Daniel Herriges: The Strong Towns Approach to the Housing Crisis

Austin Tunnell

We have the highest quality of housing that any society has ever enjoyed. And yet a lot of people struggle to pay for housing. These state and federal levels of government have kind of one tool. Let's subsidize home mortgages, let's subsidize home buyers, let's give you more money to go into more debt to buy the same house. It has to be something else now. We argue in the book that that's something else is...

Austin Tunnell

Why isn't housing affordable? Today's guest is Daniel Herregus, co-author of The Housing Trap, which he wrote alongside Strong Town's Chuck Marrone. Daniel spent the first part of his career at Strong Towns and is now the policy director of parking reform. Housing and affordability is one of the most important issues of our time, and it's a surprisingly complex issue. It can't just be blamed on capitalism or zoning. Two common refrains I hear. There's much more to it. And if we want to work towards solving the problem, we have to understand how and why we are currently in a trap. I highly recommend the book. It goes into much more depth than what we discussed today, offers insights I haven't heard before, and it does so in plain English. I hope this conversation piques your curiosity. My name is Austin Tanel and this is the Building Culture Podcast. And now, Daniel Herrigas. I want to take a moment to thank the sponsors of our podcast, Sierra Pacific Windows. They are a national window and door manufacturer, some really high quality windows and doors. We use them regularly in our building culture projects. So if you've got a renovation or new construction, I highly recommend you talk to your local distributor and check them out. Also, one source windows and doors. It doesn't just matter. the manufacturer, it matters who you're buying your windows from. And if you're in the state of Oklahoma, OneSource Windows and Doors, they've got a showroom in Oklahoma City and in Tulsa, and they service the entire state. We work with them regularly to purchase our Sierra Pacific windows. So if you're in the state of Oklahoma, check them out. Sierra Pacific windows and OneSource windows and doors if you're in the state of Oklahoma. Daniel, it's really good to have you on the podcast today. I'm excited to talk to you. Thank you so much, Austin. I'm really happy to be here. I'm about halfway through escaping the housing trap. And while I'm pretty philosophically aligned with Strong Towns and the message of Strong Towns and know a lot of these little pieces out there, really, you and Chuck have put this together in a very kind of like concise, but understandable way about what's going on with housing today in a way that I have not seen before. And I genuinely think it's one of the most important books of kind of like our generation.

Austin Tunnell

At least for the people that I hang out with. I'm really flattered to hear you say that and I'm glad that you're enjoying it. You know, I. We wanted to write a book on housing because we're constantly getting asked at Strong Towns, what's your answer to the housing crisis? This is the number one issue facing my community. What do you have to offer us? But we wanted to write a book that wasn't the same book that you've read from 10 other people. And you can find a lot of. opinions about housing, a lot of policy prescriptions about housing, and we wanted to do something sort of in the ethos of Strong Towns that was a little bit more holistic, systemic, that situated the housing crisis in maybe more of a big picture context than you might get from other writers. So to hear you kind of reflect that we did that, think is really, it's gratifying to me. Yeah, I literally would. I just want to drop. copy off at every city councilor's office here, at every utility department here, at every planning commission. But before we kind of jump in, I want to set the stage a little bit about the problem, because we're talking about like affordability, the housing trap, these problems with housing. Can you provide some historical insight on what do we mean by the problem with housing and the affordability crisis today? Where are we at today in 2024 compared to 100 years ago or after World War II or something in terms of housing and its affordableness. Yeah, we're in kind of a paradoxical place. We are extraordinarily wealthy compared to our forebears. In a lot of senses, we have the highest quality of housing that we've ever enjoyed or probably that any society on earth has ever enjoyed. And yet a lot of people struggle to pay for housing. A lot of people make really, really painful trade-offs in their life in order to obtain housing.

Austin Tunnell

really widespread sense of precarity. I, you know, we talk about affordability in kind of quantifiable ways of what people are paying for housing. And the quantifiable piece is really dramatic. The Case-Schiller index of home prices is basically at an all time high. And I believe the summer of 2023, it hit an all time high. And that's, you know, adjusted over time. That's kind of relative to overall inflation relative to ability to pay. rents are at all time highs in a lot of cities or very near those. indebtedness in order to pay for housing has grown and grown and grown over the decades. we're looking at a time when a lot of people are really, really struggling to afford housing. And it's not just the simple metric of affordability in the sense of who literally can't find a place where they can afford to pay for rent or who literally financially is strained by this. Beyond that, I think you're seeing people whose lives are being made more precarious or less stable or who are really constrained in their ability to make important life decisions by housing issues. You you can't move to a place where there's job opportunities for you. You can't live near family or near, you know, a community support system. There are people being displaced from neighborhoods. where they have social ties and a community support system. There are all these dimensions, which you tried to kind of lay out in the intro to the book, that go beyond just a numerical calculation of who can afford their housing and what percent of your income are you paying. And so we're trying to reckon, I think, with this sort of paradoxical observation that we're incredibly wealthy as a country, as a society. We have a lot of opulent homes. We have square footage in our homes that's really kind of unprecedented in historical context. Why is it that everyone views housing as a crisis? And kind of rightly so. Where is this sense of precarity coming from? Because it's there and it's something that our growing wealth and kind of ability to theoretically pay for homes hasn't erased. Yeah, I think you make a good point that it's not just a numerical issue. It's broader than that. But to put like

Austin Tunnell

some numerical numbers on it, because I think it's still helpful to see that picture. And I can't remember the exact numbers, but I know in 2024, you know, the median home price is over like 425,000 or something like that. And do you recall, could you give us some statistics on like, what was it in the 1990s? I just know the chart, you know, it of goes sideways, sideways, and you kind of go leading up to the 2008 crisis, crash down. and then going way up even above that. And like you're saying, this is adjusted for inflation. Do you actually have some new miracles? Like what was housing in 2000 or 1990s versus today? Yeah, the off the top of my head, I couldn't tell you the numericals, especially the adjusted numbers like the Case Schiller index, because it's kind of this, you know, there's a methodology behind it. But what the number means is a little bit arcane. But yeah, just historically unprecedented. The numbers that are really striking to me that I've come across have to do with sort of the mismatch between ability to pay and the housing stock that's out there. So one of the big ones is that nationwide, far fewer than 50 % of households can afford the median priced home. And so you would kind of expect that number to hover around 50. Like that's the idea of a median, right? And no, it's like 20. And when you look at the really expensive metro areas, the numbers we said in our book in the Seattle metro area, it's about 7%. And in Los Angeles, it's about 2%. So 2 % of households in LA who might be looking for a home can actually afford the median priced home on the market in LA. That's shocking. Gosh. Okay. Well, before we dive into some of the details about the why I want to take kind of a high level view to kind of, because everyone can see some of the, all these different aspects that go into, you know, affordability and the housing crisis. Can you give a high level overview, that you guys even go over in the book of why isn't housing affordable? I'll just point out, you know, a lot of times I hear, you know, out there, people I talk to social media, whatever you, I hear two things blamed a lot. I hear,

Austin Tunnell

capitalism and greedy developers a lot, actually. That's a growing accusation. And it's not that there's not greed, because I absolutely think there's greed and I wish people were less greedy. I mean, just, well, we'll get into it later. So I hear that. And then I also hear, you know, increasingly people talking about zoning, even though that's still coming. You know, it's not I wouldn't I'm not sure that's mainstream yet. But those are the kind of the two main things that I hear people talk about. Yeah. I think that that question calls for a lot of kind of yes and there isn't one culprit and anyone who's telling you there's one culprit is either kind of operating in a tunnel vision world or or they're trying to sell you something, you know, whether a policy or a product or you name it. So I think there's truth to a lot of the different narratives that are out there. You know, there's a an ancient Indian parable that I reference when I give housing talks and I reference it in the book. called the blind men and the elephant. If you're familiar with this, it's this story about a group of blind men that are gathered around an elephant and they're scrutinizing it, trying to figure out what is this thing that we've encountered. And one of the men is hugging one of the legs and says, well, it's a type of tree, obviously. Are you guys idiots? And another one of the men is handling the trunk and they're all blind. And the one with the trunk is saying, no, an elephant is a kind of snake. What do you mean it's a tree? and they're all operating from incomplete information. And it's only by combining their incomplete information that you can arrive at sort of a picture of what's going on. So that was maybe a more philosophical and kind of not to the point answer than you're looking for. I think the reality is that we undertook a massive experiment in the early 20th century, really taking off in the decades after World War II. At Strong Towns, we call that the suburban experiment, and it's been a theme of our work since the beginning. And in the book, we talk about the suburban experiment. And when it comes to housing, that really had three dimensions. It had a financial dimension in which we completely overhauled the way in which people pay for and finance housing, largely in response to the Great Depression. And through the systems that were developed to rescue the economy in the Great Depression, to rescue the housing market, we've essentially established a status quo now in which housing is not merely

