America Needs a New Housing Bargain. Here’s Why.

In this episode of the Strong Towns Podcast, Chuck explores the flawed nature of North America’s current “housing bargain,” where most neighborhoods are allowed to stay exactly the same as long as some neighborhoods — usually those that are poorer and have less political clout — are forced to radically change. He proposes a new way forward that respects cities as living and evolving systems.

• Click here for a computer-generated transcript.

  Chuck Marohn 0:00

  Hey, everybody this chuck Rome with strong towns, welcome back to the strong towns podcast. For decades, we've been living under an unspoken grand bargain when it comes to housing. It's an arrangement that most of us don't think about explicitly, but it shapes nearly every conversation we have about growth, about change, about affordability in our cities and our towns. The current grand bargain is really simple. It goes like this. No neighborhood needs to change. All neighborhoods can stay in their current form, but in exchange for that one or two neighborhoods, and generally those that are a little more marginal, let's say a little underrepresented, those neighborhoods are going to experience radical transformation. Let me say that again, no neighborhood needs to change. All neighborhoods can can stay as they are. We're not going to make your single family home neighborhood become a neighborhood of duplexes or triplexes. We're not going to impose apartment buildings on you or any other style development. All of your neighborhoods can stay the same, so long as we all agree that that neighborhood over there, that one we don't necessarily think too highly of, the one where the people don't really show up at the council meetings, that neighborhood over there, that one where we've kind of let it go bad, that neighborhood is going to be radically transformed. In fact, that neighborhood will be unrecognizable within just a few years. What this means in practice is that most of the neighborhoods in our cities are locked in regulatory Amber, the people that are fiercely resistant to any change at all, while a select few in a select few places that we all kind of you know begrudgingly agree on those are those neighborhoods are subjected to sudden, large scale redevelopment, redevelopment that reshapes the entire character of that neighborhood overnight. This is an all or nothing approach, right? And let me just say this approach works for almost no one. This is an arrangement that wasn't imposed on us. It wasn't something we bought into. It kind of emerged. It's kind of an expedient trade off that emerged out of the post war development pattern. When we look at the post war development pattern, we see this shift from what was pre Great Depression, this incremental development pattern that we talk about here at strong towns, neighborhoods, growing incrementally up, incrementally out, maturing in place, thickening up over time, to a development approach granted based on creating lots and lots of growth, turning our cities into machines of growth, allowing us to stay, in a sense, out of the Great Depression, or at least that was the goal. Let's get let's not slide back into another Great Depression. Let's grow, grow, grow, grow. Let's create a system where cities become the machines of growth that development pattern after World War Two was designed on building neighborhoods all at once, building them to a finished state, and then in cookie cutter like fashion, moving on to the next one, into the next one, the next one. Today, we are often offended by the esthetics of the suburbs. Some people are some people embrace it. Some people think it's great. Some people are offended by the esthetics of the suburbs. They'll say, Well, it's just cookie cutter development, not recognizing that cookie cutter is a feature, not a flaw. The idea was, how do we create a system, a regulatory system, a financial system, a cultural system, intertwined with each other that would grow, grow, grow, grow. The marketing brochure of this system is that all neighborhoods are built to a finished state, and thereafter they do not change world without end, right? This is doesn't happen, this bargain that no neighborhood would change, right, except for the one that's gotten really, really bad that we're ready to do away with, that might have seemed like an expedient. Trade off. When we look at static neighborhoods, we recognize that they are, in a sense, dead places, right? Every new development that goes in is brand new. It looks good. Everything is right. The streets look good and the sidewalks look good, and the siding looks good, and the yards look nice because it's all built brand new to a finished state. But like all things living and non living, over time, they start to experience entropy, right? They start to experience this falling apart. You build a subdivision of four homes, or 40 homes, or 400 homes, all at once, 25 years later, all of their roofs will need to be replaced at the same time, all of the siding will go bad at the same time, all the sidewalks will fall apart at the same time. So it's not that the neighborhoods don't change. It's not like they're static. They are, in a sense, declining without the ability to adapt to that, without the ability to change and evolve. The cost keeps increasing. The taxes do not keep up with those costs. That lack of an incremental adaptation means that these neighborhoods are not only becoming increasingly unproductive financially, they're more expensive to maintain, and they are growing day by day by day, more and more fragile. So among this sea of decline, what we tend to do in order to keep that illusion of the marketing brochure right, your neighborhood doesn't have to change. Your neighborhood of single family homes never has to be anything else. Your neighborhood of whatever, it doesn't have to change. In order to keep that, what we do is we look around and we pick out a neighborhood for transformation. We choose that neighborhood largely because we go through and we create rationales and reasons, right? Oh, it's within walking distance of a transit stop that we built, or, Oh, it's along the highway, or those homes are already in decline. Or, you know, go on and on and on, what we generally see is that these are neighborhoods that are largely disenfranchised. They're places that have been left behind. They are the most declined of the declining neighborhoods. When chosen, these neighborhoods undergo this kind of shock therapy, right? All of a sudden, now the costs there skyrocket. There's displacement widespread. There's a sense of loss for the residents that are there, right? It's funny, because I've visited so many of these neighborhoods, and I've, I've heard the stories of so many people there, and it's remarkable to me, because the reaction is, we would rather have decline than this radical transformation in kind of Human Ecology terms, we would rather starve to death than be forced to eat, you know, a banquet 10 times more than what we can consume. And neither of these are good options, right? But this is the option that we're often presented with. The neighborhoods that are chosen for this radical transformation receive this cycle of disinvestment, right? But everybody knows that they are now prey for the predator, right, the financial predator that has marked their neighborhood. And knowing that you get this kind of effect, that starts to settle in. Why would I paint my house? It's just going to be a scrape off anyway. Why would I mow my yard? Why would I plant flowers? Why would I do anything to take care of my place? Any amount of money I put in is not going to be recouped the value of my property now is to be aggregated with other properties so that we can get a big five over one complex here, or a big apartment building here, or some like radical transformation. And so these neighborhoods become, in a sense, the playgrounds for land speculators and slum lords, if the future value of the home is as a scrape off, Why care about that home at all? This grand bargain that we've evolved into, or has emerged out of the dysfunction of the suburban experiment, this grand bargain

