Very bad news on housing
By Scott Sumner
This is depressing:
“Have you considered the racket and the lights and the crowds and the traffic, and everything that’s going to happen to those of us who live here?”
It is a familiar sight in America: the public meeting, the angry residents, the housing developer trying to explain himself over the boos.
“Take the money you’ve got and get out of here,” one person shouts. A chant begins: “Oppose! Oppose! Oppose!”
Except this is not San Francisco or L.A. or Boston. It is Boise, Idaho.
And it is a preview of the next chapter in the housing crisis. Rising rents, displacement and, yes, NIMBYism are spreading from America’s biggest cities to those in its middle tier. Last year, according to an Apartment List survey, the fastest-rising rents in the country were in Orlando, Florida; Reno, Nevada; and Sacramento, California. Another survey, by RentCafe, found exactly one city with a population greater than 500,000 â€• Las Vegas â€• in the top 25.
Although Boise is the fastest growing city in America (growing 3% per year), it is issuing fewer than half as many building permits as in 2007. The problem is NIMBYism:
This is where Boise starts to look depressingly familiar. In the last few years, as the city’s growth has become more visible, NIMBY groups have taken over the political conversation. Of the 21 speakers at a town hall meeting last month, only two said they welcomed more growth. Signs reading “OVERCROWDING IS NOT SUSTAINABLE” are showing up in front yards. Some local residents, taking a page from the San Francisco playbook, are trying to get their neighborhood classified as a “conservation district” to block new buildings from going in.
These building constraints are contributing to a rapid rise in inequality:
The Treasure Valley is growing quickly in myriad ways, and with that has come a massive leap in the gap between the Boise metropolitan area’s richest and poorest households, according to a Bloomberg analysis of Census Bureau data.
The business news site analyzed average income among the top and bottom 20 percent of households. It found that the wealth gap in the Boise area widened by $44,400 from 2011 to 2016. That is so much that it rocketed Boise from No. 76 on Bloomberg’s ranking of disparities in the top 100 metro areas to No. 7.
Idaho is one of America’s least densely populated states. If building restrictions are turning even Boise into a “closed access city”, what hope is there for the rest of America?
On a related note, file this under “Make Argentina Great Again”:
The capital cost of a new petrochemical plant is at least 50% higher in America than in China today, estimates IHS Markit. Because of its many fallow years, the American chemicals industry has lost a generation of talented field managers, welders and other workers. Labour shortages are a big headache and expense.
The darkest cloud, though, is politics. Consider Mr Trump’s tariffs on imports of Chinese steel and aluminum. Dow says that the steel tariffs alone will add $300m to the cost of its new plants in Texas, and threatens to build its next facilities in shale-rich Argentina or in Canada instead. The ACC observes that China imports 11% of all American plastic resins, noting with alarm that 40% of the American products to which China has assigned retaliatory tariffs are chemicals. This tit-for-tat may, in the end, prove mostly bluster. However, it would be rum indeed if Mr Trump’s efforts to support local heavy industry ended up derailing the ongoing revival of America’s once-moribund chemicals sector.