Austin Tunnell

a source of shelter. Housing is a financial product. It's a financial product in a narrow sense in that a lot of households expect their home to appreciate in value. They expect it to be a long term investment, you know, to maybe finance their retirement. But it's also a financial product in a much more pernicious way, which is that it is the foundation of the financial system in the U.S. And this is something that we really trace the evolution of over the course of decades. We learned this really painfully in 2008, of course, that huge parts of the American economy are essentially underwritten by the home mortgage market. And the home mortgage market is, in important ways, a very artificial creation. It's a creation of the federal government. It takes a form that would not exist without federal intervention and federal support. But we're in this trap now where housing prices need to go down for people to be able to obtain shelter where they want to live. housing prices can't go down in any appreciable, sustained way, because if they do, it's gonna take a whole lot of other things with it. And those things that it takes with it are largely gonna negate any benefit to affordability. One way you could crash home prices and rents is by ushering in a second Great Depression. That is not going to usher in widespread housing affordability because of everything else that's going down with it. So one of the three legs of the... the experiment that the book is really structured around is this financial experiment where we have underwritten the ability of households, just regular middle class households, to take on debt in order to afford housing. And every time that system starts to lose a little bit of steam, we have used policy levers to kind of move it up to a higher gear, infuse a little bit more gas. basically increased the ability of Americans to take on more debt to pay for the same house. And done that in the service of underwriting all this other stuff from insurance to pension funds to university endowments, know, huge parts of the economy are basically underwritten by the housing, the home mortgage industry. So there's that. And that some people might simplify that to greedy developers and capitalism. And there's, there's a version of that narrative that you could tell that I don't think is wrong.

Austin Tunnell

But understanding really all the interlocking parts of the financial system around housing, I think is necessary to really grasp the consequences of what would it mean to talk about unwinding this and why you can't do it in certain ways that might be superficially appealing. I think the second leg of that revolution is a legal and regulatory one. And that is what you talked about. That's the rise of zoning. It's certain changes in building codes. It's changes to how we plan communities, how we approve new development, what sort of steps we put through, we put developers through in that process. And the overall trend really powerfully, especially across the mid 20th century was toward, it was away from a historical norm of neighborhoods that were going to change and evolve over time in a very organic, decentralized way, where there was very little top-down control of what you could build where. toward a really extreme situation where in the vast majority of places in North America, your zoning code dictates exactly what you can build and there is one thing you can build. And that neighborhood, there is no legal mechanism for that neighborhood to evolve or change or intensify over time. And even where there is, we make it sort of a convoluted process with a lot of veto points. And we can talk more about that. I don't want to kind of drone out a great length here, but that's the zoning answer. And that is a true answer. It is functionally illegal to produce new housing in most of the places where we might want to or where someone might want to or where there might be a demand for it. I think the third answer is a cultural piece. And there's a chicken and the egg here thing. think the financial, you can trace the evolution of the financial system around housing and the regulatory system around housing. Was that in response to cultural change in how we think about our communities or did the cultural change kind of follow New patterns of what was normal in terms of how we live and how we expect cities to function and the answer is a bit of both but in any case, I think that there's been a profound change in How we expect cities to function and like I would describe that change to oversimplify it as we have gone from predominantly citizens of our neighborhoods and in some form

Austin Tunnell

co-creators of our neighborhoods, where it's sort of understood that the people building the place you live are the people who live in the place you live, to overwhelmingly consumers of our neighborhoods, where we think of ourselves as buying a product, or buying a home is almost like buying into a club, and you expect that you know sort of what the terms of membership are, and that those terms aren't gonna change over time. So you see the rise of various forms of NIMBYism, sort of not in my backyard sentiment. driven, I think, in a really profound way by this shift in the culture where we now, we don't think of neighborhood change as a process that we are part of. We think of developers as entities that are not part of our community. Somebody's coming in from outside and trying to change our community, and we may chief at that if we're not so sure that changes are something we're going to like. And so that all exists in tandem with these actual policy changes that we can trace the history of. But it's a huge part of the context for why we don't simply unwind those policies in the face of really, really obvious negative effects. I'd like to dive in to, you know, these three legs of the financial, legal and cultural dive in a little bit more depth on each one and starting with the financial one, because, you know, I, like I had said at the beginning, I understood that housing has become a financialized product, but seeing you lay out in the book, like, each piece of legislation by year. it's like 19 blah, blah. And then they did this and then this and then this. Here was a problem. Legislation to fix the problem. New problem comes because of like the legislation. So then new legislation creates new problem, creates new legislation, creates new problem. And then it leads up to the 2008 financial crisis. But that didn't actually, you know, pop the bubble and reset us. It's like I love the point in the book you make is everyone was talking about how do we recover from the 2008 financial crisis from the bubble. And the whole point was that you can't recover if it was a bubble. Why is the goal to actually recover the bubble? I guess. And now we're well above what that is now. And so the thing that was so striking to me was seeing the actual individual pieces of legislation of the creation of Fannie Mae and Freddie Mac and how they start, you know, government mandated double A rating of mortgage-backed securities and stuff.

Austin Tunnell

Are you well versed? Because I know you said Chuck wrote those parts of the books. Are you well versed enough to kind of like walk through from the GI Bill or even the Great Depression, some of those big pieces of legislation, or even like the TARP Act of 2008? There's a lot of kind of arcane history that I didn't know until we were doing the research for this book. And it was really fascinating to to learn. my you know, prior to working on this book, yeah, I think my understanding was, you know, I knew about the GI Bill, I knew about the Federal Housing Administration in the 1930s. And then there's kind of this gap. And then there's 2008 and everything surrounding that crisis. And when you start to fill in the pieces of that, rather than walk through specific pieces of legislation, which kind of exists in a context that's often, you need some surrounding context, like the savings and loan crisis in the 80s and all that stuff. I think rather than walk through really specific pieces of legislation that were enacted in really specific context. What I would say is, and I think we try to capture this in the book, what you see over time, the broad trend is this kind of ratchet effect. And the ratchet effect is, well, we created this system with the FHA, where the government is going to underwrite, is going to essentially ensure the private mortgage industry. Because in the Great Depression, you have massive waves of foreclosures, you have huge amounts of mortgages going bad. You have people losing their homes in huge numbers amid an overall just economic rock bottom. And the federal government says, well, what can we do? This is part of the New Deal whole suite of programs. What can we do to help revive the economy by reviving the home mortgage market? And so the answer from essentially through the creation of the Federal Housing Administration, the federal government basically created the 30 year amortized mortgage with a relatively low down payment compared to what had been the historical norm. And really a manageable monthly payment for a middle class household. And they did that by offering to insure private banks against potential losses on these mortgages. If the mortgages met certain criteria, and we could go more into that if you want to, but we create this system and it works.

