The Democratic Senator Who Says Liberals Have Lost Their Way on Housing

The United States is in the midst of a severe housing affordability crisis. Eighty percent of U.S. homes are now unaffordable to the average American, meaning that the monthly mortgage payment would eat up more than 30 percent of monthly wages. The number of renters spending more than 30 percent of their income on rent is higher than it has been in decades. Homelessness is at record highs, and high-cost cities have become so expensive that they are driving national migration patterns.

Many analysts have concluded that the problem is a raft of local building restrictions that make creating new housing a long, uncertain, and expensive process—and therefore a less frequent one, despite the significant demand. According to Freddie Mac, the country has a shortage of almost 4 million homes. Local and state reforms have begun to chip away at the problem, but Washington has sat largely on the sidelines. While the Biden administration claimed it would prioritize pro-growth jurisdictions in its transportation grants, the results have been mixed.

Sen. Brian Schatz, a Democrat from Hawaii, has been one of Washington’s most vocal advocates for increasing the housing supply. Last year, he created a special pool of money at the Department of Housing and Urban Development for jurisdictions that remove barriers to housing. He’s also the author, with Sen. Todd Young of Indiana, of a bipartisan bill, the Yes in My Backyard Act, which would require jurisdictions receiving certain federal housing aid to report back on how their zoning practices are limiting opportunities for new housing. In our interview, which has been edited and condensed for clarity, he discussed his Damascene moment on zoning reform, his fellow liberals’ blind spots on housing, and why Congress can’t just tell your suburb to legalize apartments.

Henry Grabar: You got this $85 million grant program put into the appropriations bill in December, which is for “the identification and removal of barriers to affordable housing production and preservation.” Is this Congress’s first yes-in-my-backyard provision?

Sen. Brian Schatz: It is. This is the first federal program, and we’re very excited about it. As a Democrat, I come from a long tradition of progressivism based on helping people. But one of the areas where I think the Democrats have it wrong, traditionally, is that we’re actually creating a shortage of the thing that we say we want. We are making it incredibly difficult to create housing, and then we sort of puzzle through what to do about it. And the solution is very simple, in fact. We need to make it legal to build housing of all kinds.

This should be attractive to people who are progressive, because we have a massive nationwide housing shortage. But also, people who are right of center should be attracted to the basic property rights argument, which is that, hey, it’s your land—you own it.

What are the policies at the local level that are preventing us from building the housing we need?

It’s minimum lot sizes, it’s restrictions on use, it’s bans on apartments, height restrictions. All of it. There are lots of programs that need federal subsidy, but there’s not enough subsidy in the world to solve this problem. We simply need to make it legal to build the thing that we all say we want.

For me, the seminal moment when I became an aggressively yes-in-my-backyard person was when I fully understood that zoning—exclusionary zoning in particular, restrictive covenants—came right after Jim Crow was outlawed by the Supreme Court of the United States. Folks that wanted to continue the legacy of Jim Crow figured out a way to do that which would pass constitutional muster. And so all of that stuff was designed to keep primarily Black people out of affluent neighborhoods. Even though there are a lot of progressives and environmentalists who invoke the phrase “Protect the character of our neighborhood,” we need to note that history there is pretty dark.

The problem, especially in high-cost areas, is that the only people who can get through the entitlement process and still make a profit are the people who, at the end of construction, are selling luxury condominiums or what we call “gentleman farms,” which are essentially fake farms. There are a lot of instances where a developer makes a choice to build a self-storage unit in an urban area rather than an apartment building. It is way easier to get a county to permit you to essentially rent out cubes to store stuff, and it’s very difficult to rent out cubes for people to actually have a place to live.

Likewise, if people have rural land, getting it rezoned for residential purposes is very hard. Dividing a 35-acre property into these giant estates and letting someone from Silicon Valley have their third house, that usually requires almost no discretionary approvals from the government. So our system is upside down in the name of environmentalism. There’s nothing environmentally sound about sprawl. There’s nothing environmentally sound or progressive about preventing people from living anywhere near where they work.

One of the critiques that’s often lobbied at YIMBYs is that a lot of the housing that gets produced goes to the higher end of the market. It sounds as if one of the points you’re making is that the restrictions are so extreme that they have the effect of whittling down the type of housing that’s produced into only the most expensive units.

That’s exactly right. Nobody’s thrilled about another luxury condominium coming up in downtown Honolulu. But the reason that only luxury condominiums are coming up in downtown Honolulu is they can throw $5 million or $8 million at consultants to get through the labyrinth of rules and regulations. If you’re trying to renovate a 12-unit walk-up apartment on the corner of Kewalo and Wilder Avenue in Makiki in urban Honolulu, well, you don’t have millions of dollars for consultants. So the stuff for working people doesn’t get built. And the stuff for second and third homes still continues to pencil out. The status quo is working for wealthy landowners and homeowners and people who are on their second and third house when most people aren’t even on their first apartment.

