Making America affordable again

New home construction site. (Photo by Jim Watson/AFP via Getty Images)

America isn’t building enough houses and apartments, especially in its most vibrant cities. Thanks to needlessly restrictive anti-growth policies, the United States faces a mounting problem with affordable housing that’s become one of the highest hurdles to opportunity for millions of Americans. But the problem is solvable, and a handful of booming suburban cities – places such as Frisco, Texas; Franklin, Tennessee; and Apex, North Carolina – show how.

A disturbing trend

Between 2010 and 2022, home prices increased by an average of more than 60% in America’s 100 largest metropolitan areas. Incomes, however, grew by only 32% over that period. As a result, the median home price in the 100 biggest U.S. cities now stands at an all-time high of 4.3 times the median annual household income, up from 3.8 times in 2010. And in more than a quarter of these metros – mostly on the coasts – home prices have reached highly unaffordable levels: between five and 10 times residents’ median annual income.

The picture is even worse for renters. More than 45% of Americans who rent their homes are what the federal government calls “housing-cost burdened,” meaning they spend more than 30% of their income on their homes. By this measure, America’s home-affordability challenge is the most severe it’s been since the Census Bureau started tracking such costs in 1940. Among homeowners, 22% are cost burdened, but the share is much larger among people who bought their home since 2021 because of rising interest rates over the last two years, according to data from the U.S. Census Bureau’s American Community Survey.

Unaffordable housing causes many different problems, some obvious and some less so. It imposes direct economic hardship and pain. It prevents people with low to moderate incomes from living within reach of jobs in traditional downtowns or newer suburban hubs. It limits people’s ability to accumulate savings and reduces their ability to invest in important opportunity-enhancing goods for their children, such as education and enrichment activities.

The main reason so many American homes have become unaffordable is simple: Supply hasn’t kept up with demand. In a 2022 report, the advocacy organization Up for Growth estimated that in 2019, U.S. metros had 4 million fewer housing units than they needed, with most of the deficit arising from the decade of lower-than-normal homebuilding activity that followed the 2008 financial crisis. A dozen years later, during the COVID-19 pandemic, the nationwide remote-work experiment dramatically increased demand for housing space but did not lead to a commensurate boost in supply, which exacerbated the problem.

The main reason so many American homes have become unaffordable is simple: supply hasn’t kept up with demand.

In order to sustain housing stock over the long term, cities need to build between 500 and 1,000 new homes a year for every 100,000 residents. A city that is growing at just 1% per year needs between 1,000 and 1,500 new homes per 100,000 people. Yet between 2015 and 2022 – a period when the U.S. population grew 5% – American cities built only 450 homes per 100,000 people on average, based on Census Bureau permit data. The New York metropolitan area added only 60 homes per 100,000 residents, while Los Angeles, California, built 80 and San Francisco, California, built 100.

The main cause of this shortfall is a widespread increase in anti-growth housing and land-use policies. Since the 1990s, as the Harvard economist Edward Glaeser has shown in numerous studies, such policies have grown increasingly restrictive in many parts of the United States. And the more restrictive the land-use policies are in a given city, the greater the housing supply gap and the more severe the affordability problem.

The trend behind this trend is just what you’d expect: Over this period, political forces motivated by “not in my backyard” (NIMBY) sentiments have become increasingly well organized and effective in shaping land-use policies. Ask city council members in almost any U.S. metropolis and they’ll confirm that most of their constituents don’t want new housing – especially multifamily apartment buildings – to be built near their homes. And these constituents have become very good at getting their way.

Jerry Jones (C), owner of the Dallas Cowboys NFL team, with Frisco Mayor Jeff Cheney (R). (Photo via Twitter (X)/ City of Frisco)

Examples are abundant. In the city of Dallas, Texas, to name one, individual members of the city council routinely block proposals for new apartments at the behest of their voters. In wealthy California cities like Huntington Beach, meanwhile, mobilized residents and politicians have successfully blocked almost all plans to build new housing in recent years, despite state laws that require them to meet housing supply goals set by Sacramento. A handful of places like Phoenix are imposing new constraints on building based on legitimate concerns over future water shortages, but most do so simply because current residents don’t want growth.

Turning the tide

Despite all these negative trends, in recent decades, a few suburban cities have defied the odds and their own rapid population growth and built enough homes quickly enough to keep prices manageable.

In addition to Frisco, Texas; Franklin, Tennessee; and Apex, North Carolina, these include a number of other cities in the Southwest (Allen, McKinney, Prosper, Sugar Land, Georgetown, and New Braunfels, Texas; and Buckeye, Chandler, and Queen Creek, Arizona), the Southeast (Murfreesboro, Tennessee; Cary, North Carolina; and Alpharetta, Georgia), and the Midwest (Carmel, Indiana; and Dublin, Ohio). All these areas are building new homes at a furious pace, far faster than their neighboring core cities – Atlanta, Austin, Columbus, Dallas, Houston, Indianapolis, Nashville, Raleigh-Durham, and San Antonio. As a consequence, they’re managing to maintain better price-to-income ratios than their surrounding metros and the country as a whole.

