What Would It Look Like To Take An Outcome-Oriented Approach to Housing Abundance?

In Order without Design, city planner (and MAP Academic Advisory Committee member) Alain Bertaud criticizes the conventional approach to local land-use policy. Often, policymakers focus on inputs—such as money spent—and outputs—such as subsidies provided or policies changed. Meanwhile, outcomes—such as the number of homes built—or impacts—such as falling home prices—get relatively little attention. As Bertaud argues, this has the process of policy development flipped: we should start with the desired measurable impact and work backward from there.

As YIMBYs, our policy agenda should be built around reducing the ratio of median home prices to median household incomes.¹ Historically, a three to five price to income ratio was considered healthy, and in housing-abundant markets in the Midwest and South, such as metropolitan Houston, this ratio holds. In metropolitan Los Angeles, the ratio is 7.3, while up in the Bay Area, the ratio is above seven. At these ratios, if a working- or middle-class Californian has any path to homeownership at all, it will entail sacrifices such as a longer commute or less investment in education.² 

Without reforms to the policies driving housing scarcity—such as exclusionary zoning, unpredictable permitting, and high costs—the same could be true across North America.

Operationalizing the Blinking Red Lights

Before outlining how we might use it to set policy, let’s start by carefully defining our “blinking red light,” which is how Bertaud colorfully characterizes impacts of interest. For each jurisdiction, a ratio should be calculated as follows:

• On the denominator, you have the median household income within the jurisdiction’s Census-defined metropolitan or combined statistical area (MSA or CSA).³ Why MSAs and CSAs? Because MSAs and CSAs reflect labor markets, the scale at which median household incomes are defined.
• On the numerator, you have the median home price within the jurisdiction in question. Why the jurisdiction, and not the metropolitan area? Because in the US, where local land-use controls grant local jurisdictions the power to limit the supply of housing, local jurisdictions have the power to place a floor on housing prices.⁴

To see how this might play out, let’s consider four indicative examples from a city I happen to know well: Los Angeles-Long Beach CSA, a CSA with a median household income of $87,743.

1. In Hesperia—median home price of $417,300—the ratio is 3.8. Most residents of metropolitan Los Angeles could afford to live there (for now) and there is little reason to take action to ensure that more housing is built. Our little light is dead.
2. In Long Beach—median home price of $772,500—the ratio is 8.8. While far from where we might like it to be, this broadly reflects trends in urban California. The little red light isn’t blinking, but it is on—more housing should be built here.
3. In Culver City—median home price of $1,121,300—the ratio is 12.8. Few families in metropolitan Los Angeles can afford to live here. Our little red light is blinking—we must take action to get housing built here and bring down prices.
4. In Santa Monica—median home price of $1,654,800—the ratio is 18.9. Very few families in metropolitan Los Angeles can afford to live here. Our little red is blinking at full luminosity—urgent action needs to be taken to build housing here and bring down prices.

What would it look like to rebuild the housing policy in a high-cost state like California around a “blinking red light” framework?⁵ Every five years, a state agency would calculate each jurisdiction’s ratio and make the appropriate designation:

• Those jurisdictions with a ratio at or below five would be designated “Inclusive Jurisdictions.” These jurisdictions are building enough housing—they are also likely historically marginalized or far from job centers.
• Those jurisdictions with a ratio between 5.1 and 10 would be designated “At-Risk Jurisdictions.” The following provisions would apply:
  • Any proposed changes to land-use regulation—such as zoning or preservation districts—should require preclearance by the state.
  • An inventory of all local- and state-owned land within the jurisdiction must be completed and approved by an appropriate state agency. Developers proposing to build mixed-income housing would have a right of first refusal on any of these properties.
  • Permits for certain forms of state-defined housing—such as ADUs, duplexes, or residential in commercial, depending on your state—would be administered by a state agency, pursuant to liberal standards.
• Those jurisdictions with a ratio between 10.1 and 15 would be declared “Exclusionary Jurisdictions.” In addition to the provisions above:
  • Automatic ministerial approval for all zoning-compliant housing proposals.
  • Ineligibility for any discretionary state funds unless tied to affordable housing production or infrastructure immediately necessary for its production.
  • An obligation to adopt various liberalizing zoning, e.g. eliminating parking requirements, reducing minimum lot sizes, speeding up permitting, etc. 
• Those jurisdictions with a ratio of 15.1 or more would be designated “Extremely Exclusionary Jurisdictions.” In addition to the provisions above:
  • All permits would be administered by a state agency, pursuant to a simplified zoning framework to defined by state law, e.g:
    • A standard residential zone that allows low-rise multifamily subject to standard formula, and.
    • A standard commercial zone that allows mid-rise, mixed-use multifamily subject to standard formula, a la SB 50. 
  • The state property transfer tax would be established or increased for all properties within this jurisdiction, with funds transferred directly to the state housing finance agency and earmarked for affordable housing in Segregated and Extremely Segregated Jurisdictions.

