EXECUTIVE SUMMARY
Welcome back to Boyd’s weekly roundup series. We’re on a mission to describe and diagnose the housing crisis and then eventually prescribe it, policy-wise. As we move along in this process, as opposed to a ‘shut up and listen’ approach that’s, in our view, all too common in Think Tank Land, we think it valuable to basically think out loud. This — our roundup series — is just that; we’re here to transparently share our findings and create positive, substantive, and nuanced feedback loops with our readership.
Moving on. This week’s highlights include:
Newsflow on the promising developments around single-staircase multifamily development, Austin’s new AI tool to expedite permitting and zoning approval, and the increased inventory stemming from a slight easing of the lock-in effect this year;
Research/analysis on supply/demand shocks surrounding the mortgage rate lock-in effect, institutional investor impact on homeownership and neighborhood access, a “China shock” in the US real estate market, and last but certainly not least, land-value taxes (Georgists rejoice!)
If you haven’t already, do check out this week’s articles on which party is 'better' on housing regulations (data-heavy) and the various housing "pills," or lenses through which the causes of unaffordability may be assessed (commentary-heavy).
For the upcoming week, expect another edition in our series of data-heavy articles (Wednesday) as well as a commentary-heavy piece on… still TBD (hint: probably on American ghettos).
Additionally, tune in to the Substack Live session later this morning where Peter Banks and William Miller will be discussing all of the below as well as engaging with comments/Q&A.
COMMUNITY POLL
Last week’s poll asked readers the following: Which city is the WORST in terms of local housing policy? The answers were damning to the Golden State!
San Francisco, CA (62%)
Los Angeles, CA (23%)
Other (15%)
In this week’s poll, we ask the reverse:
NEWS + MEDIA
Do apartment buildings really need two stairwells?
The Editorial Board | Boston Globe
Requiring two means of egress may have been the right response to the fatal New York tenement fires in the 1860s or the Great Boston Fire of 1872, but fire safety has changed since then. Today, there are sprinklers, sophisticated smoke detectors, and walls designed to resist fire penetration …
A 2024 report by Boston Indicators, Utile, and the Harvard Joint Center for Housing Studies, suggests that in Greater Boston alone, an additional 130,000 new homes could be built if single-stair construction were allowed in four- to six-story buildings …
[T]he Pew study examined fire death rates in modern, single-stair, four- to six-story buildings in New York City, Seattle, and the Netherlands. The report found that fire death rates were comparable in single- and double-stair buildings, and the lack of a second stairway did not play a role in any of the four fire deaths over 12 years in New York and Seattle’s single-stair buildings …
For projects to get built, a developer has to make the finances work, and with high interest rates and rising construction costs, that’s getting harder and harder. The type of midsize apartment buildings that single-stair construction could unlock are exactly what the region needs.
***
City of Austin rolling out new AI system, speeding up zoning review process for developers
Jala Washington | KXAN
The City of Austin is launching a new AI tool next week in hopes of expediting the zoning review process for residential developers …
According to the city, this new tool is expected to cut the review time in half. While the actual cost is based on use by applicants, the city told KXAN it has budgeted an annual cost of about $1 million …
“It’s a multi-year process to get to get a site development permit in Austin at this point in time,” Burns said. “Any time that the city can implement tools that can make the development and permitting process easier, it’s going to eventually lead to more housing. More Housing creates more affordability in Austin.”
***
Share of Mortgages with Rates Above 6% Climbs to 10-Year High as Americans Adapt to New Normal
Mark Worley | Redfin News
Chen Zhao, Redfin’s head of economics research, said the slight easing of the lock-in effect this year has been highlighted by an increase in inventory, with the number of homes for sale returning to pre-pandemic levels in many areas of the country …
“More homeowners are deciding it’s worth moving even if it means giving up a lower mortgage rate,” she said. “Life doesn’t stand still—people get new jobs, grow their families, downsize after retirement, or simply want to live in a different neighborhood. Those needs are starting to outweigh the financial benefit of clinging to a rock-bottom mortgage rate. As a result, more homes are hitting the market than we’ve seen in years, giving buyers a wider range of choices.” …
“A lot of people want to buy and they’re just hanging around waiting,” said Mariah O’Keefe, a Redfin Premier real estate agent in Seattle. “Rates have not gone down significantly enough to move the needle—prospective buyers need to see a bigger difference in their potential monthly payment before things are going to change. If rates tick down below 6%, that will bring a lot of people back into the market.”
