Regulations Keep Millions of Bedrooms Empty During a Housing Crisis
by Howard Husock, Reason, January 17, 2025.
Excerpts:
The U.S. is facing a housing affordability crisis, and new data from Realtor.comhighlight an often missed contributing factor: millions of empty bedrooms. Census data reveal 31.8 million “excess” bedrooms in American homes—compared to just 4 million in 1970. Overregulation, particularly in zoning and local occupancy laws, is among the culprits.
And:
But even if homeowners would like to make use of those “guest” rooms, they can run afoul of local laws. Research I conducted for the American Enterprise Institute found that in 23 of the 30 largest U.S. cities, there are laws that limit occupants deemed “unrelated,” defining a “family” only as a group whose members are related by blood, marriage, or adoption. In St. Louis, no more than three unrelated persons may live together. In Sugar Land, Texas, the limit is four. Private homeowner associations may be even more strict. In the Chase Oaks Homeowners Association in Plano, Texas, a “household” can comprise no more than two unrelated persons, though there is an exception for live-in employees.
Cutting Off Trade Will Make the U.S. Poorer and China More Totalitarian
by Johan Norberg, Reason, February 2025.
Excerpt:
But as a newly emboldened Trump assembles a Cabinet of national security hawks and economic nationalists, we seem to be heading for much more than that. Several of his choices to staff his administration have agitated for decoupling the American and Chinese economies and imposing harsh technology restrictions. And that would not make the situations that worry people about China better. It would make them much, much worse.
The first casualty of any trade war is the economy. Many Americans have the impression that only Beijing benefits from U.S.-China trade. But a one percentage point increase in imports from China caused a 1.9 percent decline in U.S. consumer prices, saving a representative American household roughly $1,500 a year, according to one estimate by London School of Economics professor Xavier Jaravel and Federal Reserve Board of Governors economist Erick Sager.
The effect was largest in product categories more popular among low-income consumers, such as apparel and consumer electronics. After winning an election largely because of discontent over inflation, Trump seems ready to start his second administration with tariffs that would raise consumer prices.
DRH comment: While I agree with the overall thrust of the article and also agree that opening to imports lowers prices, I think the 1.9% decline has to be wrong. It seems highly innumerate. It means, for example, that we could cut consumer prices by 3.8 percent if there were a two-percentage point increase in imports from China.
I would spell out my reasoning, but I invite the reader to think about it.
Price Controls Won’t Build Homes in L.A.
by Jack Nicastro, Reason, January 17, 2025.
Excerpt:
Wildfires in Greater Los Angeles have claimed at least 25 lives and over 12,000 structures. To help the city rebuild faster, California Gov. Gavin Newsom waivedburdensome California Environmental Quality Act (CEQA) reviews and Coastal Act requirements for properties damaged and destroyed by the fires. Newsom also declared a state of emergency that triggered various provisions of California’s anti-price-gouging law.
Suspending CEQA reviews and Coastal Act requirements will expand housing by reducing the time and cost of construction. Outlawing prices from rising according to market forces will produce the opposite effect.
Section B of the anti-price-gouging law, effective until January 2026, forbids sellers from increasing the price of food, emergency services, and housing by more than 10 percent relative to pre-emergency prices. Section C, also active until January of next year, applies the same restriction to reconstruction services. Sections D, E, and F prohibit similar price increases on hotel and motel rates and rent, while outlawing evictions, until March 8.
Price controls cause shortages. That’s the opposite of pro-recovery policy.
For more on a major recovery from a much more decimated economy, a recovery that was due in substantial part to the ending of price controls, see David R. Henderson, “German Economic Miracle,” in David R. Henderson, ed., The Concise Encyclopedia of Economics.
READER COMMENTS
Dylan
Jan 20 2025 at 7:06pm
On the first piece, I’m glad they mentioned the shrinking household size even as houses have gotten bigger, meaning more square footage per individual. I think that is something that doesn’t get commented on all that often in the talk about the housing crisis.
More specifically to the topic of the article, I’m curious how much those laws that are on the books are actually enforced and followed?* My guess is that the vacant bedrooms are more from changing culture (see above on smaller households and larger homes) than they are about people wanting to rent out a spare room, but not doing it because of a law? And, for the people that are interested in renting a room, Airbnb seems like the way to go, and I’d be surprised if those laws prohibit short term rentals in the same way.
Moving to New York, it is true that those Airbnb laws have mostly killed Airbnb here (although not completely at all, I meet tourists regularly in the city that are staying in an Airbnb), but the rule specifically doesn’t apply to “empty bedrooms” which you’re still free to rent on the platform. You just can’t rent your whole place when you’re not there. I’m very much opposed to these rules targeting Airbnb (that have also made renting a hotel room insanely more expensive here), but I don’t think it is a good example of a policy that is leading to empty bedrooms. Kind of the opposite actually.
* I think back to when I had neighbors with 7 people living in an 1000 sqft apartment with one bedroom, none of whom was related to one another. This certainly wasn’t legal, but if you want to live in NYC badly enough, you’re not going to let some DOB agents stop you.
Richard W. Fulmer
Jan 21 2025 at 2:41pm
The New Zealand city of Auckland discovered that, when they made building homes legal again by loosening zoning restrictions and other regulations, people built new homes. The city’s housing shortage has been eased considerably as a result. No doubt Governor Newsom can explain why making home construction legal in California won’t have the same effect.
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