Let’s talk about the grant program for a second. It’s been called the “baby YIMBY bill” because it’s small relative to some of the other grant programs.

Well, that hurts my feelings.

Not my words. That’s Reason Magazine. But, you know, a baby also grows into an adult, so there’s a kind of optimism there as well. With tens of millions of dollars at HUD’s disposal at an agency that has a budget of tens of billions, how does this money make an impact? 

There’s two ways to look at that. First of all, it’s a fair amount of money. Second of all, it’s not that much money across the country. I think the other part of this that is important is that it’s simply essential that national leaders start to talk about the housing shortage. It’s too easy to say, “Well, I see that there’s a housing crisis, so why don’t we increase the low-income housing tax credit?” We can double it. And that would be fantastic. And I would support that. But [in Hawaii], you’re talking about doubling the production from a few dozen units to maybe twice that. We have a 30,000-unit shortfall! The only way to solve this problem is not by doubling or tripling individual subsidies but by simply allowing people to do what they’re asking to do, which is to try to turn a profit providing housing. Every time there’s a shortage of something in society, somebody figured out a way to make money providing that good or service. But in housing, we’ve made it illegal.

A larger question about the approach, which is offering carrots to jurisdictions that do the right thing, is that so many of the most exclusionary policies are in the jurisdictions that have the least need for federal cash. How do you solve that problem if what you’re offering is just incentives, or carrots, rather than some sort of stick?

I think we have to start somewhere. And we’ve made good progress in a relatively short period of time. This movement is growing. It’s true that some jurisdictions are going to be dead-enders and some jurisdictions may never reform their zoning laws, but the places that want to grow will grow. The places that want to be humane will be humane.

One of my goals here is to make sure that the Democratic Party evolves on housing. I came from the environmental movement. I still belong to the environmental movement. And growing up, my first involvement in political activism was in stopping inappropriate development from ruining one of my favorite pieces of coastline on the island of Oahu. If you come from the progressive tradition, especially the environmental tradition, organizations coalesce around stopping things. And I think, in a new progressive vision, we are building clean energy, we are building housing, we are building physical infrastructure. And the left should own building. The left should own investing in our own communities. There’s nothing intrinsically progressive about stopping progress.

I want to ask you about the Yes in My Backyard Act, which would require recipients of Community Development Block Grants—a much larger program, which is $3 billion—to submit reports on land-use policies. Given what you’ve been saying here, why not just cut to the chase and require any jurisdiction that receives CDBG funding to legalize apartments?

Because I’m not the czar of America, because it’s a legislative process, and because I don’t have the votes for that.

Part of what we’re trying to do is depolarize this issue. There are some unusual left-and-right coalitions, and we want to move as fast as we can, but we don’t want to strip the screw here. It took 50 or 60 years to build that thicket of laws and rules and regs and processes that make it so difficult to build. And I don’t think it should take 50 years to unravel, but it’s not something we can achieve instantaneously.

All right. Fair enough. That gets to the question of politics. This really riles people up, especially your fellow Democrats, as you just observed. What’s your argument to liberals who don’t see anything regressive in telling developers to take a hike?

Well, it’s always attractive to tell anyone who is trying to make money that they should make less money. I’m sympathetic on an instinctual level to that. One of the criticisms of the YIMBY movement really comes from socialists who believe that until we change capitalism, we’re not going to change housing. And I’m not a socialist. I believe in capital markets, and I do not think all of housing should be provided by the government.

Others are just living in the contradiction that they are nominally liberal on all the things—climate and immigration and health care and LGBTQ rights and all the good stuff, but they also have a nice home and do not want other people to live next to them. And that is not a coherent political philosophy. That’s just a person thinking they’re liberal but they are not liberal about a basic question, which is: “Do I want a nurse or a firefighter or a sanitation worker or a restaurant worker or an elderly individual or a disabled individual or a student to live near me?” And if the answer is “Well, sure, but only if they can afford this 1-acre lot,” then you’re not that progressive.

Housing has been basically ignored in every presidential election in recent memory, even as housing costs have reshaped the country’s social geography, eaten up wages, and created homelessness. Why is this such a back-burner issue?

I think it’s been a back burner because it’s considered local. But the change now is that it’s not just San Francisco and Honolulu and New York City and a few other places that are experiencing a shortage of housing. It’s every place across the country. So, this is a national issue, whether we like it or not.