Austin Tunnell

It works spectacularly. It works to stabilize the home loan industry and the depression. Post World War II, it works to juice this massive home building boom in newly opened up suburbs. You we're going to build highways out of the cities. We're going to open up all this farmland for suburban tract housing, and we're going to build really, really, really rapidly. Sort of this one time spatial solution to issues of high housing costs, crowding in cities, housing scarcity. We got all the GIs coming back from war. We're going to use the GI bill. We're going to give them really preferential loan terms, in some cases, no down being whatsoever. We're going to get them into new houses and we have builders, you we have the Levittowns of the world. We have builders willing to build these houses at a really, really rapid pace and a massive scale. And the result is that that immediate post-war era was kind of a high watermark for affordability. And those decades were kind of a high watermark for home production in the U.S. And we keep that up for a couple of good decades. And then things start to to flag a little as they do. You you you pick the low hanging fruit, the places that are really obvious fertile ground for development of suburbs. You a lot of them have been built. Now we're looking at farther out from the city. We're looking at a second ring. We're looking at a longer commute if we're going to keep doing the home building on the fringe thing, which we did keep doing. But we we've had like a massive sustained middle class home building boom. things like that naturally taper off. And we hit sort of the end of the first generation of that suburban experiment around the 1970s. And along with some macroeconomic factors at the time, what we start to see is the growth of that home mortgage market is looking a little shakier. And banks start to freak out about this. And so without going into really like a litany of specific pieces of legislation, know, kind of like I didn't. I didn't like it when my history teacher in seventh grade rattled off the names of 20 civil war battles. know, that's kind of how I feel about the detail is important to get right. And it's in the book. But I think what I would what I would emphasize is the trend of let's, you know, give a little more juice to the mortgage market by doing things to make it easier for banks to issue more home loans, make it easier for them to issue loans on more favorable terms, get more and more people into taking on debt to buy a house.

Austin Tunnell

And so we do things like extending the number of types of mortgages that the government will ensure, you know, the criteria for that. We expand the kinds of mortgage products that the government sponsored industry, know, the Fannie Mae and Freddie Mac and those companies that they can purchase. And that's really important because that What that does is, know, banks want to, banks don't want to hold a loan on their balance sheet. Banks want to issue a loan and then be able to sell that loan off to a third party. And then the banks have more capital on hand to make more loans. That's how they make their money. So a really important piece of this is how can we get mortgages off of banks' balance sheets and onto the secondary market where they can be securitized, they can be collateralized, they can be chopped up and rearranged and packaged in all these different ways. And so there's a lot of financial innovation over the years that goes into making that easier to do, making it easier to do with mortgages that are, everybody in the 2000s started to hear about subprime mortgages, you know, can we do this with loans that might be considered a little bit riskier on their own in terms of the borrower's credit history, blah, blah, blah. But we're gonna tell ourselves, if we bundle enough of them together, we're gonna mitigate that risk. because we're assuming that the risk isn't correlated across different geographies or across enough borrowers. It's a lot of different really specific detailed pieces of legislation or specific new financial products developed by Wall Street, but the overall arc is how can we make borrowing to buy a home available to a broader and broader broader swath of Americans, maybe with slightly worse credit, maybe with slightly less income? How can we expand the range of who can borrow and how can we expand how much they can borrow? How can we lower the down payment to the point where by the early 2000s, for a first time home buyer, there are lot of ways to have virtually no down payment versus a 10 % or a 20%, which might have been more the historical norm. I think that's the overall trajectory. If you've been enjoying the Build and Culture podcast and are listening on Apple or Spotify, could you pause for

Austin Tunnell

just a moment and leave a five star review. My goal is to get to a hundred reviews. And if you do take a screenshot and email it to playbook at building culture.com playbook P L A Y B O O K at the building culture.com. And when we hit a hundred, I'll randomly pick five winners and send them a building culture hat that looks just like this. I appreciate it. And back to the show. I think what surprised me about it and what I like about reading the specifics myself is like understanding the actual mechanisms that happen because you always just hear like packaging up mortgages. Well, what the heck does that actually mean? Most people don't know. But the thing that really, I think, stood out to me was I'd always heard of like, yeah, Wall Street's doing this to like make more money. And there absolutely is that aspect, I think. But what I didn't know is just like literally the complicit nature, not just the complicit, but like of the kind of the federal government. creating things and then even mandating subprime mortgages. Like it wasn't banks saying, just saying, how can we do more mortgages to people that can't afford it? Like you've got the federal government pushing for it, right? There is an illustration that is on a slide that has been in some versions of the talk we give about this book over time. I don't know that it's in my current version, but it's a, it's a seesaw and it says who benefits from lower housing prices. And there's an elephant on one side of the seesaw and there's a mouse on the other side. And you kind of know how that goes in terms of the weight balance. So who benefits from higher housing prices? Well, it's not just greedy Wall Street capitalists, blah, blah, blah. It is homeowners with home equity. It is local governments who want the tax receipts, who are funding their operations in most cases through property tax. It's the development industry. It's all of the people who have investments that are underwritten or in some way based on home mortgages, it's banks, pension funds. You know, it's this huge, like everybody is on one side of the scale. Who benefits from ever increasing housing prices except for two groups, renters, including renters who are maybe aspiring homeowners and the poor. Like that's, that's it. In the future, I would say. future doesn't benefit. Yeah. Which goes into kind of the, yes, yes.

Austin Tunnell

That's a point very well taken. But there's this huge imbalance there. And so, yeah, I think the narrative of Wall Street greed, you know, it's satisfying to pick one entity and say, they caused the problem because then you got one entity you can target to try to fix the problem. But, the federal government has been absolutely. Complicit in this process and complicit is maybe even the wrong word, because in most cases, you know, it's not you don't see nefarious intentions. And we really try to tell the story in a way that doesn't center nefarious intentions. There are the cases of outright financial fraud in the run up to 2008. You find that. But for the most part, you find a desire to promote homeownership, promote middle class prosperity, get Americans into homes. And the mechanism just that we've chosen to do this and then doubled down on over and over and over again is we're going to have homeownership. We're going to have really a narrow kind of product. think that the ideal, the housing ideal in America is single family detached home ownership. And we're going to push that through policy. And when we see that push starting to lose some steam, we're going to find a way to push on the gas. And it's all good intentions, but we are in a trap. We're in a trap where we can only go in one direction. And you see that trap even today. Just in the past few months, You can find examples of policy proposals from politicians at the highest levels of government that really epitomize why this is such a trap and why the default response is to deepen the trap. Chuck has talked about this on some recent podcasts and writing that he's done, but you know, after the release of our book. But and this is not a partisan thing at all. I'll be clear. You see it from both parties. But the examples that he called out in one podcast recently, I thought this was really striking that in the span of like a week, you had The governor of Minnesota, where both Chuck and I live, saying, we're going to have a program to basically throw, think it was $150 million into subsidizing down payments for home borrowers, and into down payment assistance. And then you had President Biden saying much the same thing. It wasn't down payment assistance in that case, but it was essentially, we're going to give relief.

Austin Tunnell

to mortgage borrowers on their mortgage payments. And this is the trap. We know how to do this. We know how to let's throw more money at you to obtain housing through this mechanism. Well, in the context of a whole bunch of supply constraints, in the context of the zoning stuff that we're talking about, when you subsidize demand, all you're doing is pushing the price of housing up further. in a really direct way. And it's not that these policymakers are stupid. It's not that they don't understand that. It's just that they're kind of powerless to do anything else, I think, from that level of government. And maybe we can revisit that point when we start talking about the things that local governments can do, because I think that's where the book pivots in its final third, and that's the part I'm proudest of. But what we see is that these top-down, these state and federal levels of government have kind of one tool, one button that they keep spamming over and over again. it's Let's subsidize home mortgages. Let's subsidize home buyers. Let's give you more money to go into more debt to buy the same house. Yeah. think, think it's important to really connect those dots of, you know, inflation, know, rising prices really comes from, know, too much money chasing too few goods. And so all the policy prescriptives, not all the vast majority are like what you're saying have been on the demand side, helping people pay more. helping people buy more, helping people take one more debt, basically infusing money into quantitative easing, where you're taking loans off a bank's balance sheet by the federal government, they're just gonna kind of like hold it so they can loan more, and you're just injecting more money into the housing apparatus. System apparatus, yeah. anything about supply, virtually, and then by the way, being very specific of, only going to, by the way, do this for single-family detached homes in the suburbs, and not around these red lines and other things. And so it's an explicit like inflation issue. And gosh, it's really on my mind that inflate, know, as a builder and stuff, because it costs us 40 % more to build today than it did four years ago. And that's just every builder I talked to, maybe it's 30 % sum, although most say like, yeah, 40 % at least, you know, maybe more. And those were a lot of

