should make money off their houses as a real estate investment -i.e. housing prices should constantly rise.

People actually could use homeownership as a road to wealth if we got back to cheaper homes that people can easily pay off so they can invest in something else.

"People actually could use homeownership as a road to wealth if we got back to cheaper homes"

Zoning doesn't allow it!

If you want to eventually not have to pay rent, then you have to buy a home.

Then you pay rent to the county. Doubt me, don't pay your property tax bill.

Sure, but your taxes are definitely lower than your mortgage, and will be lower still if you house doesn't have a high market value.

The problem is people buying a house at $400K and counting on it being worth $2 million by the time they retire so they can sell it and live off the profits.

If your strategy is to buy a cheap house, pay it off and then invest your money in something else then you don't have to care about what your house is worth, in fact, it's better if it stays cheap so you won't hve to pay as much in property taxes. You buy the house to live in it not because it 's your retirement fund.

Typically your taxes are included in your mortgage payment. My mortgage is 21 years old so it may not be typical, but escrow payments for taxes account for some
60% of my monthly mortgage. The remainder is 25% principle and 15% interest. If it were a young mortgage these shares would be reversed.

The key problem with finding a lower cost home is finding a lower cost home in a desirable neighborhood (including schools). I think often people are buying neighborhood as much as they're buying a home.

"This is because we have been brainwashed in believing that owning property / house is the way to build wealth."

Brainwashed? It's not really brainwashing when it's true. Granted in the US you would be better off investing in equities than in real estate. But in most first world countries, real estate is somewhat better.



People that own their own home tend to have more wealth than those who do not.

Hazel makes a good point that a lot of people consider their home to be their retirement fund. While the overall housing market is safer, individual home is a risky investment. It is like saying that the broader market is a safe investment, so I can go and buy an individual stock and be rewarded.

“Cooling acts as healing,” Jwatts had said of ice cream to his first wife.

"This is because we have been brainwashed in believing that owning property / house is the way to build wealth."

Spend a grand on rent or spend a grand on a mortgage - which do you think makes *me* richer, faster?

"The rich do not spend a disproportionate amount of their wealth on houses. We do."

Because they're *rich*. The rich do not spend a 'disproportionate' (and here 'disproportionate' means 'MajorEcon doesn't think you should spend that much money on it') amount of their income on *anything*. Because they're rich.

"If 80% of our wealth is equity we own on our property, NIMBY is not a surprising outcome."

Especially when not being active can mean that 80% of your wealth can get destroyed because someone thinks that a freeway overpass would be useful so they want to build it right over your property. For the greater good of course.

Wait, the richer you are, the more you act to protect your wealth?

And this is a surprise to a public choice economist. especially any that like to point out how politicians are controlled through the need for contributions to retain power?

Yes, this seems sort of dog bites man. When people bought their properties, there was a set of rights associated with those properties including the right to exercise their vote to restrict use of surrounding properties. Without that right, people would be stuck bearing more of the risk that their neighbour could turn his house into a nightclub or something, reducing their enjoyment of their property significantly (and also collectively funded amenities near their property -- concerns about road congestion for example, or rich Californians trying to keep the peasantry away from beaches).

Obviously, your local elections could turn out to be dominated by libertarian professors so it's not like your risk is 0 just because you have the right to vote in local elections. But normal people will have similar incentives to exercise their rights to protect the value of their investments, so it seems pretty intuitive that letting people vote would support NIMBYism. Where people aren't allowed to manage changes to their neighbourhood through a democratic process, you get protests instead, or incidents like when Angelenos throw feces at cafes and galleries or whatever to deter gentrification.

Don't we want more homeowners if it means more participation, thus more YIMBY's to enable more people to have homes to buy?

This result is ancient. Increased voter participation has been touted as a "benefit" of home ownership since as far back as the 1990s. One must question, though, if this is truly an obejctive benefit to society. I'm not convinced it is.

I could be wrong but wasn't voting in the states originally tied to homeownership? Before the days of there being workable databases you couldn't keep track of individuals with social security numbers or passports, people could more or less come and go as they please. The property owners, though, had deeds filed in the local registrar's office hence you could use that as a voter registration criteria.

It was property owners. Back in those days, they were the only taxpayers. The right to vote was restricted to those who pay for the things government decides to do. Something to be said for that, but it was discarded with the restriction of voting rights for white males over 21, throwing the baby out with the bath water. We have moved closer to a democracy, defined as two wolves & a sheep voting on what's for dinner.

