4 Ways To Build Homes and Expand Opportunity, With Cullum Clark

Cullum Clark, director of the Economic Growth Initiative at the George W. Bush Institute, returns to the Strong Towns Podcast to discuss his recently published report on housing reform. Cullum highlights several reforms that have proven to be economically feasible, politically realistic, and impactful on a large scale.

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  Chuck Marohn 0:00

  Chuck, hey everybody. This is Chuck Marohn. Welcome back to the strong towns podcast. We've had Cullum Clark on here before, from the Bush Institute, the George W Bush Institute. The latest report that they have out is blueprint for opportunity. Series number five, aptly titled, build homes, expand opportunity. I feel like that's the most succinct title you've had. Cullum is that, is that fair? Welcome back to the strong towns podcast.

  Cullum Clark 0:34

  Thanks so much, Chuck. It's good to be with you. I think this is my third time, and I've loved the other two, and I'm honored to be back. I think about these titles, and some have been better than others, but, but I like the idea of the verbs, the imperative sense of we need to go and do something. As I contemplate everything that's going on around housing in our country, I think what we have is a great deal of talk and a whole lot of inaction. We do have some good reforms here and there. So I'm an optimist at heart, and I want to try to point to progress and not primarily focus on shortcomings. But I do think there is just an overwhelming need to kind of get at it, to get to work on it.

  And you know, when I say that, I wish I could say that in this report I had come up with some absolutely wonderful new local housing reform that no one's ever thought of before. I don't think that's actually possible to do at this point, or at least it's beyond me to do that. What I can do, maybe a little bit better, is, first of all, be an economist and try to evaluate the evidence. What do we actually see that is having an effect at scale that I think I can make a bit of a study of? Another is to try to think about like, well, what has turned out to be politically feasible, because I do work at a think tank, and I think we're trying to be realists here, what actually is both impactful and has gotten through in some places. And then I think also to try to articulate what success looks like. Because success is not, you know, Nirvana in this in this world that we live in, it is we need to be able to sort of define what it would look like and aim at that.

  And so, yeah, build and expand. And as for linking homes and opportunity, I really want to emphasize they're joined at the hip. I think sometimes people think of housing as kind of in its own silo. It really needs to not be. It's all about creating a strong town, creating a strong community, a place that is a good place to live, a good place to raise a family, start a business, get ahead in a job, pursue whatever dreams that you have in this in this life, it's all joined at the hip, and being able to afford a decent home is absolutely a prerequisite for doing those other things.

  Chuck Marohn 2:39

  I feel like you and I are well aligned in many, many ways. And I wanna spend some time like going through that. I want people to listen to the whole thing, because I think there are a few places where we have some obvious divergences too, and you and I have discussed these, so it's not, you know, I think there's two perspectives. I think at the beginning here, you have some really strong arguments about missing middle housing and a reform agenda for cities. How do we start with existing neighborhoods and build affordability there? Like, what is the message for mayors city councils, when they're looking at their existing neighborhoods, maybe particularly ones that are struggling? How should they be thinking about these differently than than the way they are today?

  Cullum Clark 3:24

  Well, I think one thing that I really try to do in the report is to start with the idea that we need more housing, and we need more housing in good locations, so locations that help people to, you know, pursue whatever it is they want to pursue in their life, which oftentimes includes a job and maybe good schools for kids and so on. So both getting more of it and in good locations is kind of the core of the story. I'm kind of agnostic about the extent to which we manage to do more infill home building in locations that are relatively densely built up and urban, versus areas that are, that are they're new, that are expansions of metropolitan areas outward, typically, although it could be kind of larger scale infill, the area between a suburb and a city that never has quite been built out. I generally like it all, so long as we build a good, integrated place, a place that incorporates, you know, everything that human beings need to thrive in relatively close proximity. So in terms of infill and dense built up areas, here's what I try to do to check in this report, it's easy to list the full possible toolkit of reforms. That's not hard. It's been done in lots and lots of places.

  What I've tried to do that I hope adds a little bit of value, is to first of all, take a pretty disciplined look at, well, which of these reforms have actually gotten through in one or a handful of places, where does it actually seem possible politically, and also, where has it been impactful? Because, like, one thing that I think is kind of a problem in the whole housing discussion, the incentives for political leaders can be very. Out of line and, you know? And one thing that I think is really unhelpful is someone manages to build one single, little garden apartment building someplace with like, 20 units, and the mayor does a big ribbon cutting and so forth. And it took years and years and a gigantic lift to get to that point. But there's not another one in the pipeline. You know, that was it? That was, like, that was it for the mayor's term? More or less, maybe I'm slightly exaggerating for effect, but-

  Cullum Clark 3:25

  No, I don't think you are. I don't think you are. I've seen that plenty of times.

  Cullum Clark 5:28

  Well, I mean, I think these ribbon cutting things, I mean, I've seen it again. I live in a pretty big city. I'm in Dallas. We're the ninth biggest city in the United States. And I could tell you, you know, I could probably count on one or maybe two hands the those kind of openings that mayors attended, and they were very proud of them, but other than one single exception I could think of, they were universally pretty small scale. So that's no disrespect to the people who worked hard to make them happen. You know, they're doing the Lord's work. I'm glad they did it, but we need much bigger scale. So what has actually worked in the sense of it's both gotten through and it's created pretty wide scale improvements, a handful that I think we've seen.

  Number one, reducing minimum lot size, particularly in areas that are fairly substantial pieces of land, like they could be raw land somewhere for whatever reason, in the middle of a city surrounded by built up urban area, or it could be repurposed retail or repurpose industrial. So Houston, as you know, was kind of the big innovator there. Maybe kind of it just sort of followed naturally from a place that has no zoning and has really peculiar, peculiar housing rules. But for whatever reason, they decided in 1998 to reduce the minimum lot sizes to 1400 feet. So that's making for a pretty skinny townhome on a lot sharing a wall with the next townhome over. Typically, they did that in their downtown area and surrounding downtown people generally liked it okay. And in 2013 they expanded citywide.