Consider Frisco, which is representative of the group. The city’s population has sextupled since 2000 and grown 88% since 2010. But it has increased its total housing units even more: by 92% since 2010. To do this, between 2015 and 2022, the city built about 1,090 units a year per 100,000 people. That’s seven times the rate Dallas managed during the same period. As a result, home prices in Frisco are just 2.8 times the median annual income today, compared with 3.5 times in Dallas and 3.4 times in the larger Dallas-Fort Worth metropolitan area.

Contrary to the conventional narrative, Frisco’s overperformance is not primarily due to the greater availability of land there. In fact, southern Dallas actually has a lower population density than Frisco, plus vast acres of underused retail and industrial land that could be repurposed for housing.

The real reason Frisco is growing fast is because it has chosen to do so. Its housing policies are exemplary, featuring streamlined permitting processes, the efficient handling of zoning cases, and a friendly approach to housing developers. Frisco’s land-use plans are publicly transparent, and developers know they can get required building permits via the city’s online self-service portal within days. Policies like Frisco’s are easy to describe but tricky to implement, as countless local leaders across the United States have learned. But they’re also not impossible. Frisco’s distinctive accomplishment has been to build and sustain widespread public support for rapid growth and the housing that comes with it. And if Frisco did it, other places can, too.

At the opening of the new PGA headquarters, Frisco, TX, Oct. 2019. (Photo by Darren Carroll/Getty Images for the PGA of America)

Clear eyes

Frisco’s leaders have managed to keep their city growing for more than three decades by maintaining a consistent vision of what they’re aiming to build. Originally a suburb of Dallas, Frisco, with a population of around 250,000 people, is becoming a major city in its own right, performing all the functions of a traditional urban area. It features excellent schools and safe streets but also various high-value-added employers, such as AmerisourceBergen and T-Mobile, as well as a full suite of urban amenities, such as performing arts facilities, widely praised parks and trails, and a vast array of restaurant and shopping options. All this represents an entirely different model from that of most 20th-century suburbs, which marketed themselves as escapes from urbanism and its ills.

In order to sustain public support for rapid growth, Frisco has offered residents a package deal. Locals accept the headaches that come with fast development in exchange for the benefits it brings: a bigger tax base to support great local schools, better quality-of-life amenities, and wider job opportunities for residents. To sustain this balance, Frisco competes ferociously for business relocations and expansions. It also continuously and aggressively invests in its schools, health care facilities, parks, trails, entertainment venues, and other amenities.

Frisco’s leaders have also been successful in convincing its citizens that attracting and retaining people ranging from young adulthood to retirement age requires a full range of housing types. “Frisco is a full-life-cycle community,” Mayor Jeff Cheney told me. “That means we’re proactive to maintain housing options for residents in all stages of life: urban-style living, townhomes, single-family neighborhoods, and luxury homes. There’s something for everyone.”

Frisco’s leaders understand that the building a robust economy with abundant jobs requires providing affordable homes to a wide range of workers.

Frisco’s leaders understand that the city’s efforts to build a robust economy with abundant job opportunities depend on it providing affordable housing for a wide range of workers. “A large part of our economic development strategy is retaining and growing our vibrant workforce,” Jason Ford, President of the Frisco Economic Development Corporation (EDC), told me. “To do that, we work closely with our colleges, education partners, and the city’s development services team to make sure we have policies and products that support our current and future workforce needs.”

Frisco’s single-minded effort to build a new kind of suburban city has been a resounding success. Jobs are growing even faster than the population. The daytime population of adults working in Frisco is approximately equal to the nighttime working adult population, meaning as many people now commute to Frisco as from it. Even though Frisco is 27 miles from central Dallas, the average commuting time for Frisco residents is about the same as for workers in the urban Dallas County.

Frisco and its neighboring north Texas boomtowns also boast unusual types of downtowns, featuring concentrated mixed-use job centers with multiple office buildings, apartments, restaurants, and stores in a dense, walkable location. Today, the combined Plano-Frisco downtown straddling the Dallas North Tollway has more office space and workers than Dallas’ central business district. Frisco also has more walkable urban places – locations where residents can easily walk among “live,” “work,” and “play” destinations –  on a per capita basis than the cities of Dallas or Fort Worth, according to a study by the George Washington University scholar Christopher Leinberger (creator of the “WalkUP” concept) and his colleagues.

Frisco is pro-growth even by Texas standards, but in a distinctly curated way. It makes and executes long-term strategies. Its EDC has plans for specific locations that won’t be realized until the 2040s. And the EDC is selective about what kind of businesses it courts, emphasizing firms that bring knowledge-intensive, high-paying jobs to its city – like IT services firm McAfee, financial services firm TIAA, and insurance company Tokio Marine America, which moved to or expanded in Frisco during 2022.

Frisco also focuses relentlessly on quality-of-life investments. It has long mandated that all new developments devote 10% of their area to green space. It’s developing numerous projects to reinforce its self-assigned status as “Sports City USA,” including the headquarters of the Dallas Cowboys and the PGA, the National Soccer Hall of Fame, and more. Last year it announced plans for a Universal Studios theme park.