This is why the top 10% of taxpayers pay nearly all the income taxes now. They can't outvote the wolves.

Actually tariffs were a lot higher back then so the tax base was much larger than only property owners. Although the only people who physically paid those taxes were importers at the customs office.

It's far more ancient than that. It goes back to the founding of the country. Jefferson and other founders emphasized the importance of citizens owning real estate (the famous yeoman farmer) for these sorts of reasons. Westward expansion allowed people to acquire land cheaply. Now that people are more densely clustered around cities and land is no longer cheap, NIMBYism becomes more of an acute problem (most people prefer having some space so building up rather than out is a very imperfect substitute).

Westward expansion allowed people to acquire land cheaply.

The dead native Americans that once lived there were unable to drive a hard bargain.

They were made an offer they could not refuse.

If it was conclusively shown that people went out and voted in greater numbers for the idiotic and indefensible reason that a total stranger told them to VOTE, it would be considered a triumph.

But when some circumstance - ownership of a tiny plot of land -- inclines, or appears to incline, people to vote -- there is gnashing of teeth about their "over"-participation.

Can we just get this over with already?

NPR was whining this morning about "how do we get more people to vote."

And here's Tyler complaining about too many landowners voting.

Obviously, it's only certain people they both want to see voting more.

The idea that greater participation in elections is a good thing is insane. It is a good thing that people have the RIGHT to vote, but won't the best results be achieved by those voters who are paying attention & informed on candidates & issues voting, & those who have no clue staying home? The apathetic & ignorant do their civic duty by NOT voting. But for the last 20+ years, the fashion is badger, cajole & shame these people into registering & voting, even though they have no clue who the candidates or issues are, or anything else relevant.

We have enough ignorant people who vote already, as evidenced by the ones elected at all levels.

Only the personal retinue of a candidate for office has any knowledge of his or her characteristics that might make them suitable for it. What percentage of the citizenry had ever spoken to BHO or any other presidential candidate before the election?

Our own selfishness is biologically over-determined (& then -relatedly- culturally reinforced).

But we also regularly perceive and act out of enlightened self-interest and an altruistic concern for others and the greater good.

So, no...we should not wish to “get over” the interplay and tension between self-interest and enlightened self-interest. A healthy society fearures a dynamic interplay of forces emanating from these tendencies within us.

A tyranny of Each against All (radical individualism) is just as oppressive as a tyranny of Each under All (radical collectivism).

But heaven forbid radical communitarianism should rear its ugly head in that "dynamic interplay" ...

Is your remark advocating political localism?

The main critique of liberal democracy that I think most relevant is that it works against the health and vigor of local communities for the health and vigor of non-local markets, thus alienating individuals who are then prone to surrogate identities based on politics, racism, nationalism, consumerism, etc...each of these “pseudo-identities” is inherently unfulfilling and fearful (perceiving threats) precisely because they are surrogate senses of belonging.

Liberal capitalism has required a trade-off, and amidst the widespread (and often justified) celebration of the “pro’s”, there’s a blind spot about the “cons”.

People want to be part of small scale communities that balance mutual support with individual freedom, and people should (ahem) want such communities to have a meaningful degrees of democratic autonomy from larger systems of coercion.


I'm not sure that local homeowners collaborating to restrict development in pursuit of rising housing values is really a kind of "mutual support" and not a gaming of the system for short-term profit.

No but it is. They're collaborating. That's community. Ugly from the outside.

I'm not adverse to your point of view, but collaborating to drive up land values ultimately has some perverse outcomes even for the people doing it. You wind up paying more in property taxes, for one thing - at some point the gains in equity via rising asset prices have to get cancelled out by the additional amounts you have to pay in interest and taxes. We're probably riding that point already. the other problem is it prices your own children out of the market. I guess you can still leave them your house as an inheritance, but then you can't do that AND sell it and live off the money for your retirement. So basically driving up asset prices to the point where people can basically never pay off their mortgages is a way of stealing from the next generation. You might own a valuable asset, but your children won't be able to afford to buy the same home and will basically never be freed from the grind of paying off a mortgage or renting, and they won't have an asset they can borrow money against to start a business. It's sort of tragic. If people just decided to pay of their mortgages and invest money in something else and not worry about the value of their house so much, we would be have a more prosperous and more equitable and freer society.
In a way, it's like a massive prisoner's dilemma. It's bad for everyone to if asset prices on real estate are extremely high, but the individual whose house rises in value always has an incentive to lobby for policies that will cause it to rise. Maybe we should consider cheap housing as a kind of public goods problem.

