Manhattan. CC image from sakeeb.

Breaking news! Last week, the New York Times reported that it is expensive to live in Manhattan. The Times frames the question through the lens of the middle class, asking what the definition means in the context of they city’s densest borough.

In a city like New York, where everything is superlative, who exactly is middle class? What kind of salary are we talking about? Where does a middle-class person live? And could the relentless rise in real estate prices push the middle class to extinction?

There’s lots of discussion in the article about incomes in New York, as well as the high cost of living – particularly for housing. The article notes that the New York, urban context makes the traditional symbols of the American Dream (e.g. home ownership) less applicable, and most of the text is spent searching for some other indicator of middle-class-ness. Matt Yglesias notes that such a search for a single metric isn’t always useful. Likewise, it’s not as if this is a new topic in New York, or even for the Times.

There’s lots of discussion about housing costs and the demand for living in a place like Manhattan, but not a single word about housing supply. I understand the author is looking to explore the perception of what constitutes the middle class, but a word about the supply of housing is warranted. Even a short mention of the constraints to supply would be a worthwhile addition to these kinds of articles.

David Schleicher’s twitter response asked that same question, and provided a link to Glaeser, Gyourko, and Saks’ work on regulatory constraints to housing supply in New York. From the paper’s abstract:

Home building is a highly competitive industry with almost no natural barriers to entry, yet prices in Manhattan currently appear to be more than twice their supply costs. We argue that land use restrictions are the natural explanation of this gap. We also present evidence consistent with our hypothesis that regulation is constraining the supply of housing so that increased demand leads to much higher prices, not many more units, in a number of other high price housing markets across the country.

As noted, Manhattan certainly isn’t the only place with these kinds of constraints. Another recent article focuses on San Francisco, this one from tech writer Farhad Manjoo. Manjoo makes the case that San Francisco needs to grow in the face of tremendous demand for urban living. More importantly, he argues that opponents to growth, those who fear how growth might change the things they love about San Francisco, need to get over themselves.

Don’t look good fortune in the mouth. Yes, growth will bring some problems. But they’re not nearly as bad as the problems you’ll find in decline (ask Detroit). Instead of complaining or blocking growth, San Francisco’s old-guard would do better to propose ways to ease the city’s transition into its digital future. This doesn’t mean opposing newcomers. It means recognizing a new reality, that San Francisco needs to become much larger and more accommodating place than it is. And it means adopting polices that will make that reality a pretty good one.

In particular, for San Francisco, adopting that reality means one thing above all: It needs to build more buildings.

As an example of the fear of change, Manjoo links to this article by David Talbot, blaming the influx of tech workers to the city for forcing things to change – forcing the city to battle for its own soul.

One point that Talbot ignores is that obstructing the physical change in the city (e.g. blocking development) will not save the idealized city he loves. In fact, it might even accelerate the process of gentrification.  Some level of change is inevitable. Fighting any kind of change to the physical environment might even accelerate changes to the city’s socioeconomic environment.

While the overall thrust of Manjoo’s policiy is correct, it’s not hard to see why many fear for the loss of San Francisco’s soul. Manjoo laments that the city has not built more densely, and implies that old Victorian houses are the culprit: “this city is defined by, and reveres, its famous Victorian houses” he writes.  “Those houses are very pretty. They’re also very inefficient. Collectively, they take up a lot of space, but don’t house very many people.”

The truth is that San Francisco could add a great deal of new housing supply without touching those houses that are worthy of preservation. Consider this thought experiment from Keep Houston Houston for transit improvements and upzoning in the Sunset District:

All of this in one neighborhood, and without straying from the basic SF vernacular architecture of low/mid-rise, wood-framed buildings. Apply this same rubric to the rest of the city, allow towers in a few places, you could easily accommodate 200,000 more people.

Likewise, Stephen Smith makes the case for dramatic upzoning in large parts of Brooklyn, but not on the borough’s brownstone blocks:

In some neighborhoods, this sort of conservative zoning makes sense. The tree-lined blocks of Brooklyn Heights and Park Slope, for example, thick with brownstones and pre-war apartment houses, are urban treasures worth preserving.

But northern Brooklyn is not brownstone Brooklyn.

We’ve seen the same thing in DC (and seen the impacts of zoning). And we’ve also seen anecdotes of what adding new supply can do to downmarket properties, thanks to the process of filtering.

Each of these strategies at least hold the promise of keeping the market rate housing prices within reach for the middle class. Obviously, the dynamics of these markets are quite complex, and the nature of neighborhood change is not well-understood (not in a way we can forecast, anyway) and the housing market for a given metro area is larger than any one jurisdiction, but the macro signs are quite clear. Given the constraints to supply in the Zoned Zone, removing these regulatory constraints on the market’s ability to add supply seems like an obvious prerequisite to a change in policy.

To Charles Marohn’s concerns about density, and those that fear for San Francisco’s soul: will this new development ensure a quality place? No, probably not. But allowing this kind of growth is a necessary-but-not-sufficient condition.