  And it's been pretty widely studied by economists, and what people have found is that this reform has resulted in, by my count, something on the order of 40,000 or so homes that otherwise would not exist. Some of the studies point to somewhat bigger numbers. I'm trying to be pretty disciplined about like, well, what's the counterfactual really look like? What would it happen to absent the rule change? But you know, 40,000 in a city of Houston size is pretty, pretty good.

  They are also overwhelmingly in places that were not previously single family homes. I don't really have a, you know, a kind of a dog in the fight of what happens to neighborhoods that are currently zoned single family on pretty big lots, I figure, like, Well, I mean, if a city really wants to change it and the neighbors are kind of good with that, then great. But what I observe is that that's not have very much success any place. In Houston, the rules do actually allow that. They had an opt out procedure in which, you know, a city block could opt out, but otherwise, developers were perfectly free to buy a single family home on a big lot and subdivide it. But in practice, that's resulted in a really tiny number of units in Houston. But on the raw land, or the old what used to be the strip mall, what used to be the industrial site that's all cleaned up. Actually, it's been quite impactful. So that's one, and now Austin has imitated them.

  I think a second type of reform that's proved pretty impactful is allowing apartments or townhomes to be built as of, right, like, without any specific action by city council or whatever, in commercially zoned areas. Again, you know when you talk about, like, what? What is it that people really come out in a huge way to oppose at city council? It's typically a change to their single family neighborhood, their their neighborhood of relatively low density, large lots and so forth. Yeah, you'll get some people come out, but it's a lot, it's a lot smaller crowd that comes out to object to the idea that the developer is going to tear down the one story strip mall and build a, you know, a building that's now going to be like, three or four stories with still, with some coffee shops or whatever on the first floor, and I think where that's been tried.

  So, for example, as you know, Minneapolis did a handful of reforms, you can pretty well look at what's been built as a result. And the idea of identifying a number of of transit oriented commercial corridors and allowing much greater build out of apartments in those places automatically, without a specific action by government, has been pretty impactful. That's been a really good reform. It's actually resulted in a whole lot more homes than has the more heralded talked about reform to getting rid of single family zone. I'm not here to argue that Minneapolis is policy on single family zoning. I'm just trying to observe where are we actually getting homes built and in good locations. So I call that a success,

  Montana, for reasons that are maybe very distinctly Montanan, but has done that in their relatively small cities like Billings and Bozeman. And also with what seemed to be the start of good results, Florida's Live Local Act is kind of remarkable. There you have another deep red state at the moment that I think has implemented an interesting reform. I know there's a little bit of backsliding on it, but on the whole, it seems to be sticking, although it's relatively new. I expect we'll see good results there too. So that, I think, is a is a good measure, for sure.

  A third one that has shown evidence of some success in a handful of places is that when a city organizes itself to activate some kind of big swath of publicly held land where nothing's happened for years or maybe decades. So I think there's, there's several good examples. San Diego had a good example where I think several 1000 units got built on what was a, I can't remember exactly the name of it, but a publicly owned large parcel that was more of a kind of, as long as anyone could remember. There are a couple others like that. Oh, I'm trying to think one of the suburbs of was an Orange County town. I'm trying to remember which one Anaheim or I can't remember so that too.

  And I think one thing that we see a lot is, you know, local governments, school districts, public transit authorities, typically have a whole lot of land. They haven't, haven't ever done anything with in a long time. Their mentality was always better to have more land rather than less. Who knows when we'll actually use it? Decades go by, no one ever uses it. It's an eyesore. It's actually pretty well located a lot of the time, you know. And I think sort of transferring that land into the into the hands of people who can actually put it to good use and create something beneficial there, housing or other, you know, things that people will actually use has been a pretty good idea, too.

  So, and then, I guess, fourthly parking. Clearly, we require, we require too many parking spots in apartment buildings in American cities. A decent number of places have reformed that now. My own city of Dallas just did a kind of a a decent, kind of a partial reform there. Yeah, yeah. Austin had done a more sweeping one kind of across the city a couple years ago, but that's actually been spreading across the country. I think that's a that's kind of a pretty easy reform, if you don't I mean, you can try completely banning parking minimums, which doesn't really bother me. I think it will bother some. Some people will turn out but if you identify the places on the map and say in those places like downtown, that you could build an apartment building without parking, it seems to be, again, every reform brings out opponents. There is no there is none that doesn't bring out opponents. But that one seems more implementable than most others based on the fact that quite a few cities have done it now. So I think those are all kind of low hanging fruit type of items. And you know, what I'd like to see is basically every city in America do all of those.

  Chuck Marohn 12:12

  What you have described and what you describe in the report, particularly when it comes to this, you know, you use the word infill. I always try to avoid that word, because I'm a planner, and I know how planners think so. But let's use the word infill for a little bit, just because I think it's descriptive enough where people listening will know. Whether it's changing the minimum lot size, apartments by right, city kind of mobilizing around these lost parcels that they have in their inventory. To me, those all feel like places where you're mimicking greenfield development in a smaller way. Is that kind of a fair you're nodding so I'm assuming you think that there's a fair analysis.

  Cullum Clark 12:55

  It mostly is, maybe not 100% so for example, if you allow apartments in commercially zoned areas. Let's posit for a moment that the commercially zoned area actually has commercial real estate sitting on it today. Right, right. Then you might be talking about demolishing the old, you know, the old strip mall holding something better. And I actually think that that's like a low hanging fruit reform for every city, every place that should be, that should be one they enact without even even thinking about it too much. And you know, the parking one is, it could be an issue of how many apartments can you put into, and at what cost onto a big, you know, previously, kind of raw land, sort of parcel. But it could also be about what you build downtown, you know, the city of Dallas, in the year, 2000 for all practical purposes, we had zero people living in what is formerly called Downtown Dallas. Today, it's 20,000 and growing pretty fast. So we have plenty of housing problems, but that's actually something of a success story in a number of cases. That was apartment buildings that are typically not there are a handful of high rises, but mostly they are kind of mid rise apartments in areas that generally had pretty, you know, some prior use.