Austin Tunnell

policy decisions where you shut down an economy for years and inject money into it and constrain supply. And, and then now this is the new normal. And you're right. do think it's, can be, people can feel powerless on the, the political side of it, but I do, I think shifting into the, to the next stage of this kind of going into legal stuff. So much of the solution really is focusing on the supply aspects and empowering people and all that other stuff. let's, let's move into the legal aspects of, of, and if you want to kind of give a little background of what you guys laid out in the book, starting with the zoning and stuff. And I really love how you start off with in the book talking about housing used to be communities and cities used to be this kind of organic process that unfolds over time. And then suddenly in our kind of industrial mindset and, you know, other cultural things, we're like, we're going to build places to completion, 100 % completed and done, and it's not going to change. I think that's a really key aspect of all of this. Absolutely. When you look at the way cities developed really prior to the great depression, know, organic, I'm always like, I'm always inclined to use the word organic. And I think in terms of a lot of ecological metaphors, I'm also like, I try to restrain myself because I think it's a word that can be easily abused or that can almost like hand wave away. Like, no, there are human actors with human agency making human decisions here. Like, so in, in pre-depression cities, you had large scale builders, you had real estate speculators, you had, it was big industry, but small, small operators could play in that system. You think about like, you think about a city like Chicago and Chicago in 1850 was a frontier settlement of 30,000 people. And by 1890, it was a metropolis of 1 million. And by the way, they had a fire that basically destroyed the whole city in the middle of that. And they built it out of brick after that too. By 1930, so another 40 year jump, Chicago was a metropolis of 3 million. So just real quickly, a math, 970,000 people in what was that 40? In 40 years.

Austin Tunnell

Well, and the rate of growth, the annualized rate of growth comes out to something like nine percent growth per year. For comparison, the fastest growing metro area in the US in the 2010s was Austin, Texas, which grew at about three percent per year. Way more typical is like one percent, which, as you think about the the built environment of your city, you think about all the buildings that are out there. Pretty normal growth these days is like one percent of buildings are new. in a given year and the other 99 % were already there. Chicago, we're talking about 9 % a year sustained over 40 years and then not much slower than that for the next 40. Like that's disorienting, absolutely disorienting chaotic change happening largely in a really decentralized way, mostly through the actions of small scale builders. You have a city that's laid out according to a template that can just be kind of replicated and replicated forever to the horizon. You the Chicago grid. is legendary. And it's just this endless like small streets, small lots. And then there were real estate speculators that went in and had big portfolios, but there were also individuals who would buy a lot and build their house on that lot. And they were doing it largely. weren't, you know, using a professional architect necessarily. They were doing it according to templates that were well understood. You know, there were people who knew how to build this type of house. You see these building blocks of older cities. In Chicago, it was like the two flats. In New England, it's the triple decker. We talk a lot about triple deckers in the book because they were this very fascinatingly like small D democratic way to build a city. They proliferated in New England in the late 19th and early 20th centuries. And there are these three story wooden homes, you three apartments, virtually identical floor plan, and they're stacked on top of each other. Pretty straightforward, simple construction. A lot of people who built them were immigrants. who like their ticket into the American middle class was you're gonna build a house because you got some carpentry skills, you got a community with the ability to do this. And then you're gonna live in one unit. Your extended family is gonna live in the second one and you're gonna have a paying tenant in the third one. And so that's helping cover your mortgage. You had like mill owners, factory owners who built these for their workers. You had people in the trades who would like get together with some cousins and build a house in their spare time. It was kind of their side gig. You had a lot of sort of semi amateur developers who could buy a lot and build a house.

Austin Tunnell

using a template that was kind of a basic building block of these cities. And you could scale really, really rapidly. And so you could accommodate really dramatic growth. And this is an era where the bar for housing quality was quite low. And we shouldn't glamorize that. A lot of people lived in poor conditions, fire risk, poor quality air, ventilation, sanitation issues were huge. The bar was low. and improvement over time was the norm. And people could get into this game at a really low bar of entry. So it didn't take that much to be a developer, and a lot of the development was being done by people who lived in your community. You were far more likely in the past to be the person who built your house or to know the person who built your house. What we start to see in response to the Industrial Revolution, in response to this really explosive growth of American cities, is there is a reaction that happens and it's a reaction against some of the public health issues. It's a reaction against some of the chaos and the churn and the flux. And so modern urban planning, as we know it today in the US, largely develops around the turn of the 20th century out of a public health movement. You have tenement reformers saying these conditions are appalling. have, you know, the photographer Jacob Rees famously published How the Other Half Lives in about 1890. with these really shocking photos of conditions in New York City's tenements. And it galvanizes this whole public health movement of like, the conditions in our cities are deplorable and we can do better. And a lot of it is really well-meaning. It's quoted as progressive at the time. But it becomes very quickly interwoven with this sort of elitist moral critique of certain community arrangements or modes of living. And you really can't separate it. I don't think you can moralize neatly when you look back at these reformers, because it's the same people. You will see people get into arguments today about like, was zoning just from the beginning, was it a front for segregation and economic exclusion? Or was it a really rational response to trying to contain some of the chaos of these burgeoning cities and improve quality of life? And the answer is yes, it was both. It was always both. And it was the same people doing both. So the book tries to highlight that. I talk about

Austin Tunnell

Lawrence Valor, I'm not sure I'm pronouncing his last name correctly, but one of the leaders of the anti-tenement movement in New York, also known for really kind of saying the quiet part out loud when we look at his writing and his speeches today in a way that some of his contemporaries didn't. So he used the phrase the lodger evil to talk about the practice of lodgers, usually like young unmarried men living, essentially subletting a room and living in a family's home. And this was really common, especially in certain immigrant communities. A lot of Eastern Europeans would do this. Italians would do this. These young single laborers would just be a lodger. They'd live in your attic. They'd live in your basement. And they would save a lot of money by doing that. was a strategy for affording rent. And ultimately, it helped catapult these groups into higher rates of homeownership. But that strategy, a lot of these reformers would just assail it. using really kind of demonizing language, know, fears about like sexual predation on children, things like that. Like this is, this should be a moral affront to every decent American that we have these rough and tumble young men living in the homes of good families. know, really the rhetoric is kind of, it gets pretty over the top to modern years. But it's the same people who were the tenement reformers, the fire safety reformers, the public health folks. They, the triple decker. came under a lot of this kind of criticism. And some of it was warranted, concerns about fire risk. But a lot of it was anti-immigrant sentiment. It was aesthetic objections to, know, what are these cookie cutter boxes overtaking our serene middle class neighborhoods? And so the reaction takes two forms. You have upper middle class people, people with means, moving into new suburbs. You have the first really kind of planned suburbs in this era, the late 1800s, early 20th century. master planned, you've got the famous examples like Riverside outside of Chicago, you've got the curving street grid, tree-lined streets, you've got an attempt to provide all of the basic amenities of the community from the outset. And then I have whole bunch of deed restrictions built in where this community isn't gonna change, where you can't sell a house for below X dollars, where you can't build a store, this is a purely residential district.

Austin Tunnell

You can't subdivide. You can't do all these things that would be seen as imperiling the character of the community or maybe inviting a less desirable element into the community. You have racial deed restrictions really proliferate in this time. And quickly, the zoning reformers kind of adopt these tactics. So instead of being something in the private property deed, it becomes local law. The first single family zoning district in the US is established in 1916 in Berkeley, California. for a planned subdivision called Elmwood. And the developer of that subdivision is on record, like explicitly saying that the intent was to exclude non-white people from this neighborhood. So you can find sympathetic motivations from the get-go. And you can find really, to any modern sensibility, really kind of nefarious, awful motivations. And you can find them in the same people at the same time. But in any case, what happens is that there is this rapid movement toward We're going to try to contain some of the unpredictability and the chaos of the city. And we're going to protect residential neighborhoods. We're going to protect their character and their stability by essentially locking them in amber. This is a district now of single family homes. Not only no commerce, no industry, but no apartment homes. Apartment homes are, know, famously there's a quote from the Supreme Court decision, could be Ambler that legalized single family zoning in 1926. There's a famous quote. from those Supreme Court hearings that said, very often in residential districts, the apartment house is a mere parasite. So we're going to exclude economic diversity from our communities, racial diversity. We're going to exclude the possibility that the neighborhood evolves in a direction we don't like. And we've got this explicit sales pitch on the part of large home builders, people like J.C. Nichols in Kansas City, who we talk about a lot in the book. We're going to plan for permanence. We're going to give you a neighborhood where you are comfortable making a long-term investment because you know that everything you need is provided on day one and it's going to be there for you. And this place is going to be a desirable, leafy, verdant, pleasant, you know, whatever adjectives, but it's going to stay that way. And this is going to be the basis for long-term investment in home ownership. so this is the cultural kind of revolution, the cultural paradigm shift.