  Chuck Marohn 9:42

  has in it kind of the seeds of just like deep cultural dysfunction, we tend to have these fights now over growth, not necessarily about whether it should happen or not, but where it. Should happen. And the subtext of that conversation is, of course, anywhere but near me, we've developed the term NIMBY, the not in my backyard, to describe people who are, you know, against change. And the avatar that many have is, you know, the NIMBY as, like the old, stodgy person, maybe a bit racist, maybe a bit hateful, who just, you know, get off my yard. I don't want anything to change. I want my neighborhood to stay the same. And we, we vilify these people, I think, in a way that actually sells that human part of it very short, when neighborhood change looks like radical transformation. We, in a sense, breed our own NIMBYs, because very few people want their neighborhood to be radically transformed. Think of the place that you grew up in. Think of the place you know, hopefully you have fond memories of playing with friends and being in a park and, you know, doing, doing delightful things with other people. I hope that. I hope those are your memories, if not, imagine people who do have those memories of a place, being with their parents, being with their grandparents. Maybe it's raising kids, whatever it is in that place, those those memories are tied up in that place, the the kind of character and culture that it has, that character and culture needs to change, yes, but just as in, your human body doesn't go from, You know, the infant phase to the adult phase. Overnight. We go through adolescence, we go through pre teen years, we go through teenage years. We go through, you know, the late teens into early adulthood. These are all transformations that take place at kind of the scale of our ability to grasp them. The idea that you would go home to your neighborhood after being away from five years or 10 years or or longer, and it would be completely unrecognizable. There's a natural human reaction to that, right, this shocking development pattern, this, this, this idea that all of these neighborhoods would stay locked in place, but this one over here, that's where all the growth is going to go, whether that neighborhood is out on the distant edge in the corn field or whether it is the poorest neighborhood near the urban center, these are transformations that most humans are just not going to welcome, whether we shame them into wanting them or not. The fact that these are often done on the backs of the poor, the backs of those with like the least amount of political clout, and done under the guise of like this will be good for you, is also one of those things that when you step back and think about it, step back and look at it, when you actually experience the way people live through this is also deeply disturbing at strong towns we have long called for a new grand bargain, and I want to renew that call today on this podcast, a new Grand Bargain has to acknowledge the reality that cities are living, breathing systems, systems that must evolve and adapt over time. And so this new grand bargain is equally as simple as the old grand bargain, but it's far more viable. Here it is. Every neighborhood needs to experience a bit of change. They all need to evolve and mature, but no neighborhood should experience radical change. At its core, this is a new paradigm that recognizes that change is inevitable, that is healthy, that we can accommodate others, accommodate growth, accommodate new housing, accommodate things that make our lives better. We can do that everywhere, and we can do it incrementally. In a city where every neighborhood is not just allowed, but actually expected to change over time, the pressure to radically transform any one area starts to dissipate. We don't need those massive transformations in a handful of areas if we're allowed to add backyard cottages and duplexes and have other housing types emerge gradually throughout our neighborhoods, incremental change is the foundation of a strong and locally responsive housing market we lament today. Eight that housing prices are insane, and they are insane every place that I go to and I have traveled, I have been in every state in the United States. I've given a talk, a strong towns talk, I have been to every single one. I've traveled all over this country. And I have to tell you, for years, for a decade, people have said, everywhere I go, housing prices are insane. Housing prices are out of control. Housing prices are not keeping up. Everybody has their own local story about why things are so different where they are, why things are so unique where they are. I'm in Florida and they're saying, well, there's all these people moving to Florida, and I'm in California, and everyone's saying, Well, everybody's moving to California. Everybody's moving in California. And then I go up to Oregon, and they say, well, the Californians are moving here. And then you go to Montana, and they say, well, everybody from the West Coast is moving here. And and then you go to Detroit, and they'll say, well, all these outside speculators are buying it is. Everybody has a story. Everybody has also the same outcome. This is not a local story. This is a national story. It's a national story driven by the housing economics of our financial system and the way we have chosen to make it easier for more people to consistently, decade after decade after decade, spend more money on housing than they otherwise would. Allowing incremental change is a foundation of a strong and locally responsive housing market. And by locally responsive, I mean a market that actually reflects local supply and demand dynamics. If people can't afford to pay that for a house, the market needs to respond dynamically at a local level to make that happen. This kind of market response allows for a natural evolution of a neighborhood and continuous improvement in maturing, instead of waiting for outside developers to swoop in with large scale projects that displace residents and overwhelm local infrastructure that needs all kinds of tax subsidies and and different kind of incentives to make it happen. An incremental approach allows neighborhoods to grow in ways that are more responsive to local needs, to local resources, to local capacities. I'm not reflexively nostalgic. I don't want us to go back to before the Great Depression. I wrote in escaping the housing trap that prior to the Great Depression, housing was abundant, it was very affordable and it was of really low quality. I don't want us to go back to that, but there is no reason why we can't have housing that is also abundant, affordable for people in the community, and also of decent quality of respectable quality, of quality that is safe and respectful of the humans who are living within it. I say that I'm not rooted in nostalgia because I don't want to go back, but it's hard for me not to point out that this incremental way of maturing is how our cities used to grow, before the suburban experiment, before this post war pattern of development based around the idea that we could turn cities into engines of growth, machines of growth machines, where we just added federal highway spending and federal infrastructure spending and state tax subsidies and a secondary housing market and all kinds of financial liquidity. And out of that, we would get not only new subdivisions, but new strip malls and new big box stores and new drive through restaurants and bam, bam, bam, bam. GDP grows up next quarter, and everything is great. This is the pattern development that emerged after World War Two. What I am talking about an incremental approach is yes, the way things used to be. This is the historic pattern of development