  Chuck Marohn 14:05

  I know this wasn't the focus of your research, but I want to push you a little bit and ask, because I feel like part of the issue here is we are good at greenfield development, like we are really good at it. And if you look post World War Two, we've developed entire systems from, you know, Wall Street down to the local level for facilitating that style of development. I feel like part of your argument is, if we want to get housing built quickly, we use that system to its optimum. Which, which would be tearing down the strip mall that you know is, is is ready to go filling in that parking lot with a with a building taking this unutilized space? Is that an indictment of city regulations, and I guess, like alternative approaches? Or is it more of an indictment of the fact that the building industry itself is built around kind of a very small set of highly profitable projects. You see what I'm getting at?

  Cullum Clark 15:10

  Yeah, I mean, there's no question that I am primarily in this report talking about doubling down, tripling down, and what we know how to do, as opposed to developing entirely new muscles that have not been ever really exercised in this country or no time in my lifetime, and yours to any meaningful degree. I think, you know, I'm a friend and a fan of yours, and I think you have, in some cases, talked about developing some new muscles. So I'm influenced by that. I go out and preach about it when I can. I guess I would say I'm enough of an empirical economist to want to say there is evidence that what I am suggesting can, in fact, be done at large scale, that we proved it can be done.

  One thing I try to think a lot about is there's man's laws, if you will, like all the rules and cities and so forth. And then there are the laws of economics, of you know, where like capital chasing a return and so forth, subject to what is legal. So to some degree, clearly, the rules created the the current set of muscles that we have are in significant part a function of the rules. There's, there's no question that's, that's clear. But I also think to some degree, they are the result of the laws of economics as well. The laws of economics being that, you know, well, we haven't made a whole lot of obvious productivity improvements in how we build homes in all of your lifetime and mine. You know, for all practical purposes, we do it about the same way. I think the microwave is the only new kitchen appliance that has achieved kind of widespread rollout since I was born. All of the other, you know, kitchen appliances were there when my, you know, when my grandparents were born, more or less. And we haven't changed much about how we build the frame of a house and so forth, or a, you know, mid sized apartment building.

  And of course, there's a number of academic studies that show negative productivity growth since the 1960s like, it actually takes more people hours to build one square foot of housing today than it did in the 1960s that's an amazing fact. I mean, what an indictment, right? So in terms of the muscles we that we never succeeded in developing, I guess what I would say is there are very likely some rules we can talk about that kept us from developing some of those new muscles. But I think that to some degree what you have is, if we don't have some. We haven't figured out a way to build, you know, a square foot of housing at a dramatically lower cost. Then, you know, money is going to chase. What uses the dollars as well as possible.

  We figured out how to build, like, four story or six story apartment buildings that are probably about as good as good a trade off as you can have between, like, the quality of the place, the quality of the build and the amenities and so forth, versus the cost that, you know, modern technology and modern money so far has been able to achieve. I think they're they're pressing against the limits, and that's why, to some degree, we get the same apartment buildings built city after city all over America. Some some degree, it might be kind of a fad, whatever is in fashion, but I think it's all think it's also a fact that they've, they've arrived at the the logical destination that you would arrive at if you're operating according to both man's laws and the laws of economics.

  So could we develop radically different muscles? Well, you know, one place to look is new technologies. I think it's kind of a scandal that we so restrict the ability to roll out either modular or or manufactured housing. I mean, manufactured housing doesn't have to necessarily, not that I have any prejudice against, quote, trailer parks, unquote. But we could certainly put out, roll out manufactured housing that actually looks like a small stick, built house, no problem, not allowed. And that's a scandal.

  And we also could imagine some kind of variation on 3d printing of at least some of some of the house. I talked to the guy who's the, I think he was the board chair of icon, company that has built a handful of 3d house 3d printed houses as an experiment in the Austin area. He was a little bit upset, because there was some media that said, Well, it's kind of a disappointment. So far, they cost just as much as traditional houses. He said, like, wait a second, this is the very first 100 that we built. Give us a year or two and watch us take down the cost by 20% 30%. You know, it's a young technology. We need to allow it to sort of have a chance.

  You know, beyond that, are there things that could both if we allowed it. I think a lot about what you have said about small builders doing one home at a time, I would like nothing more than to see a real flowering of that idea. It's kind of amazing how little of it there is, right? I mean, you look around tiny amounts, yeah, tiny, tiny amount. And I think it's very, very persuasive, and I love the idea. So is it literally not allowed in a lot of places, or is it more just the economics are too tough? I don't know. I defer to you. It's your it's your suggestion, but I like it in theory.

  Chuck Marohn 19:52

  Well, let me ask you this about the economics, because I think where I have struggled the most is the idea that if you want to borrow -- I mean, there's a, there's a saying that I've heard before, and I'll bastardize it a little bit, but it's like, it's, it's really hard to borrow half a million dollars, but it's really easy to borrow $50 million. Meaning, like, you know, if you are in that range, you can get your hands on a lot of capital to build a lot of stuff. If you are just like a normal American and you want to borrow money, the bar is pretty high.