Austin Tunnell

accompanied by this really, really rapid legal paradigm shift. Zoning proliferates incredibly rapidly across the country in the 1920s, 30s, and 40s. Until by the end of the 40s, I would say, it is a very rare community that doesn't have a zoning code. And the vast majority of those codes confine neighborhoods to single uses, separate the single-family homes from the apartments, separate the upscale districts from the more mixed and the lower-income districts. This is, and if I'm rambling on too much, I'm laying out the history, but I'm not always good at concession, not my strong suit. This quickly becomes interwoven with, as we have the home mortgage industry take off with the advent of the FHA and all that, this quickly becomes deeply intertwined with lending practices by the banks. most listeners at this point have probably heard of redlining. There's been a lot of discussion about and reckoning with redlining in the last decade or so. It was not a term I knew growing up in school. It's kind of shocking to me in hindsight that the whole history that I was taught of race relations in America and the history of race relations never covered redlining, which was the practice by banks, often using maps supplied by the federal government, of systematically denying mortgage loans in neighborhoods that they deem to be hazardous investments. which included almost always neighborhoods that were predominantly non-white, predominantly non-white, predominantly immigrant. You couldn't get a mortgage loan, which means you couldn't rehabilitate your property, do renovations in those neighborhoods. You were very limiting your ability to sell a house in those neighborhoods. That churn of- poorest people had to have cash to buy a home because you can't get a mortgage. you have all these predatory practices that then arise around that too. where the poorest people end up having to actually pay more for the same home. But redlining shuts off the spigot of capital to the neighborhoods that are the victims of it. It shuts off the process of incremental regeneration and redevelopment and improvement. And it drives these neighborhoods, largely older urban neighborhoods that tend to have a certain amount of compactness, tend to have a mixed use fabric. It drives those places into deep, deep decline over the course of a generation.

Austin Tunnell

It's a huge inducement to white flight from cities, to the building of new suburbs, to all of that. And zoning is deeply interwoven with it. By the end of the 1930s, I found a paper that really astonished me, because this was a history I'd never heard. It's titled, How the FHA Zoned America. You had lending criteria, or rather mortgage insurance criteria. in use by the federal housing administration in the late 30s that said that the neighborhood had to have a zoning code and the zoning code had to meet certain criteria. And that included all the things we consider hallmarks of like suburban single-family zoning today. You couldn't have mixed use. You had to have a certain setback. You had to have certain lot widths. Like it's all, it's total pseudoscience, but it was the notion that these were the things that were associated with what was thought to be a good, stable, prosperous community. These were the hallmarks of good middle-class living. And they were essentially the template for the American suburbs. And city after city after city adopted almost like copy paste zoning codes in order to not jeopardize their residents access to mortgage lending among other reasons. You have this really, really rapid spread of a monocultural experiment. We go from cities where there are all these ad hoc strategies for affording housing. And that's really when we talk about the lodging. know, renting a room in somebody's home. When we talk about building a triple decker so you can live in one unit and rent out the others. All of these kind of ad hoc strategies that were adaptive for low income people to afford housing in a place where they could get a job and try to move up in the world. And one by one, these strategies in the sort of early to mid decades of the 20th century are made systematically illegal in community after community. We banned backyard accessory units, accessory cottages. We banned multifamily housing, duplexes, triplexes. Triple-deckers were banned in most of New England by 1930. The housing form that defines New England, like you go to Boston, Somerville, any of those cities, Cambridge, they're everywhere. They were all built in this window of time from about 1870 to 1930, because after that they were illegal. Systematically banning.

Austin Tunnell

all of the ad hoc strategies that actually delivered affordable housing at the lower end of the income spectrum. If you think about housing as like a ladder of options, we've removed the bottom rungs of the ladder. And that remains true today. And if anything, that problem is only deep in today. Yeah, it really reminds me of one of the reasons I love Strong Towns is the whole idea of a bottom up approach and everything you're talking about and everything in this book that it lays out. just for me so clearly is going like, wow, it's not that federal government doesn't matter or something or that policies don't matter. In fact, I'm saying it matters a whole lot, but that's the danger of these like top-down approaches that is so crazy that in the 1930s, you got the F8, who would have thought just saying like mortgage insurance, we're gonna back that by the federal government and then we're gonna make certain requirements to get this mortgage insurance. You're gonna have to have certain kind of zoning basically in place. And then now today in 2024, our entire world reflects that. And it's just normal because it's been going on for a hundred years. And we're going, of course this is how stuff is built. Of course subdivisions are just, you know, monolithic subdivision. Like this is how the world works. Literally so many times when we post on building culture on my own personal page, show a picture of an area, critiquing how the world looks, you know, and it's capitalism at work. That's like the response so often. I'm not saying like capitalism necessarily fixes all of those things. But I'm like, this is not the result of capital. Like that is a profound misunderstanding of what's going on here. Or at least if you're going to say it's the result of capitalism, you need to define capitalism as a system in which the government has a huge role in structuring markets and policy has a huge role in determining the range of outcomes that can occur versus this kind of cartoonish understanding of, well, it's just Wall Street greed. That's something that really sticks in my craw. Whenever someone blames greed for a deeply complex societal problem, it's like, you might as well throw your hands up and say, well, because we're not going to fix greed. Greed is something that will be with us as long as humans walk the earth. I totally agree with that. It was interesting. put, this was, don't know, maybe it was a year ago. I recorded a couple little, I don't know.

Austin Tunnell

reels or something videos that I put out on Instagram talking about like suburban slums that I was saying, like I, this is just kind of like a hot take in a sense, but like, think that a lot of our suburbs, not all of them, some of them will be maintained, but a lot of the stuff we've built over the past 20 to 50 years, particularly, particularly the monolithic suburban subdivisions will end up being. kind of like the new slums. And the reason I say, and I hadn't actually connected what you guys say in the book where you're talking about the building to completion. So I'll kind of connect that here at the end. But my reasoning is it's just being a builder and experiencing comps and appraisers. when you say all the houses in the area are $300,000 and they're all three bed two and a half bath, because that's how we built stuff. It's all the same. know, and if you want to live in a 600 square foot, a $600,000 house, you have to move, you know, a few miles away to the $600,000 neighborhood. But say you're in that $300,000 neighborhood. Well, one, you're building single family detached houses. So you're building kind of the most expensive houses to maintain because like every side of it is exposed to the weather elements versus even like a large apartment building and water is the number one enemy of building. So you're building something that's going to be expensive to maintain over time. You're building it cheaply. while putting expensive things inside, you're putting expensive H-beck, you're putting expensive electrical, you're putting expensive modern plumbing, all good things, then our average house size is over 2,500 square feet. So we're building big, cheap stuff with expensive things inside. It's like both cheap and expensive at the same time. Then our property taxes don't actually cover the infrastructure costs in the long run. So all of our cities are running deficits, even here in Oklahoma, where like the local governments are like rated like AAA or something like that because they're doing such a good job yet. know, Edmond, Oklahoma runs a 20 to $30 million deficit annually from infrastructure, deferred infrastructure maintenance. And that's today. It's just going to get worse. so then over time, but in a house, in a neighborhood with $300,000 houses, no one can upgrade their house and make money. No one can like remodel their kitchen or add a bedroom because