Universal Parks & Resorts plans for Frisco, Texas (Photo via Twitter (X)/ Universal Studios Hollywood)

Frisco has also managed to make itself more ethnically diverse. Nonwhite people now make up about 40% of the population. The city’s Black population has doubled since 2010, and its Asian American population has more than tripled.

Frisco’s success in building so much new housing has obviously been good news for recent and prospective arrivals. But perhaps the city’s most impressive accomplishment is that existing residents believe the benefits they get from the city’s growth – including a booming economy, top-notch schools, and fast-improving quality-of-life amenities – outweigh the costs they incur, such as more traffic and ubiquitous construction. Locals have plenty to feel good about. While growth-friendly housing policies tend to slow the rate at which home values rise (by increasing supply), Frisco has seen faster-than-average appreciation over the last 10 years because demand has grown so fast.

No easy task

Despite the benefits, establishing and maintaining pro-growth policies like those of Frisco and similar boomtowns invariably faces resistance. Many residents don’t want to see their cities become denser. Contentious debates over development, especially the construction of new apartment buildings, are inevitable.

To win those debates and sustain public support for growth-friendly policies takes effective political leadership. Local politicians must deliver on their promises to provide better school facilities and other amenities. They must build the necessary infrastructure before new residents arrive in order to limit increases in traffic and other forms of congestion. And as the population grows, leaders must keep selling the city’s package deal to new residents.

Frisco’s political and business leaders have pursued the city’s vision with steady purpose and determination. Its previous City Manager, George Purefoy, served for 34 years from 1987 to 2022, during which time he presided over the city’s growth from 6,000 residents to more than a quarter of a million today while maintaining continuous support from elected officials. Meanwhile, mayors, EDC officials, and business leaders consistently articulate the same messages.

“Frisco’s desire is to sustain the city’s success for the long term,” Wes Pierson, the current City Manager, told me. “We’ve been successful, in great part, by remaining focused on our strategic goals for quality development and a vibrant economy. We have a vision for our city, and everything we do works towards making it a reality.”

A roadmap for other cities

Overcoming resistance to housing development requires convincing residents that the benefits of growth will outweigh the costs. Winning support for change is hard. It’s a lot easier for city leaders to stick with the familiar status quo.

For that reason, most of the United States’ core cities have virtually given up on growth. Most suburbs, meanwhile, prefer to remain static bedroom communities, even though this means wearing out their housing stock as their residents (and residences) age in place. But if local leaders everywhere in the United States took this approach, new development would grind to a halt, home prices would move further out of reach, and economic mobility would decline.

The good news is that more suburban cities are developing their own versions of the Frisco model. Today, suburban communities in Texas’ largest metropolitan areas – Austin, Dallas-Fort Worth, Houston, and San Antonio – constitute 40% of the state’s population and almost all of the state’s impressive growth, census data confirms. These communities show that rapid housing development remains possible in 21st-century America.

Of course, smaller cities such as Frisco have an easier time when trying to win broad support for this kind of deal, as locals have more reason to believe they will realize the benefits of growth and not only incur the costs. For instance, an individual Frisco voter is more likely to live close to a new park or trail built by the city than a comparable voter in Dallas.

The most important lesson from cities like Frisco is about how to make the case for growth – a case that can be made anywhere.

But the most important lesson from cities like Frisco is about how to make the case for growth – a case that can be made anywhere. Too often, advocates for more growth-friendly housing policies in numerous U.S. cities, particularly on the housing-starved West Coast, make their case in accusatory ways, telling residents their resistance to new housing is rooted in exclusion, opportunity hoarding, or even racism. A 2022 New York Times article, for instance, quotes activists accusing “NIMBY” forces  of advancing smokescreen arguments against subsidized apartment developments as “proxies for racial exclusion.”

Unsurprisingly, this strategy has conspicuously failed to make much headway. NIMBY attitudes are a natural human response to change and often reflect a rational analysis of the costs and benefits of new housing for existing residents. And guilt trips are nearly always counterproductive.

The Frisco model, based on changing the narrative to “growth will be good for everyone,” shows the path forward. A handful of large cities – notably Nashville, Tennessee; Phoenix, Arizona; and Raleigh, North Carolina – demonstrate that core municipalities as well as suburbs can successfully implement their own versions of the model. All these cities have long records of pragmatic leadership committed to new housing, attracting businesses, and growth. In each case, leaders continuously reaffirm their case that growth will benefit all residents – and then prove it. Raleigh Mayor Mary-Ann Baldwin, for instance, has consistently made the case for new housing of all kinds and associated population growth since she entered Raleigh politics in 2007, and she has won election after election despite intense anti-growth opposition.

These cities and other pro-growth boomtowns offer a solution – indeed, the only solution – to America’s housing challenges. Many cities can’t or won’t follow their example. But if more do, millions of Americans are likely to vote with their feet and move to places that welcome them.