  How do you call something a market, or say like the market has, in a sense, spoken, when one product, and I'll say the, you know, the apartment complex, or the infill house, or even the greenfield development, has like a whole range of federally backed, federally subsidized markets, markets that have repeatedly bailed out when they don't work and they don't fail in order to deliver that product. And obviously, like our muscles are really good around those but you have another set of products, the small one off developer building the one off house that, in a sense, is hardly financeable, certainly not at, you know, in a way, where the muscle memory for a bank, let alone all the other people that would be involved in delivering that pipeline, is really well developed. I think where I struggle is the idea that the market has somehow spoken and delivered this, as opposed to what I felt like, is a pragmatic argument for you, from you, which is, here's where we are if we're trying to build housing tomorrow, here's how we would do it. Is that a fair critique or question?

  Cullum Clark 21:37

  Yeah, to lean into what we know how to do, and there's evidence that we can do it pretty well and at scale. You know, I know when I say at scale, it's probably a little rattling when you have been writing so well and speaking about the idea of, you know, small developers doing a home at a time. I would, I like nothing more than small developers with one home at a time. You know, it's interesting. We do know how to finance the ownership of that, of that house, right? I mean, we're good at, actually, we're really good at creating individual mortgages, packaging them at the mortgage company, selling them on to Fannie Mae or Freddie Mac. So we're, we actually have the world's most sophisticated system for doing that.

  But it's probably true that the small builder would have a hard time borrowing the, you know, the several $100,000 at a you know, one at a time to do the single home. You know, I think if you talk to bankers, which I'm sure you've done a fair bit of, they would say like, well, if, if the 50 million loan and the $500,000 loan take roughly the same amount of work on the part of one of our bankers, and we have to pay these people, what do you expect us to do, right? My answer to that would be like, well, I guess, given the current business model, I can't really argue with you. You probably know how to run your bank. Maybe this is a case where I don't know the AI of the future could figure out how to actually do loan approvals in a way that was dramatically less costly than paying that banker to approve each one individually. I know we're not set up to do it today.

  That loan to the developer and so, yeah, that seems to be a constraint. I don't know if, if we're talking about single family homes on kind of existing lots, I think that that. I mean, that's probably the area that the rules restrict least, you know, like the local, the local rules in general. I mean, we have a, I mean, here in Texas, you know, seeing the single family home demolished and another one, typically bigger, going up in its place, that's the most ubiquitous side around that's that's happening on almost every block I can think of, or at least it has done in the last handful of years. So we're good at that too, but we're not good once you get below a certain, you know, price point. We got to develop some new muscles. I agree it's hard.

  Chuck Marohn 23:42

  Yeah. Yeah. I mean, that would be the price point where you would buy the house at disrepair, fix it up and build a second one in the backyard. And, you know, use that minimum lot size shrinkage to create two lots out of one, you know, something like that. And that. The people who do that work today are almost heroes, because it is such an uphill battle.

  Cullum Clark 24:06

  And a hard way to make a living, Chuck right?

  Chuck Marohn 24:08

  Hard way to make a living.

  Cullum Clark 24:10

  If you, if this is what you want to do with your life, and you develop some talent at it, I mean, that's that's just not a way to get rich. Yeah, I'm sorry to say, because absolutely that would be for cities. It's probably not actually a great career path unless someone, as you say, has got a certain amount of the heroic in them.

  Chuck Marohn 24:27

  I feel like part of the tension that I have with the YIMBY movement, the yes in my backyard movement, is that they've painted themselves largely as an opposition to NIMBYs. Like NIMBYs are the enemy. NIMBYs need to be defeated, shouted down at City Hall. Like, overcome. I feel like a lot of the NIMBY reaction to what we do is, I'm not going to say, you know, like, I'm going to stand up and yay NIMBYs, like, I love you, but almost like, from a human standpoint, very defensible. Yeah, and I felt like your I felt like your report was kind of in a similar vein of what I think our conclusion has been, which is there's a part of human nature in America today that is going to be resistant to change. Change is not. neighborhood Evolution is not built into our thing. And so if our premise is going to be we need a better set of humans, or a different set of humans, That's kind of a non starter. is that the analysis that you've got, like we got to do, we have to work with the people we have, not the people we we wish we had, Maybe?

  Cullum Clark 25:35

  Yeah. I'm so glad that you asked that, Chuck, because I couldn't agree more with the question that you did with the premise of your question, yeah, I think oftentimes, the kind of YIMBY rhetoric today, implicitly, what we're really saying is, first, let's start with totally changing human nature. And then once, once we've done that, now we can really, let's get started and actually, like, build totally different cities.

  Well, you know, I mean, the human nature. We're imperfect in a lot of ways, but I think that the the tendency to want to protect what is close to home is a very human instinct, and one that, unless it's, you know, channeled in really ugly directions or goes too far, is is ultimately a force for good in human life. And the fact that people can band together and protect, you know, whole neighborhoods against things that they might see as terrible for themselves and their families, I think is also, ultimately, mostly a healthy thing. Though it can go too far, though vetoes can be too enshrined in rules.

  One thing I think about a lot is history. And I think it's true, there have been a lot of a lot of good writing. There has been a lot of good writing by you, by a number of people, about, well, the rules we have today. It wasn't always this way. It's been a kind of an evolution. The evolution has been almost completely one way, like IE, towards it getting harder and harder and harder to build new housing. There's the odd reform here and there. I think the evidence is overwhelming that the arrow, mostly is still moving towards getting harder. So then you think back like, hey, what was the golden age like? Right? So if we go back far enough, like back in the days when, what was it triple-deckers in Massachusetts were built and so forth, and when neighborhoods might have gotten, like, torn down and rebuilt very, very fast, what were things like then?

  Well, I would guess the first thing you could say is the areas that were most subject to tear down and rebuilding were on the whole ones where people did not have enough wealth or political power to do anything about it. And if you went back and looked at the neighborhood where the, I don't know, the Vanderbilts or the Rockefellers lived in Manhattan, or something like that, or on Newport, chances are they were pretty darn good at keeping things from being built next to their mansion that they didn't want to get built. They were get built. They were probably as good at it as any NIMBYs of today. So the fact that neighborhoods, and, you know, individual families, are kind of better at protecting what they want to protect, and, frankly, holding off change, maybe that's just a result of being in a wealthier society, more technologically sophisticated, people better able to organize.