To see where any given California jurisdiction would fall within this framework as of 2023, check out California YIMBY’s map. The same could easily be recreated for any other state.

Gaming Out the Blinking Red Lights Framework

How would we expect jurisdictions to respond to this framework? As with any intervention, there are positives and negatives. 

On the one hand, this approach might encourage exclusionary jurisdictions to merge with less affluent neighbors. While this might exempt them from state interventions, it would come at the cost of sharing resources. Any Census-designated place that is unincorporated within a county will need to be regulated as if it were a jurisdiction. This might encourage affluent unincorporated pockets to merge with less affluent neighborhoods.

This framework would also normalize two underrated reform ideas: state administration of permits for any state-defined housing typology and state definition of statewide zoning districts, in the style of Japan or France. Perhaps these provisions would eventually apply to all local jurisdictions, exempting local jurisdictions from costly “fair share” planning mechanisms like RHNA, and saving local elected officials from the messy burden of land-use policy.

On the other hand, this framework would leave out exclusionary areas in larger jurisdictions. For example, since Los Angeles has a ratio of 9.5, a neighborhood like Bel-Air would likely remain untouched. One way to deal with the issue would be to calculate the median home price within a given zip code or some other relatively stable sub-jurisdiction unit, in jurisdictions that are sufficiently large. 

There are also inherent political difficulties with such a dramatic policy change. This would strip Exclusionary and Extremely Exclusionary Jurisdictions of a huge amount of power—not incidentally, these are some of the most politically powerful jurisdictions in the state. As with past successful YIMBY reforms, it may make sense to adopt this framework into law with fairly light remedial actions and then slowly turn up the heat in subsequent legislation.

Conclusion

There are no silver bullet policy reforms. Even the best reforms—such as ADU legalization—take years of sustained refinement, compromise, and implementation. But we have also learned that, if you put in the work, radical policy change is possible. A decade ago, policies like single-family zoning and minimum parking requirements were sacrosanct—now they’re on the way out in many jurisdictions. Why should we be any more deferential to unchecked local control and the patterns of scarcity and segregation that it serves to entrench? 

The project of retooling our cities around a philosophy of abundance—of affordable housing, reliable transit, and quality public services—is only beginning. But making the most of this moment requires disciplined thinking about what we want out of our reforms. At the Metropolitan Abundance Project, we believe that means less thinking about inputs and outputs, and more thinking about outcomes and impacts.

1. Why not median rents? The simple answer is that this is a distinction without a difference—home prices and rents move in tandem, and I find home price as a multiple of household income to be a slightly more intuitive measure than any comparable rent-income ratio. ↩︎
2. Why this ratio, and not something else? Two reasons: First, this data is easily available and consistent. Second, this measure heavily shapes other outcomes we might care about, such as rent levels or rates of homelessness. ↩︎
3. For jurisdictions not in an MSA or CSA, this should be the median household income within the relevant county. ↩︎
4. That is, in healthy metropolitan economies, a condition that broadly applies to every major metropolitan area in states like California. ↩︎
5. I use California as an example, since it’s the context I’m most familiar with. You could easily build a version of this policy for your state or province. In low-cost states, or states mostly focused on equity and sustainability rather than overall affordability, this framework may need to change. ↩︎