  Chuck Marohn 19:28

  over time. In this pattern, cities would mature as land values increased, those smaller homes would gradually expand. They'd be converted to, you know, either multiple units or one larger unit. Sometimes when they would age out, because the land value was continuing to grow to climb, people would say, I'm gonna buy that house. I'm gonna convert it into something else. That kind of growth wasn't disruptive. It was more like a natural. Evolution, and it provided lots and lots of housing at very different price points. This kind of organic development has all but disappeared. Today's regulatory environment not only shuns it, it doesn't even in most cases, ponder it. Right the way we finance homes doesn't ponder that style of development. It doesn't consider it. What we have set up is a regulatory environment, a financial environment that is kind of supported by a cultural environment that has embraced the idea that we build all at once and we build to a finished state if you want your neighborhood to mature and evolve, you generally have to go through costly, time consuming types of approvals. You have to find a bank, find a lending institution that will go along with this, that will play along without some kind of crazy financing scheme. And then you've got to find a way to break through the cultural kind of aversion to change that we have developed, the new grand bargain that we have put forth. Under that grand bargain, all neighborhoods have to be allowed to evolve to that next level of intensity, that next increment of intensity for a neighborhood of single family homes. This might mean turning that home into a duplex. It might mean building a backyard cottage. It might mean both for more mature areas, areas that are more mature than that. It might mean small apartment buildings or other investments that thicken up the neighborhood. The point is that no place in our framework, no place in our community, should be off limits to that next increment of maturing. I think, more crucially, the grand bargain that we propose ensures that no neighborhood is going to be subject to radical, large scale transformation in the current paradigm, we see distressed neighborhoods become the target of big redevelopment projects. They erase the existing community, they replace it with something entirely different, the top down approach that we use now to develop and redevelop neighborhoods, not only breeds resentment, it multiplies that NIMBY sentiment, but it also fuels gentrification. And let me be very clear, I am not someone who runs around going, Oh, gentrification, gentrification. You won't hear that out of me. It doesn't come in our book. It doesn't come in my writings. I don't run around going, Ah, because I recognize that neighborhoods that do not receive investment are neighborhoods that are going to be disinvested in. You cannot shun investment without creating the platform for disinvestment. Every neighborhood needs investment. What creates gentrification is not investment. It is radical change that leads to dislocation. There's no need for us to experience that. We can experience investment in neighborhoods without the radical change and without the dislocation, but we have to do it under a new grand bargain, one where every neighborhood needs to be allowed to change and transform the system we've set up today. The motivating goal of all homeowners is to not be the neighborhood chosen for redevelopment. I don't want to be that neighborhood. I will show up at the meetings. I will fight and resist all change, because when any change looks like a radical transformation, I do not want that. I do not want to be part of that. And so everybody in the community will show up, and I'm personifying the person here now who does this. But I want you to see this is not an irrational response to the current grand bargain. We literally create our own class of NIMBYs, the new grand bargain, the strong towns. Grand Bargain offers a more relatable alternative. I've used this a number of times in my talk as a way for people to get their minds wrapped around this, I think this is a good measuring stick. Someone should be able to leave their