  I'm not sure that human nature ever really changed along the way. I think, if anything, actually, I don't ever bet on human nature, but I do think attitudes changed, and they changed in ways that are probably conducive to doing a better job with our housing challenges. For example, I think people are a whole lot more welcoming of, you know, living in a neighborhood with people who don't look like them, or people of different sexual orientation, lots of different things like that. I think in almost across the board, people have become more tolerant on the whole, including in things very close to home, and that should be a force for good. So we're still left with this sort of human nature conundrum, though, which is people don't love to see dramatic upheaval in the physical, physical space that surrounds their home. So what are you going to do about that? I'm just struck again and again when this or that city tries to do some one little thing, just how hard it is and how ferocious the resistance is, and it's just, it's ubiquitous, it's it's people of every background, every level of income. It's just so powerful.

  So, you know, I'm not here to say, just call it good or bad, but I think any kind of reform movement that starts with the idea that, you know, not in my backyard, sentiment is bad, it's a human stain, a kind of failing, I think, is- Whatever else you can say about it, it's certain to fail. It is. It is just about as certain as certain can be, that if you tell people that they're bad people, and the these very human attitudes they have are something to be embarrassed of, you will not succeed. You will cause them to dig in more. So what can we do about that? I have tried to write about this, both in the report and in a couple other things that are a bit more local.

  Here in Texas, I've tried to listen to places that actually have managed to achieve really rapid housing growth, typically on green fields, it's true, but nonetheless, they still achieve really rapid growth in ways that are going to create a little bit more traffic for the people who are already there and so on. How do they do that? How do they actually win people over? So I've got some ideas on that, and they typically don't involve trying to get people to throw out their old human nature and get a new one. I'm reminded of something I think Berthold Brecht wrote, I think in he was talking about like the East German regime from back in the 60s, but he said there was a period when the people had, kind of had all these protests against the communist regime. And I think East Berlin. And Berthold Brecht wrote, maybe what should happen is the government should meet and dissolve the people and elect a new one. Yeah, so I think that's a losing strategy.

  I think what has maybe had a little bit of success, but I don't want to over claim it, is if a community has a really clear, explicit plan for what it's trying to be, and it articulates it again and again and again. And people who missed the first 10 meetings, they come to the 11th and they hear it again. And the plan includes the idea that, well, with growing number of people and more housing units, there will be a bigger tax base, and we will be able to do things we couldn't do before, and it will be a better town to live in. Don't just take our word for it, but look at the specific plans that we're going to do, like the new school building. We're going to build the new trails, the new this the new that, I think when people hear that, they don't necessarily leap at it, but they kind of grudgingly accept it in a number of cases.

  One thing that we've you, and I've debated some, I'm very up on events in a handful of very fast growing suburbs here in Texas. And in some of them, what you see is a council manager form of government, where oftentimes, the city manager and the top deputy city managers and so on are in place for a very long period of time. And there is extraordinary consistency to the story about what they're trying to be as they grow. And Mayor after Mayor comes and goes, but they keep on endorsing that and keep on explaining it to people, and people they come to that town sort of signing on to the idea, yeah, we're part of something that's growing. We're part of something that is being made anew, and we are signed up for that like we're we're good with it doesn't mean we're not going to protest when that apartment building gets proposed for a block from us. The people still reserve the right to show up and protest. And yet, somehow more gets done in that kind of setting. So I'm trying to think about how to work with human nature, rather than overturn it.

  Chuck Marohn 32:16

  I feel like in a place like mine, or let's even go to like a rust belt place, I can say in Minnesota here, like Duluth. But you know you could go Buffalo or Erie or Cleveland. Places where you have neighborhoods that are clearly in decline, and you have some of this in Dallas too, but places that need love and attention. I do think that there is an opportunity to turn the NIMBY energy into a positive force. In other words, how do we make what it comes next an advantage for the people who live there, like, how does what's built improve their lives?

  And I think where I kind of struggle is I look at a block and I'm saying, if we could add a, you know, take every single family home on this block and add, make them duplexes, and add some backyard cottages and some other things, and maybe double, triple the number of people living on this block, we could support the restaurant up the street, or the corner market, or, like, whatever it would be. If we put the big apartment building in, you might get that same raw number of people, but in a different dynamic where the neighborhood wouldn't benefit. In other words, one galvanizes the NIMBY instinct against the project, and one takes that, I think base human nature, and says, Hey, this is good for me, so I'm going to support it. Am I being Pollyanna ish? Am I like, you know, being naive here?

  Cullum Clark 33:49

  I actually see a lot of evidence of that occurring. I think you're absolutely right. Where I travel around and see particular older neighborhoods, there clearly are the cases where they you take a look at them, they don't appear to be extremely wealthy places, but they are places where there has clearly been some TLC put into typically very old homes. You know, even that encounters a little bit of resistance, because oftentimes the people who can put a little bit of money in are, in some sense, maybe considered, quote, gentrifiers, unquote, right?

  But I have no trouble saying in an older neighborhood that needs some TLC, little bit of gentrification is a good thing. That means, like, somebody moves in and wants to spiff up the house that was already there. It's, there's, there's spillover benefits for everyone. I think everyone likes living down the block from a house that has become a, you know, little prettier, a little bit better condition. So, yeah, I'm actually pretty optimistic about that too. I think it happens all the time. And I think in any city there are blocks where that is happening and there are blocks where it's not happening, and the houses are growing more and more dilapidated, and maybe in some cases vacant, and the whole area is just going going south. There's just a lot of both. I obviously worry if the latter easily outweighs the former, if there's a whole lot more blocks that are deteriorating than are getting invested in, gently invested in. There's a developer here in Dallas you might know, I think, who talks about gentle-fication?

