Steps Toward Reform: Get Past The NIMBY Versus YIMBY War
N and Y stand at a distance of 10 letters in the alphabet. They appear to be at war when they each take their place at the beginning of two of residential real estate's more acrimoniously combative acronyms: NIMBY and YIMBY.
The two terms are each just one letter different. Yet they act as if there's no shared interest at all, only a "back yard" to quarrel over at every turn.
Newsflash: NIMBY vs. YIMBY trench wars, despite outcomes that appear to reflect favor to one party or another in the very near term, are typically a lose-lose.
It falls to residential development and construction leaders to set aside their part in that acrimony and find, not common ground, but rather a non-negotiable that if it will be negotiable it would be valued by the other parties. Otherwise, the consequence of continuing the finger-pointing blame game leads here:
According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), just 42.2% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $90,000. This marks the second consecutive record low for housing affordability in more than a decade, trailing the previous mark of 42.8% set in the second quarter.
We know affordability – when it comes to working households' access to homes near where they work – mostly comes down to the ground, its entitlement, and the initial costs and carrying expense of getting title to the dirt.
A friend writes:
Land is the residual value. If you actually can find a way to build cheaper and faster, if you do not have entitlement reform, all that will happen is the value of the land will rise.
Thought experiment. If [a big national builder] cracked the code on off-site building and could save $10 psf and speed up production would they ...
A) sell homes for below what the market will bear?
b) buy the same amount of land as before and have bigger margins? or
C) use the cost advantage to buy more land by out bidding others?
The answer: C.
There are a lot of great things we can and should do in the industry on costs, cycle times, etc. None of it will benefit society unless paired with entitlement reform."
The issue is this, we've seen now for decades how the tug of war between NIMBY and YIMBY works, and guess what, it doesn't. It's a modern social experiment in Einstein's definition of insanity.
Housing affordability, says NAHB Assistant VP for Survey Research Rose Quint, has fallen ...
yet again – to its lowest point since the Great Recession in the third quarter of 2022."
Solutions to the reality that housing affordability for more working America households is trapped will not come from YIMBYs overcoming NIMBYs.
That's the "good versus evil" stuff of comic books and their characters.
The achievable innovation challenge of the decade ahead would be the equivalent of opponents believing in – and being willing to – locking themselves in a room together and staying there until together they hatch solutions.
Starting with all the non-negotiables on the table can be daunting. You know what they say about the imperative for compromise among fiercely opposing politicos...
It's the hardest way to govern, except all the others."
Compromise is at the heart of real estate deals and value creation even as it's in the soul of the nation's social discourse.
A common mistake is to assume that compromise requires finding the common ground on which all can agree. That undermines more realistic efforts to seek classic compromises, in which each party gains by sacrificing something valuable to the other, and together they serve the common good by improving upon the status quo. - Daedalus
Importantly, housing affordability's standard metric from the NAHB is in its nature, not simply a statistical relationship between incomes and house sale prices. By name and nature, it measures Opportunity itself.
That's where housing's leaders – by ending the comic book perpetual impasses between NIMBY and YIMBY – and finding real ways that the "other" receives real and residual value can re-write the mid- and longer-term story of the future of housing. It's already one of their superpowers.