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Is PHIMBY Realistic?

Government-subsidized housing is a useful complement to market-rate housing, but an affordability strategy that relies solely on low-income housing may be impractical.
Michael Lewyn | @mlewyn | December 19, 2018, 9am PST
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As NIMBY (Not In My Back Yard) activists have become more successful in using zoning codes to block new housing, housing supply in many metro areas has lagged behind demand, causing housing prices to rise. In response, a YIMBY (Yes In My Back Yard) movement has arisen in a few high-cost metros; YIMBYs seek to fight for new housing, taking on NIMBYs and (usually) allying with residential developers. YIMBYs focus heavily on zoning reform; they seek to reduce or eliminate government regulations that restrain housing supply.

But YIMBYism as well is controversial—and not just among NIMBYs. Some progressives agree that more housing is necessary, but emphasize that even reduced citywide rents will be inadequate to house the neediest. The most extreme progressives oppose new market-rate housing, and argue that the primary solution to high rents should be government spending on low-income housing. For example, a recent article in Jacobin magazine suggests that municipalities should build 10 million new units* over the next decade. A new acronym has arisen to describe progressives who emphasize such strategies—PHIMBY, or Public Housing In My Back Yard.

A PHIMBY platform, if implemented, would be an improvement upon the status quo in some ways. Housing supply added by government is still housing supply, and thus would reduce rents for everyone. And because government-subsidized housing is likely to be directly targeted to the needy, such housing will directly benefit low-income renters. By contrast, new market-rate housing eventually benefits the poor by holding down rents, but this process may take years if not decades.

But there are two major political obstacles to PHIMBYism. The first is of course NIMBYism; the same NIMBYs who object to private housing for the middle and upper classes are likely to object even more vociferously to public housing for poor people. Even in poor neighborhoods, low-income housing is controversial. For example, Boyle Heights is a working-class Los Angeles neighborhood famous for anti-gentrification agitationbut even in Boyle Heights, low-income housing has been stalled for years due to NIMBYism. While residents of affluent aresa may see low-income housing as a threat to their way of life, residents of poor areas may believe that they have been a dumping ground for poverty for far too long, and may thus resist new homeless shelters and public housing.

The second major obstacle is cost. Subsidized housing in urban areas often costs about $700,000 per unit. So if the United States added a million such units per year,* the taxpayer bill would run to about $700 billion per year—roughly 15 times the current budget for the Department of Housing and Urban Development, or about 15 percent of all federal spending. In recent years, the federal government has been too ideologically divided to support major new domestic spending programs, thus it is hard to imagine Congress approving such a large project. State support for such an expansion seems even more unlikely, because states are usually constitutionally required to balance their budgets and cannot spend as much on new programs on the federal government.  In theory, government could fund such programs through large-scale tax increases- but this seems unlikely, not just because of public taxophobia but also because the same progressives who favor public spending on subsidized housing also favor public spending on a wide variety of other priorities. 

So even though a PHIMBY program may be substantively desirable, it may be even more politically infeasible than an aggressive program of zoning deregulation.  

*I note that according to Freddie Mac, 1.62 million units per year will be necessary to meet future housing demand. 
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