  Chuck Marohn 35:12

  Monty.

  Cullum Clark 35:13

  Yeah, Monty, exactly. So gentle-fication is clearly good. I don't think you'll find many people who would object to it. The question is just how to how to get it. I don't, on the whole think that city rules are as problematic as city rules can be. They're not the main obstacle there, right? The main obstacle is the power of the market, on the one hand, and then the, well, the power of, you could say, just entropy in places that aren't being invested in, that are typically low income and and just, you know, getting in worse and worse shape.

  In a lot of places. One thing I like to point out to people who maybe don't know, like big Sunbelt cities well, people who may be from the Northeast or the West Coast who are used to a denser environment. I think it's really notable that in a lot of the lower income neighborhoods of a place like Dallas or Austin or Houston, the density of structures and people is amazingly low, really, really low. So we're not talking typically about like, how you go into a somewhat densely built urban environment. Maybe someone has in their mind, like a neighborhood that once was really struggling in Brooklyn or something. We're nothing like that. We're talking about places that were built out single family on lots that oftentimes weren't that small. A very long time ago, in a number of cases, the houses have long since been abandoned. Sometimes, now and again, the city gets possession and demolishes it, but it's typically kind of not that good at turning it into something new, and so you get a level of human density that is, I mean, I've measured this in what we typically call southern Dallas. In much of it, the density in terms of human beings per square mile, is considerably lower than basically all of the fast growing suburbs north of Dallas.

  Chuck Marohn 37:00

  Yeah, shocking. To the point where it's hard to generate critical mass. Even if you could, say, double the number of people there, you're still struggling to get the number of people you would need to support commerce, to support jobs, to support, yeah.

  Cullum Clark 37:14

  You are. And you know, and what you what you see in places like that is there are plenty of pockets that actually are pretty well functioning middle class neighborhoods. They're scattered all over southern Dallas or the lower income parts of Fort Worth or Austin or something, but there are pretty big swaths that are just plainly deteriorating. So what in the world to do about that? You know, obviously a lot of chicken or egg problems.

  I think in big Sun Belt cities, you typically see, if anything, less than the average amount of quote, gentrification, unquote, because it's so easy to build out further and further into the suburbs. You know, if you face no physical obstacles, and the machine, for, you know, expanding outwards, the finance and development machine, is in extremely good shape, then maybe there's just not a lot of folks around who actually really want to work on that, that left behind urban neighborhood. So, you know, it's not like capital is clamoring to get in and it's being kept out. On the whole how to deal with that. My, you know, my own thought is, you, I mean, chicken or egg. What comes first? I would say an increase in the population of people probably comes before just about anything else. Like you've got to actually have some housing get built, and that can be controversial, but nonetheless, you know, that's where I would start.

  Chuck Marohn 38:28

  In the report. And also, you know, you were interviewed in Connor Doherty's piece for The New York Times. I'm actually going to have Connor on here in a couple of weeks. It's going to be fun. Yeah, no, I'm looking forward to that. You hold up the Sunbelt cities as a model for success. And I know, you know my counter argument to that. I mean, I I often point to the Sunbelt cities as the place I think with the most struggle. I'd like you to to make your case by answering this framing.

  I've argued many times that Texas is California just 20 or 30 years behind. Why is that off the mark? Like, what am I missing? As an economist, like I can look through the lens of an economist and say, yep, we want growth next quarter. We want growth next year. We want housing units built in the last five years. Who's winning that? Sunbelt cities. Like, I'm with you. Like, I agree. But how is the trajectory not getting you to the place that you don't want to be? If I think we would both agree that, particularly when it comes to housing, California is the place we want to avoid becoming.

  Cullum Clark 39:44

  Correct. Well, okay, first thing to say is, I think any, anyone who knows Texas cities well, who doesn't worry about your premise that we might be following footsteps California is not paying attention. Of course, we should be worried about it. Of course, as the population booms, and people move here, in many cases from California, and we build vast highways but the law of induced demand still holds, and we build enough additional housing in far out locations that, you know, the congestion reasserts itself almost no matter how much we build. Of course, we should be worried that we might be following in the footsteps of California. So if we don't get some basic things right, then very likely we do reach California levels of congestion, and we do so in the absence of California year round weather and California ocean views and so forth. So we create something that's not just a lot like it, but is definitively worse.

  So what's my answer? There's certain difference in the conditions in which we operate, and also the fact that we're doing it today and not the when a whole lot of suburban Los Angeles was built out. Both of those things are in some ways good news for Texas, if we get some basic things right. In what respect are conditions different? Well, here's one basic fact about California. California is particularly right along the coastline, exceptionally scenic, I don't have to tell you. And there are really great views that are a limited resource, like, ie, if someone blocks my view, I don't have it anymore, right?

  Chuck Marohn 41:12

  Right, right.

  Cullum Clark 41:13

  The motivations for, you know, getting your piece of California and then pulling up the ladder behind you and not letting anyone else in. The motivations are higher there than just about any place else. And that, I think, matters. That's not just me talking. That is some some good academic studies that have looked at the relationship between, you know, what are considered real places of great natural amenities, great mountain and ocean views and so forth, they just tend to produce a kind of NIMBYism that is beyond anything that you get in the less scenic middle part of the country, so that that's probably something that we aren't going to fully imitate, most likely, because there's no one place in in Texas that has, you know, in any big city of Texas, that has that great a view in any one direction.