Austin Tunnell

And the praiser is going to look at that on the sale and say, well, all the other houses are $300,000. So your house, is it worth $400,000? It's worth $300,000. Maybe we'll give you a tiny premium. This happens to us at Building Culture. We'll build a nicer house or something like that. But they're just looking at the comps in the neighborhood. Then if other people aren't maintaining their house, but you're the one that maintains your house, you're not going to get your money out of it. And so you've got all this like people might be able to afford the payment. You know, we can afford the mortgage when it's new. But the problem is you expect your house to appreciate. But the second person buying it. can't both afford the mortgage and the more expensive mortgage, because the house probably appreciated, and the maintenance that comes with a 20 year old cheaply built, large, single family detached house. And then like the people that have options are going to move out and the people without options are going to move in. And it just is really the spiraling thing. And the thing that was kind of new to me that I hadn't connected was that you pointed out in the book is because all these subdivisions are built all at once, it really my gosh, it just, it all hits at once. All those maintenance things hit at once. You don't have this ability to kind of like slowly maintain, do this, maybe a house goes down. It's like all these things, you know, and anyone once again with any money, if they're smart, they're going to leave and not maintain the house because it doesn't make sense to maintain the house, which is a really, really sad, sad. That's I, you, you connected some dots for me that I'd never heard connected before. This is why I'm so happy to be talking to someone who's actually a builder. about this stuff and I need to shut up more and let you talk as we go on here because I think that perspective is so, important. first of all, like the recognition, the cheap box with expensive stuff in it and that is expensive to maintain and that this trap of can you afford the maintenance and actually recoup the money you spend on that. We do talk in the book about that, that cycle of decline that neighborhoods go into and it's really downstream of monoculture. Like that's the That's the key insight that I would want people to take away from it. It's like the absolute homogeneity of like, not even the cartoonish version of the subdivision where every house is the same floor plan and the same color beige, but like the, just more broadly, the monoculture in terms of the kind of home product that is available at scale and that we built at scale, which is essentially down to a very, very limited range of things. And we do it at the neighborhood scale and we do it all once to a finished state. And there are huge portions of our country where

Austin Tunnell

The small scale incremental builder is like virtually a dying breed. It's all this really large scale corporatized stuff using centralized investment. So yeah, like one thing that I, you know, I've had this conversation with people, I used to live in Florida, is like the, Florida is maybe the extreme cartoon version of what you're talking about. Like Florida is where the, the $300,000 communities across the road from the $350,000 community. And it's that segmented. And you can drive, from Sarasota where I was, you can drive from the old downtown, a lot of beautiful 1920s Mediterranean revival and bungalows and stuff, and then out through the mid-century suburbs built in the 50s and 60s and 70s. And those are the places that are in really obvious visible decline. You see a lot of deferred maintenance on the houses. No one sees those as sort of prime desirable neighborhoods. And then out into the new kind of McMansion suburbs and everyone thinks, they've got the best schools, they're flush with cash, they got all these amenities, all the best restaurants and stuff are out there. Like these places have a bright future. And it's like, no, fast forward another generation. There is no reason to think that your 2010 suburb isn't gonna go the same direction that your 1970 or 1980 suburb already did. Because the selling point of these places is largely that they're new. And when they're not new, you get that hangover of there is no mechanism for it to incrementally regenerate itself. I'd like to take a moment to thank the sponsors of our podcast for Sierra Pacific Windows. We use their windows on the majority of our builds at Building Culture. one of our go-to products is their H3 casement window. We love casements because they open sideways, they open all the way, they kind of have this classic window feel. And I really like that you don't have that horizontal bar when looking from the exterior. And to get really nerdy on you, we really love their 5.8's putty profile on the window, which kind of feels updated, but still a very classic detail. Also, Sierra Pacific windows. If you are in the state of Oklahoma, Sierra Pacific has a showroom in Tulsa and Oklahoma City. And we actually purchase our Sierra Pacific windows through them.