neighborhood, the place they know, the place they've lived in, the place they love and care about. They should be able to leave that, go away, go to college, travel the world, take a job somewhere else. Do do something, go away, come back a decade later and have that place still be recognizable. Now, ideally, it will have changed, right? It will feel like a more mature version of yourself. Imagine knowing someone, not seeing them for a decade, and then seeing them a decade later. You. You still recognize them. They are still the same person. They haven't utterly transformed. You don't take someone who's five foot two and then you see them a decade later, they're six foot five and 400 pounds, right? That's a that's an utter transformation. You're seeing someone the five foot two today. You see them a decade later, they're five foot two. I'm saying five foot two because that's this. That's a tall my wife is. You get this? Like she's the same person, right? Like I see her today. I'm gonna see her 10 years from now, I can see the same person there, even though it's a more mature version of that person. This is the experience that people should have in their neighborhoods. This kind of gradual adaptation is not just better for people who live in those places, it's also the key to making our cities more productive and more financially resilient. I understand, and let me be clear, we understand at Stark towns that this shift is not easy, right? It requires regulatory change, which is always, always, always going to be hard we get it, policy makers, city council members, city staff. We need to embrace the planning commissions a flexible, responsive approach to land use regulation, one that facilitates these incremental changes rather than erecting barriers to them. A lot of these code changes are really, really simple. I mean, allowing duplex conversions, allowing backyard cottages getting rid of on these existing lots and these existing neighborhoods, your minimum lot size requirements, allowing smaller homes, getting rid of your parking requirements. These things are really, really simple to do from a technical standpoint, the cultural conversation around them is not nearly as simple. And I get that, I get that, I get that it's hard, but if we're going to get to a better place, we're going to get to a better grand bargain. Those are the things that we need to do to get there. We need to have a conversation in our community. We need to understand at a fundamental level that neighborhoods need to evolve, and this isn't something we should fear, but something we should embrace, because the opposite of maturing is not stasis. It's not stagnation, it's actually decline. When people say, my taxes are going up, my services are going down, my neighborhood is falling apart, I don't like the way this is going. That is not because the neighborhood is changing. That's because the neighborhood is not allowed to change. The way that we respond to stress, is by embracing change. When our neighborhoods are subject to stress, they need to be able to adapt and evolve. When we say no adaptation, no evolution, no change, what we do is we condemn our neighborhoods to decline. Now it might take a decade or two or three or four for that decline to set in, but the decline will set in. Go visit any neighborhood from the that was built in the 1960s and 70s. Go visit any neighborhood that was built in the 1980s and 90s. You You can see the trend, right? You can see the trend. Go to any suburb. You can watch this happen. We need to have this conversation in our cities, because we need to enunciate the current grand bargain. We don't talk about it. It has evolved. It's not written down anywhere. It's not something that we codified. It's something that has arisen out of, in a sense, cultural practices. We need to give it a name. It's a grand bargain, and it's a dysfunctional grand bargain, the idea that my neighborhood can not change, and in order for that to happen, other neighborhoods need to radically change. That Grand Bargain needs to be spoken. It needs to be given a life, we need to actually acknowledge it, and when we acknowledge it, we can acknowledge its deep, deep dysfunction,