  But I also think that when we're doing it matters, okay. It was California's misfortune that a whole lot of the suburbs of greater LA and the extended, you know, Inland Empire and so forth, got built at a time when we didn't yet have Chuck Marohn traveling around the country talking about how to build a stronger town. We didn't have Ed Glaeser having built a, you know, 40 plus year of publishing, dozens and dozens of academic papers about cities in all kinds of ways, people were making some decisions that now we look back and almost universally, think weren't very good decisions. You could say all of history is like that, like do we ever learn anything from it. But I think in this instance, we have, and I think now there is a whole sense of what you would want to achieve when you go and create a city. It doesn't always win, by the way. I mean the force of the dollar. You know, the economic argument sometimes can overwhelm the good ideas from people who kind of know how you would build out that new place in a more sustainable, better way. So, yeah, the good the good ideas certainly don't always win, but the good ideas are at least present.

  So what makes me a little bit optimistic? You know, you, you have done a better job than I think anybody out there and talking about what it means to build, like, unsustainable, financially unsustainable infrastructure. When you visit the -- you and I've had this discussion a few times I think, Chuck -- when you visit the fastest growing suburban places in Texas, and I increasingly find this is the case in other Sunbelt places like North Carolina and so on. Increasingly, the people kind of running those places, the heads of, you know, the city manager, the heads of economic development, they know the argument. They're acutely aware.

  Chuck Marohn 43:38

  They are.

  Cullum Clark 43:39

  They're not saying, what are you talking about? They've been paying attention. And they said, we think about that. We model it out to a to a lot greater degree than, you know, our predecessors did maybe 20 or 30 years ago. So what would you do if you were going to build on a green field site in a way that is sustainable? Well, you know, you where there's some pretty obvious propositions, like one allow a significant mixing of land uses. Because, for example, if you allow a decent ratio of commercial uses, and you succeed in filling that space, you know it's more valuable. It pays a higher, higher amount of tax per acre. And that makes things, makes the infrastructure a little more sustainable that if it was all just single family homes and nothing else. You allow a range of densities. You allow some apartment buildings to get built, allow some townhomes to get built, allow a full a full range. There's probably a whole number of infrastructure things that you just decline to do, like the, you know, expensive road that would go out to the gated community, way removed from the rest of everything else. You know, there are some basic things to do.

  And I think that a number of these places are trying. Some aren't trying as hard. Some are trying really hard. But what they're they're again, they're very conscious of the idea that they're creating something new, and they want to do it well, and they want to do it in a way that will please the people who are here, but also the people of the future, and actually not burden the people of the future with impossibly high taxes. Because otherwise, the infrastructure is all falling apart. So I think people are trying, and I like to think that we're learning a little something from from the past.

  I'm really glad you're talking to Connor, because, you know, he came to town with a thesis that dovetailed pretty well with with my own. You know, one thing that was kind of funny, I hope you'll ask him about this, is a lot of the, you know, reaction all over the internet to what he wrote, which, I guess I took that a little bit like, oh, aimed at me as well, because I was quoted in the piece. You know, some, you know, a lot of it is just so misplaced. I mean, people saying, like, Connor Doherty can't stand cities. He only likes-

  Chuck Marohn 45:35

  Yeah, yeah. That's silly, right.

  Cullum Clark 45:36

  That's BS. I mean, he, he just wrote about, like, Well, where can we actually build some housing? Where's he getting done? I'm going to describe to you. To describe to you a place, at least, a set of places, where it is being done. And by the way he wrote, it's being done well in some of these places and not well in some other places in the Greater Dallas area. I thought that was a pretty good point. It's dovetails 100% with what I write in my own report. I don't just write expand outwards. I say expand outward smartly. And that's a pretty, a pretty important point.

  And then I think another kind of reaction, maybe a little more thoughtful than Connor hates cities, was -- I'm trying to remember, it was pretty prominent journalist, I'm trying to remember which one -- basically said it's not so much that he hates cities. The issue is, what should we take as unchangeable? Like he may be describing the way things are, but is he really, is he truly closely analyzing the things that keep things as they are? That prevent, for example, much greater density in built up urban areas. And somehow just not looking at, well, maybe some of those things are changeable. Maybe they're, not just in a theoretical world where human nature changes, but actually it's within reach. And okay, let's have that discussion. Because, I mean, if they are within reach, I'm for doing them. I mean, I'm completely I'll bet he is too, not that I speak for Connor Doherty. But if something is politically doable, that would create a better neighborhood and a better area within this or that, you know, city, great.

  Chuck Marohn 47:05

  It does feel a little bit though, and I'm going to oversimplify your your point, but it does feel a little bit like you're saying, Hey, we're a lot smarter today than they were 50, 60 years ago. Like we, we we get it more. And, you know, I can buy that in some ways. Like, you know, we've got high density polyethylene pipe as opposed to clay pipe. And like, I like, there's some things that, like, yeah, okay, I understand. But I also am very confident in stating that they thought they were really smart and had it figured out better than their ancestors, and they managed to screw things up in some pretty colossal ways. I feel like we're human at the end of the day, right? Like I'm maybe you have a little bit more, and I know you do too, but limits on our hubris a little bit.

  Cullum Clark 47:57

  Yeah. I mean, I think you're absolutely right. I mean, we don't want to get too carried away. I'm glad I like history a lot. I read a lot of history. I've tried to write little pockets of history here and there. I think that it's good that we keep on debating and discussing and maybe revising views on, you know, what were the good decisions of the past? What were the bad decisions of the past? You know, I'll still stick with the idea that despite all their flaws, the you know, founders of the United States, when they wrote the Constitution and so forth, made more good decisions than bad ones. On the other hand, when I look at both the architecture and the urban design, if you will, of sort of 1950s style, suburbanization, I think mostly, mostly it wasn't good. Mostly they made bad decisions. You know?