Austin Tunnell

Because it doesn't just matter the window manufacturer, it matters who you're buying your window from, who's putting that order together, who's installing it, who's warranting it. And we work with both of these people at Build and Culture, and I was very happy to say yes when they asked to sponsor the podcast. All right, back to the show. Yeah, which, you know, I really, some people might think because that like, building culture, what we, we, we talk a lot about durability and permanence and how like, how we need to be building more durable structures. And Strong Towns also has this message of, we don't always want to be building durable structures, but our philosophy is not in conflict with Strong Towns at all. I haven't always said this, but I'd say over past three to four years, I talk about like how fast and cheap housing is actually really important to every society. And it will always be part of our society because it's a way for things to grow and evolve and start and change. But as you kind of go up the increment, I guess, as strong towns would call it, that's when you start, in my opinion, want to start moving to more durable structures. You know, mean, it's like all of Europe. mean, their cities were cobbled together out of wood and just, you know, houses slammed together in city centers. And during the Renaissance, they're rebuilding it block by block out of masonry. But that's kind of at a certain stage. Like if you were to ask me, like, yeah, you could build a suburban subdivision. a monolithic suburban subdivision out of brick instead of really, I'm kind of like, no, don't do that. You actually don't really want that to last. And it's this idea of, you said you don't hesitate to use the word organic. And I understand that. And one of the ways I like to talk about it is unfolding versus imposing. there is a human, what I think is so great about the strong times approach is there is this kind of more. humble approach to it where one, it's not about pointing fingers. It is being realistic about problems out there and not skipping over that, but not just saying nefarious intentions, the various intentions, the various intentions, but also saying, here's kind of like a path forward, but it's also up to people. You know, we can't force this. We can't come in and impose this. We don't know exactly what a community should look like. No one does. Like that needs to happen over time. And then when we lock things in amber, like you've said, Austin Tunnell (01:01:18.861) You just can't do that. And you lose all of the humanity that actually happens in a place. Because I really think like our cities and towns and neighborhoods really are a reflection of us as people and who we are and our values, or at least they should be when they're not reflections of FHA backed, you know, insurance and stuff like our built environment today does not reflect people. It reflects the incentives of some banks and some other things. And getting back to that built by like four by people, four people kind of thing of our neighborhoods and towns. I love that you say that the desire to really to care about the quality of buildings, about the quality of the built environment is not at odds with the idea of fast and cheap housing and fast and cheap and incremental. And in fact, that's something that I think it's really heretical in sort of the culture around housing and places that predominates. And that's the thing we're trying to push at Strong Towns is when you actually look at a place that is broadly beloved for its built environment, almost always that was something that happened because there were people who were deeply rooted and invested in that place and they loved it. And they were willing to make an expensive, painstaking long-term bet on that place. because they got into that point of investment where that made absolute sense for them to do. You don't get that when it's designed by spreadsheet. You don't get that when you're trying to optimize from, on financial criteria set by people who live far away and don't have any skin in the game. That comes from people who have a deep connection to the physical place, who have an intimate knowledge of the physical place. But that is the endpoint of a product of people being able to make small bets in a place, being able to do temporary things, do imperfect things, and build that investment in that care over time. So yeah, like I love the idea of like, because I think often like the regulatory response to issues of a quality built environment that people are comfortable with, and people generally who are not builders is, Austin Tunnell (01:03:42.765) Well, let's mandate the bar of quality that we want. Like I saw this a lot in Florida, too. Like a lot of the people who were really distressed about new kind of mushrooming suburbs in a distress that I shared with them and their proposed policy solution was let's have more and more layers of design review, more and more layers of community consultation. Let's ensure let's regulate facade materials. Let's do all this stuff. Let's make sure that we have a really, really high quality built environment. And hey, if we can do that. If we can mandate all of that, I'm comfortable with density. I'm comfortable with walkable mixed use communities. But you're going to make it so prohibitively expensive to build that you're going to get very, very little of it. And you're not going to cultivate new builders. And it's not going to become something that can scale. going to get, you might go a one-off beautiful project out of this process. It's interesting. You really can't get a great place through intense control. You need that balance to both order in. And it goes back a little bit to what you were talking about there. There's this cultural element too. There's the financial stuff, there's the legal stuff and which comes first and you're like, it's both. And I agree with that. The whole reason for the name of building culture is the both. It's the building culture as in the construction and real estate culture. And then there's building culture, like actively cultivating culture. Because if you want better places, more beautiful, humane and human places that are life giving and build relationships, neighborly connections. Yeah. You got to fix the incentives. You got to fix the zoning. You got to fix the financial stuff. Like you do have to fix that, but fixing those isn't going to suddenly just like lead to all these amazing places either. Like it is this cultural element to a values and good trade practices even, you know, which is, is this more kind of like organic human relationship based, I don't know, business model in a sense or culture. So kind of wrapping up here a little bit. So we started off with financial got into a little bit of the legal and zoning and moving to kind of this last third of the book. And I know that you really had a heavy hand in how do you guys kind of wrap this up? What is your vision? Austin Tunnell (01:06:08.353) for escaping the housing trap. There's an anecdote in the book. We called out our publisher in the text of the book, which was kind of fun to do, because we had this back and forth kind of battle with them where they wanted to title the book, Escaping the Housing Trap, the Strong Town's Solution to the Housing Crisis. And we said, no, no, no, not solution. We don't offer solutions. That's not the business that we're in. The Strong Town's response to the housing crisis. And I don't know whether it was delivered or not, but they kept coming back to us with newly workshopped versions of the cover image. the strong town solution to the housing crisis. They really push solution. And probably someone is telling them like that, that's going to sell better. Okay. No, we put our feet down. We're like, if you're looking for a solution, don't come to us. If you're looking for a silver bullet, don't come to us. What we need are rational responses that are able to evolve over time. And it needs to be a lot of all of the above. We need, I love the phrase building culture. We need a culture of placemaking that allows housing markets to be responsive to local demand, to local needs, immediate to be rapidly responsive, and to have a low bar of entry so that you have the range from quick ad hoc, fast and cheap housing, but not the tract house model value engineered to death that we think of today. Because we've kind of hit the limits of that model. It has to be something else now. And we argue in the book that that's something else is the most incremental forms of infill within existing neighborhoods and not even infill in the sense of new buildings. A lot of the time it's things like it should be utterly simple if you own a piece of property to build a backyard cottage, to carve out a little accessory apartment out of your existing home, like an efficiency. Austin Tunnell (01:08:08.109) In a lot of cases, this is not a complex physical undertaking. Do some firewalls, do an exit door, throw in kitchenette. And there are all sorts of people who maybe have spare bedrooms that they're not using. They're an empty nest or whatever. They can use the rental income. There are all sorts of people who have a garage that they can convert into an apartment or put one up above. I'm an evangelist for the backyard cottage because I happened just, in my 20s, I lived in a succession of three of them with my now wife. And it was the perfect solution for us where we were in life. it was, these were old, they were built in the 1920s. They were just behind other homes. They were kind of weird ad hoc arrangements. In one case, our landlady lived in the main house, which she had inherited from her mother who had recently passed away. She moved back from Germany into her mom's old house in Florida. She was cash poor. needed an income, had this rental unit. It was nonconforming with the modern zoning code. It would have been illegal to build today, but it was there and she rented it out to us and we got to live in a neighborhood where we couldn't have afforded to buy. And it was a step in our journey. It was a step for her. was an incremental step. It was a step for us. It's not some sort of like housing ideal. How should everybody live? But like it was 400 square feet. It was attached to a garage. We didn't own a lot of stuff. We moved into a bigger apartment that was also a backyard cottage. Then we bought a home. Like it's that bottom rung. But that bottom rung in multiple senses in terms of affordability, in terms of cost, but also in terms of the complexity of the undertaking of creating that housing needs to be just stupidly simple. You should be able to walk into city hall and, you know, with a completed application for a permit to build a backyard cottage, to turn your single family home into a duplex. you should be able to walk out with that permit. You walk into City Hall at 9 a.m., you should have that permit in your hand by noon. You should be able to start work that afternoon. That's a massive paradigm shift from where anything is today. That alone doesn't solve the housing crisis. I don't think that backyard accessory dwelling units or cottages or granny flats, whatever you've got all of them, that's not the silver bullet. But it is part of a culture of building at different Austin Tunnell (01:10:30.943) levels of complexity at different increments of thickening up existing places. We also need cohorts of developers who work in a very local area, who live in that area, who know it intimately, so that they can see the opportunities that a giant outside development firm is going to be illegible to them. We need local lenders who can finance those projects. So you can do something on the vacant lot in your neighborhood. So you can. know, rehab an old building with a little commercial space and now you've got a bakery or a hair salon and you've got a couple of apartments above it. These things are, you know, I love ecological metaphors. You think of an old growth forest, you've got the big canopy trees. You've also got a really, really rich understory, a lot of biodiversity, a lot of complexity. Our cities need large scale builders. They need people to come in and do Apartment towers in the downtown or next to a rail station, somebody's going to need to come in and retrofit that old dead mall. And it probably makes sense to do that at a large scale of investment with a whole lot of housing. And hopefully it's done thoughtfully and to a certain level of quality, but we need that. But we also need the really entry-level ad hoc stuff to be just stupidly easy. And right now it's prohibitively hard. It is, can attest to it being very, very, very, very, very hard. it's not just the zoning is just step one where it's just illegal to do anything besides single family. I mean, I Oklahoma City is something like 95 percent or one just single family detached only with all these big setback requirements and minimum maximum lot coverage ratios and minimum house sizes, stuff like that, which make just any other kind of housing literally illegal. Then you've got the utility and the public works departments that are really all of their codes and stuff and their practices and processes are built around suburban, their suburban experiment of these giant easements between the gas and the electric and the water. When we know all over the country, like there's places where you can stack utilities vertically and what that does for the ability to be able to build some more compact things like cottage courts or, know, whatever it is. The trash departments with our big Austin Tunnell (01:12:54.317) trash trucks and trash requirements, the fire departments, which you point out in the book even, some of the regulations around fires, around fire, which of course you've got the well intention stuff. We don't want things burning down. You also had regulation that was working towards supporting single family detached housing and not apartments and all these other things on purpose, you know, because those things are a nuisance, you know, those get built into the fire code. No one remembers that now. And so it's just like, well, our fire code is here to protect us. But it's kind of like how the, how the tax code has gone from 400 pages to 4,000 pages where everything just gets more complex and bureaucratic. But it's like, what's