RESEARCH + ANALYSIS
Unlocking Mortgage Lock-In: Evidence From a Spatial Housing Ladder Model (2025)
Julia Fonseca, Lu Liu, Pierre Mabille
Despite also reducing housing demand, we show that the net effect of mortgage lock-in is a negative shock to housing supply, which increases house prices and thus creates inflationary pressure …
The proposed $10,000 Mortgage Relief Credit modestly increases first-time home buying and has larger effects on upward mobility at the top of the housing ladder …
Upward mobility within the housing ladder comes at the cost of renters and starter homeowners moving from high- to low-opportunity areas, as house prices in higher-priced areas increase …
House prices and rents are endogenously determined by household mobility within and between locations, and are thus impacted by lock-in.
***
The Impact of Institutional Investors on Homeownership and Neighborhood Access (2025)
Joshua Coven
Overall, institutional investor entry resulted in a tradeoff. Renters benefited from lower rents because institutional investors increased the rental supply by 0.58 homes for each home they purchased. This expansion occurred because economies of scale outweighed the incentive to use market power to decrease supply. However, prospective homeowners had a harder time buying homes: Homeownership decreased by 0.23 homes for each home purchased, and institutional investors caused 21% of the observed price increase in their top decile of markets …
Policies seeking to ban institutional investors or cap annual rent increases would increase rents by reducing the rental supply—the opposite of their intended effect on the rental market …
Institutional investor entry decreased rents on net because they increased the supply of rentals… The model-implied rent impact is of opposite sign to that observed in the data, suggesting that rents would have risen in the institutional investors’ absence.
The results highlight the importance of disentangling selection from causal impact for policy, as policies designed to reduce rents by removing institutional investors would end up increasing rents by shrinking the rental supply.
***
Local Effects of Global Capital Flows: A China Shock in the U.S. Housing Market (2022)
Zhimin Li, Leslie Sheng Shen, Calvin Zhang
A one percent increase in foreign Chinese housing transactions, as measured by transaction value and count, lowers low-income household count by 0.067 percent and 0.109 percent, respectively …
Using transaction-level housing purchase data, we document two salient phenomena: (i) a China shock in the U.S. real estate market as characterized by a surge of foreign Chinese housing purchases after 2008; and (ii) home bias in these purchases as they are concentrated in ZIP codes historically populated by ethnic Chinese. We exploit the temporal and spatial variation of real estate capital inflows from China and find that they significantly increase employment in the local economy. We present evidence that the employment effect is mainly transmitted through a housing net worth channel, as these capital inflows significantly increase local house prices, raising local housing wealth and, in turn, demand for local non-tradable goods and non-tradable-sector employment. At the same time, foreign Chinese housing purchases drive out local residents, especially those of lower-income brackets, and thus induce gentrification.
***
Homes for Young Families Part 2
and Bobby Fijan | Institute for Family Studies
It may not seem obvious why builders are fixated on rents per square foot: the whole point of building an apartment building is that additional square footage can be added by building additional stories. Square footage should not be the primary constraint on such structures, yet it is …
The real estate industry is not about to reinvent itself overnight, shedding a wide range of structural characteristics that make it hard to build family-friendly apartments. But there are areas where changes could be made …
Private Sector Practices
Lenders, builders, buyers, and managers alike should insist that investment return metrics incorporate variable vacancy rates, nonpayment rates, and tenant turnover rates appropriate for units of the given bedroom count, thus implicitly assuming higher occupancy and higher payment rates for buildings with more two- and three-bedroom units. Buildings with lower ratios of bedrooms to units should be seen as having systematically higher operating costs …
Government Policies
Housing trust funds that finance or build apartments at public expense, whether state, federal, or local, should be given explicit, statutory guidance to prioritize housing the largest number of people, and producing the largest possible number of bedrooms, not simply the largest possible number of units.
***
Land Value Taxes—What They Are and Where They Come From
Elizabeth Kepner and Rick Mattoon | Chicago Fed Letter, No. 489, November 2023
Because pure land value taxes do not create any deadweight loss, revenue from that tax might be large enough to replace the typical property tax, along with other forms of taxes for a municipality, while remaining revenue neutral. In the example of one U.S. city, introducing split-rate taxes allowed the city to avoid other forms of tax increases, encouraging development …
Evidence of the possible impact of split-rate taxation on building permits was identified in Cord (1983). This paper analyzed the experience of three neighboring cities in Pennsylvania—McKeesport, Clairton, and Duquesne—which were all suffering from declines in the steel industry. McKeesport adopted a split-rate tax structure in 1980. In the three years before and after 1980, McKeesport saw a 36% gain in its average annual value of building permits ($1.716 million to $2.333 million), while Clairton saw a decline of –30% and Duquesne had a fall of –14%.
REMINDER
If you or someone you know is interested in competing in the Boyd Essay Contest for a chance at $2,500 cash and a Boyd fellowship, the submission window is open through the end of October. Details here:
Boyd Essay Contest: Call for Submissions
We’re looking for essays that answer one simple question: What’s an actionable, outside-the-box solution to America’s housing crisis?