This sounds very un-libertarian!:

Collective action problems that can’t be addressed by the free market but could be addressed by collectivism (public policy).

Perhaps I misunderstand?

What we're talking about here is having collective actions that subvert the collective action of local homowners driving housing prices. Something which is assisted by various federal policies. My point is that libertarians can actually sieze on some of the same mechanisms to produce a more libertarian end result: allowing people to build new housing.

That’s helpful: dueling collectivisms vs. state/individual dichotomy.

Staying philosophical: it’s all dueling collectivisms: Capitalist individualism is a culturally-conditioned product, not the revelation of an inherent human nature.

Except in this case we are talking of landowners using the strong arm of government to buttress inflate the value of their properties.

Nothing un-libertarian about opposing what is clearly a government interference in the free market.

There is also an issue with the arrow of causation. Rather than home ownership causing participation, it may be that people who participate more are more likely to buy a home. These two events can be jointly determined by income and education.

Move along, there is nothing new here.

Having a financial stake in an outcome increases one's participation in determining that outcome. Yawn.

The YIMBY vs NIMBY conundrum reminds one of Bastiat's dictum that "Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee." Would eliminating local control lead to a tragedy of the commons? What unseen values would be dispensed with? What would Ostrom say?

How much of that is driven by a desire to access half-decent public schools and preserve their half-decentness? My guess is a lot. Are there ways we could change that dynamic?

Restore the rights of association.

If a group of home owners could decide to form a non-union private school district, and only allow people that are net tax payers (= high income and wealth), then the bidding up of property prices to keep undesirables out would no longer be necessary.

Another way would be to require owners to have $100K or $1M in liquid assets before they are allowed to buy in the community, depending on how exclusive the community was designed to be.

An alternative form of your proposal are gated communities and large developments with owner associations. The less autonomy homeowners in traditional neighborhoods have, the more these forms or association are valued. Personally, I think there is a huge market opportunity for gated communities that offer private schooling. Scotch the tennis courts and golf courses and offer a decent elementary school and middle school and you would have young homebuyers lined up.

The problem with all this is that once you own a house, at some time you may need to sell it. The growing cost of housing has attracted a huge following of people wanting a share of the action every time a home changes hands.

The buyer will employ a lawyer to make sure that his purchase is safe and wise. The lawyer will act in what he sees as the buyer's best interest. The lawyer's best interest will be served by making sure that the buyer is frightened off, because he will still get paid, and the buyer will then repeat the process. In addition, there are other professional groups that perform surveys. A general house surveyor will recommend several specialist surveys, the obvious ones being electricity, water and gas. In a mining area, mining surveys will be recommended. The entry point is a desktop survey, which isn't that expensive. But these usually recommend drilling surveys, which are expensive, disruptive, and damaging to the property. The owner then has to pay another person to put right the damage. The government collects transaction taxes on all this economic activity, that generates no real wealth.
Surveys may mention certain plants growing in the garden that are believed to be damaging to the property. The list is growing, and started with Rhododendron, moved on to Japanese Knotweed, and is soon said to be including bamboo. No doubt a general surveyor will soon be recommending horticultural surveys.
The latest "jolly jape" by the professions is that once a sale is agreed, the mortgage company used by the buyer undervalues the property, and if the seller won't drop the price the sale collapses.
In the UK, the government has introduced a requirement to prove the Identity Purity of buyers. This is to prevent people with impure identity, ie illegal immigrants, or those without proper proof of their entitlement to live in the country, setting there.
Similar restrictions exist if you want to rent the home out, with the risk of 14 years in prison if you don't do it or don't do it properly. But in general most people let property through an agent who does this for them.
Letting is easier than selling, but if you want to buy another home then you need another mortgage funded by the rent. This is fine until the next economic bubble bursts and mortgage companies start asking for more security.

Regarding the investment value of buying: I have several rentals, some single family. At first, after the 20% down, the rent is pretty close to what the costs are. There is a small profit that gets eaten up by extraneous expenses. After a few years, rents go up, but most of the payment is fixed. My payments are 30% variable - taxes and insurance and upkeep. The rest is fixed for 30 years. At 2 (lately) or 3% inflation that fixed portion creates some value over time. At year 1 cost is 100% of renting. Year 10 it's about 89%, year 20% its 79%, year 30+ your at 33%. That's cashflow. Not counting equity you're building, roughly 181% of original value.

Not in Chicago...

Nimbyism can work. All you have to do is make sure that you have the right Nimbys.

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