the benefit and what's really the purpose behind it. And then you've got the lending element too. So all of these things, you got to battle that if I wanted to make money, that was my number one goal. I would go either build storage units somewhere. or I would be kind of like a suburban land developer and just buy a big chunk of land, carve it off, cul-de-sacs, sell it off to builders. And that's easy. That's what you do. And then the opposite, like you said, is multifamily, big multifamily apartment buildings. Those are really the only two things. You have to really freaking want, like really be passionate about doing something different and being willing to make less money doing it probably, at least in the short run, to go do some of these other projects. And so there is a lot of this, the regulatory side and the legal side, we really, really, really need to fix. I love talking to incremental developers because I learn things every time. And it's this like, you know, rabbit hole of, and there's this problem and this problem and this problem and all these, know, intricacies of the codes, but also, you know, issues surrounding utilities, issues surrounding you know, the phasing of a project, you know, can you get your plumber or your HVAC guy in or is it going to be a four month wait and what does that do to that? You know, there's a huge amount of complexity in terms of what it takes to execute on these projects that is invisible from kind of a broad level outside policy world. So I find it fascinating and I'm fascinated mostly by what I don't know, but by how sort of contingent and complicated some of this stuff is. And the piece that always ends up impressed on me is Austin Tunnell (01:15:14.123) that our systems aren't doing the small scale, the incremental developer, any favors, that they are optimized for monocultures, they are optimized for these kind of big scalable solutions, and they throw a million roadblocks in the way of doing something that is different in any way from the path of least resistance template, which is either you build the big spreadsheet five over one apartment building, or you build the suburban subdivision. And so there's a huge need to get into those intricacies. And the places that are making the most headway, I mean, these policy efforts, they're really local. And I find that they're informed by the insights of actual incremental developers who are doing the work. Like, if you're in City Hall, if you're an elected official, if you're running a planning department, if you're not talking to the infill builders in your city about where they run into roadblocks, then what are you doing? I agree with that. So I'm curious, you guys do, you're policy director at Parking Reform now, and you were with Strong Towns for a long time, and still write for them. What's your, I would assume you kind of have a better pulse, a lot better pulse than I do, mine's very localized, kind of like the state of the country in terms of this conversation. And we've come a long ways, I think just since really starting with, for example, Seaside in the 80s was kind of this, Everyone thought they were crazy. What are you doing? And then suddenly it becomes this place. All these developers are going to learn how to replicate. And it's been a long time. It's been, you know, 40 years kind of in the making a little bit here. What's your opinion about kind of where do we stand now? Culturally, legally, where are we and where are going? I think that we have a hundred year old paradigm that is failing in increasingly obvious ways and we're at something of a watershed. And, you know, I'm cautiously optimistic. I'm really inspired by the growth of the Yes in My Backyard or EMB movement over the last decade or so. And I don't think that some of the loudest voices in that movement, might not get all the details right. I think that they'd be well served to Austin Tunnell (01:17:31.789) engage more with incremental builders, infill builders, people who are doing stuff at like, like we said, that illegible scale, that more ad hoc scale. But I do think just the energy around that movement, the fact that they have the ear of policymakers in many, many states, that there have been major reform efforts. I mean, in the book we point out like the, you can split hairs about this. But really the first major US city prior to the wave of everybody adopting single family zoning, the first major US city to completely end single family zoning that happened in 2018. And there have been more since then. Which one was that? The first Minneapolis, though there are a lot of caveats around that. think the thing is that everybody that does it, then other cities look at what they did and improve on the template a little bit. So Minneapolis did it in some ways that I'm not going to get into, but were maybe were ineffectual in terms of actually allowing small scale infill housing to be built. They've been much more effective at getting like more infill apartments on major transit corridors and things like that. But these templates are being copied and they're being iterated on and they're being proved on. Huge numbers of American cities now have a live policy conversation about should we fundamentally revisit some basic aspects of our zoning code. parking reform and not just because I now work for the parking reform network, but It's a huge issue man off-street parking mandates stop most small-scale development like dead in its tracks You you cannot build any of the historic building types that everybody says they love You know that the urban fourplex the row houses things like that you cannot do it if you have to provide one or more off-street parking spaces for every unit and These rules proliferated in the 1940s and 50s, became ubiquitous everywhere. Nobody thought, nobody gave a second thought to them for decades. The first large US cities to eliminate their parking mandates completely were Buffalo and Hartford in about 2016. And now I know of at least 70 cities that have done it. And there are probably more we don't know about. But that's in less than a decade. There is something of a sea change happening. Austin Tunnell (01:19:50.433) And I think it's really because the housing crisis has reached this point. I mean, we went through the collapse of 2008. People thought maybe this is going to be some sort of a reset. Well, no, we recovered. Housing prices rapidly recovered. And we're about what we were before. Building fell completely off a cliff and recovered very, very slowly to the point where, I mean, we have a lost decade. A lot of the housing crisis right now, the affordability issues are down to the fact that In the 2010s, there were fewer homes completed in the US than in any other post-war decade, despite population growth, despite everything else, just massively fewer. I'm glad I was not building that year. Yeah. And we have huge labor shortages in the trades still, as I'm sure you have to reckon with in your work, as sort of the hangover from people leaving the skilled trades when there was no work to be had in 2009, 2010, 2011. Things are just at enough of a crisis point in enough places that I think were something of a policy watershed where you can't ignore the issue anymore and you can't default to status quo responses anymore. And I don't know which way that's going to go, but I'm heartened by the political power that that Yimby's have been able to wield. I'm heartened by the incredible response to the Strong Towns movement. I Strong Towns has, I believe, over 200 local conversation groups. And a lot of them are run by young fired up advocates who are just like looking around like, hey, the place I live kind of sucks and I can't afford anything. And the streets are unsafe and I can't navigate them without a car. like, so much of this is wrong. What can we do? There is a huge amount of energy and frustration and like people are ready to change something. So there's a lot of work ahead of us and it's something it's gonna have to grow. It can't be forced. There's no top-down silver bullet. think that you have to grow a culture, you have to grow a paradigm of how we build places and that paradigm looks like a cultural shift in terms of accepting that our neighborhoods should change, that new buildings, that thickening up more people, that that's actually a good process to have. And then maybe like that means we need to let go of some control, some levers, you know, some veto points over what gets built. Your neighbor might put something up in his backyard that you don't like. Austin Tunnell (01:22:15.341) There's some cultural reckoning that we have to do with that. At the same time, we need to fix all of these issues in the zoning codes, in the building codes, in the regulatory approval processes that delay and obstruct new housing, especially at that bottom end, those bottom rungs of the ladder. We need to do that everywhere. We need to come up with options to finance this stuff locally in a way that isn't so driven by the business cycle and by sort of the prerogatives of Wall Street. There is a lot of work to be done and you can enter it. There are so many different entry points to that work. And you need cohorts of people who have a base of knowledge about how you build places, which is something that I think has largely been lost. And I have so much admiration for people like you who are doing the physical building and doing it in a really thoughtful way where it's about creating a culture and a base of knowledge about how do we do this again in a time where we've had decades of really abdicating the role of designing our communities, really outsourcing that to developers who at the end of the day, you're aligned on a spreadsheet somewhere and they have no stake in the community. Yeah. Well, it's exciting. I am as frustrated as I get sometimes by some of the things around where you're just going, my gosh, this is just so stupid. policies, whatever. I am also very encouraged in a lot of ways and very optimistic about the future because there is this growing awareness and understanding and there is this cultural shift underway. And because the system that we've been, as you've said, the past hundred years, it really is breaking down in front of our eyes. It's making way for kind of a counterculture of thinking. And I see that growing more and more. So I find that really exciting. And the other thing that I think is really cool just is how, you know, neither of us believe in like, it's going to come from the top down. Yes. Do I want certain policies? Sure. Great. But I mean, that's not really where the solution lies. It really is people and individuals. And I've been so amazed by how much like one person or a small group of people can change in their own community, whether it's Austin Tunnell (01:24:37.625) one person on city council or one person in the planning department or one civil engineer who thinks a little bit differently and that they might be younger, one builder or whatever it is. Someone that puts together a CNU chapter or ULI chapter, a strong towns conversation and their local community. It really, or one, you know, one good architect, one urban designer, all that, whatever, there's all sorts of different ways to engage in the built environment. And we need all of them. We need all those people involved. having conversations, pushing things kind of in a new direction and creating that new culture. So really appreciate what you guys do at Strong Towns. I really, really do love it. I think it's such an important message, particularly because it comes, you always bring it back to people and this bottom up approach of how do we empower people? Not just how do we get mad and yell at people and get new top-down policies, but how do we empower people? And I think that's what leads to a strong town and durable places. So I highly recommend everyone read Escaping the Housing Trap. I mean, a really, really exceptional and important book. Daniel, how can people get involved? Like I know you've got an annual kind of Strong Towns conference. How can people follow you? Yeah. Anything about the, you you can learn more about the book. You can learn where to get a copy. If you want to organize a speaking event, you can go to housingtrap.org for all of that. That's run by Strong Towns. I'm not an employee of Strong Towns anymore. I'm the co-author of the book. So, you know, if you're interested in talking more with me about it, if you got a question or you want to yell at me about something or you want to bring me to speak, you can email me my last name at gmail.com, harigas.gmail.com. Is the best way to reach me I Definitely recommend checking out strong towns in general strong towns org The organization has a ton of resources great content three podcasts going on every week They go way deeper into all of these issues then one book or one podcast is able to An events program as I said tons of local groups where you can get involved actually work with people in your community Austin Tunnell (01:26:48.545) to make change. And I really appreciated that kind of closing note that that's what it is. That's and it's you can change way more than you think you can once you just like start talking to people who live in your place. And Strong Towns, you know, does that's the core of it is trying to facilitate that that bottom up groundswell. Well, Daniel, thanks so much for coming on and hopefully I get to meet you here at one of the. upcoming conferences at CNU or Strong Towns or something. So I will probably be at them. And yeah, I'd love to get a chance to shake your hand. And I'm open at some point to get down to Oklahoma and see your work, too. It'll be fun. We got a lot of stuff happening over the next probably five years where things are going to get pretty exciting. So awesome. All right, Daniel, talk to you soon. All right. Thanks so much. Take care. If you've been enjoying this podcast, please like, subscribe and share with your friends. And on if you're listening on Apple or Spotify, please leave us a five star review and take a screenshot. Send it to playbook at building culture dot com. And when we reach 100 reviews, I'm to send out 10 building culture hats like up there behind my head. If you're watching video and I'll send it to your house. Thanks so much for listening and catch you on the next episode.