  Chuck Marohn 29:29

  and we can embrace a new grand bargain, the grand bargain that says every neighborhood needs to be able to mature, every neighborhood needs to be able to adapt to Stress and change. Every neighborhood needs to thicken up, but in exchange, no neighborhood will be overwhelmed, no neighborhood will be radically transformed, no neighborhood will become unrecognizable. I look around at our strong towns, local conversations, the 200 and if. 5060, odd groups around North America, and suddenly, now around the world, which is really crazy, but very cool, we're, I think, about to have our first, like, level one local conversation. So a group that's gotten beyond the startup phase and is actually like meeting and doing stuff outside of the United States, which is really, really cool. When I look around at those groups, I see them leading this bottom up conversation. If you would like to be part of that, go to strongtowns.org/local, and find a local conversation near you. If there isn't one near you, start one. There's a little button on that web page to start your own when you do that, you're going to get introduced to our team, who will walk you through the steps, walk you through the process. You're going to meet lots of other people who are at the same phase of this as you. Local conversations. We call them that instead of local chapters, or strong nouns chapter, we call them local conversations, because they are first and foremost about changing the conversation and their community. Get us out of this, this dysfunctional dialog around a bad grand bargain and into one that actually will make our cities better. If you want to know more, if you're interested in delving deeper into this. Go get a copy of escaping the housing trap. It's came out last April. It became a best seller. So it is our first, it's, it's the first best selling book that I've written, very, very cool. Go out and get a copy of that. Share it with your council members. Share it with your planning staff. Share it with your city engineer and your city manager, you know, tell them like, this is the direction that we need to go in. I've been on book tour, and the book tour kind of officially wound down at the end of last year, but I've still been out on the road. I was in Wichita a couple weeks ago. I will be, gosh, there's a long list of places I'm heading I'm going out talking housing all over. This is the topic of the day. This is the thing everyone is struggling with. If you want me to come to your place, strong towns, org slash events, you can see all the places that I'm going to be. Other people on the strong hands team are going to be and, you know, sign up. I'll come to your place. That would be awesome. We can help shift that conversation together, this grand bargain that we've had, this kind of unspoken grand bargain, it's broken. It needs to go away, if we can have a new commitment to incremental growth, to thoughtful change, to neighborhoods that mature over time. Not only can we make our cities dynamic and enduring, places that grow stronger over time, we can make them just pleasant, delightful, prosperous places for us to live. That's what a strong town's vision is all about. Thanks everybody for listening. Take care and keep doing what you can to build a strong town. Thanks everybody.

ADDITIONAL SHOW NOTES

• This Thursday, February 27, Strong Towns will release a toolkit to help city officials welcome incremental housing development. Learn more here.

• Become a member to join the toolkit launch livestream with experts Alli Thurmond Quinlan (Incremental Development Alliance) and Eric Kronberg (Kronberg Urbanists + Architects).

• Chuck Marohn (Substack).

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