  I mean, again, that's subjective. People can revise that view as we go along, but I think at the moment, there is a pretty strong movement afoot. A significant part of it calls itself the strong towns movement, so congratulations for that. But there's a wider movement that actually sort of agrees with what I just said. Like, yeah, they didn't do such a good job in that period. Let's do a better job of suburbanization or building a greenfield sites, or whatever it is we're trying to do today. I know people will look back on today, you know, from our when our kids are older and, you know, 30, 40 years. And they'll, they'll, they'll talk about, like, oh my gosh, they really messed this or that thing up in the 2020s. Of course, that will happen. But I don't know, maybe we'll do a few things where they look back and actually said we did a few things better than before. I don't think that's a crazy thought because we have a, you know, we got a lot of a lot of smart people thinking very actively about how you create sustainable, high quality cities today.

  Chuck Marohn 47:57

  Let me ask you this last question. I know we have to go but I watch financial news. I read financial news a lot. One of the things that financial news is freaked out about is the potential right now for falling home prices. Home prices are falling throughout much of the country, particularly at Sun Belt and southern states. How would that change things, if we have a significant reset in home prices? From a, from the thesis of your work and kind of what you're seeing in terms of building, the urgency to build.

  Cullum Clark 50:11

  Well, in my in my report, I actually have a brief moment where I comment on what you wrote about it in escaping the housing trap, specifically the idea that we're we're in a trap of our own devising because if house prices go down enough, it kind of wrecks the financial system. Which I basically argued, if it happens fast enough, is true, but if it happens with more gradually, then probably we shouldn't be quite so worried about that. I mean, it's useful, I think, for people like you and me to keep on pointing out to anybody who will listen that it's, it's, it doesn't make any sense to cheer for both, you know, higher housing prices over time and lower housing prices over time, right? Like, right? That's obviously illogical.

  I know which side I'm on which, very simply is, you know, I quantify it in the report that, on average in American cities, home prices and rents have gone up around 20, 25% on average relative to people's income since the start of the century. That, to me, is bad. That was a policy failure. We should be upset about that, and we should be trying to reverse it. So we should try to put ourselves on a path where home prices actually go down as a multiple of, you know, people's incomes and rent go down as a percentage of people's incomes for, you know, the next -- in my judgment, it probably takes, like, 20 plus years to get to what I would call a sort of long term sustainable level there.

  I don't think that if you actually had what's like, what's happened in- Take Dallas very recently. We had a bit of an apartment building boom, sort of post coming out of the pandemic, and now we have rents that are about flat and home prices that have gone gone down in low single digits as a percent. Of course meanwhile, people's incomes have gone up over this last couple of years. So as a, you know, as a multiple people's incomes, you could say there's probably been a decline of about like 6, 7%. I don't think that's stressing the financial system at all there. I don't see any evidence of outbreaks of, you know, mass delinquencies on mortgages because of that. It takes more and faster.

  So I think what we saw in 2008 and the run up to that, we all can learn something from history. Hopefully, what we saw then was a giant amount of speculative activity, and when it unwound fast, you know, people started defaulting fast. All of a sudden, the models are all broken. The residential mortgage backed securities are all sort of coming unglued. Now, all of a sudden, something you thought was safe, it's going to be a loss. So there's, you know, the chaos spreads through the financial system. Clearly, that could happen again, but I don't see that we're there at the moment.

  One thing that I do think a lot about is, to what degree is there actual, like, speculative froth in the housing market that could come come out, like, really rapidly, like it did. And, you know, at that time, like the the air coming out of a balloon or something, it looks to me like, like, take Texas. I think there was considerably more speculative froth in the in the Austin housing market than in the Dallas or Fort Worth or Houston housing markets. And I think that's the main reason they also had a pretty big apartment building boom, but I still think the main reason that Austin home prices are down a lot more than Dallas home prices over the last like 12 to 18 months, is there was, there was more of a bubble to unwind. There aren't too many other places quite like that in America. A handful of the like coastal Florida cities I think, are having pretty, pretty rapid unwinds of a certain amount of speculation, but I think the system can, can take it.

  If, what we're really talking about is we do a somewhat better job of building new housing and, you know, in a way that keeps up with demand a somewhat greater degree. And what we get on get on a long term path which we should be on, which is, you know, in general, the homes aren't getting that much better year over year, and so, you know, and yet, we're getting richer year over year. On the whole, the you know, American people, what we should see is home prices should gradually decline as a share of people's income, just as you know, food prices do, just as other necessities, maybe not quite as fast, because we've got more ways we can improve them at the margin, but still, the trend ought to be downwards. I'm not as, maybe as stressed as you about it, although you could convince me to be stressed if we start to see something a little more, you know, chaotic, but I'm still going to root for more housing supply. You're right. There's a trap. But I think we can navigate our way out of it if we, if we just basically get a little bit more smart about our policies.

  Chuck Marohn 50:11

  The report is called, build homes, expand opportunity. Lessons from America's fastest growing cities. You can go to bushcenter.org to get a copy. We'll also put a link in our show notes to it. So if you want to read the report, Cullum, thanks so much for your time. You are director George W. Bush Institute, SMU economic growth initiative. I just really value our friendship and the fact that you were willing to come on here so often and chat with us about your work. So thank you so much.

  Cullum Clark 55:10

  I do as well, and I sure appreciate everything, our friendship and everything that you are doing out there around our country. Thanks so much for having me.

  Chuck Marohn 55:17

  Thanks friend. Talk soon. And thanks everybody for listening. Keep doing what you can to build a strong town.

ADDITIONAL SHOW NOTES

• More from Cullum:

  • Read the report: Build Homes, Expand Opportunity: Lessons from America’s Fastest Growing Cities

  • George W. Bush Presidential Center (site)

  • “How Do You Build More Housing When No One Wants Neighborhood Change?” (Strong Towns Podcast)

• Learn how to unlock housing in your city: The Housing-Ready City: A Toolkit for Local Code Reform

• Chuck Marohn (Substack)

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