Part One: The YIMBY Movement
If you’re an HR professional responsible for employee relocation, you’re all too aware of the real estate challenges your employees face when moving to a new city. The chronic housing shortage in the United States is one of the most pressing issues affecting companies that provide relocation assistance today, and it often leaves your workforce scrambling to find suitable housing in competitive markets.
However, a growing movement known as “YIMBY” (Yes In My Backyard) advocates for increased housing development, which could meaningfully increase housing options for relocating employees and eventually even help bring housing prices down.
In this blog post, we’ll explore the YIMBY movement, discuss the US housing shortage and why it’s so difficult to build new homes and explain how this movement could help ease the situation.
Understanding the YIMBY Movement
The YIMBY movement advocates for fewer restrictions on housing development to address the growing housing supply gap. Unlike the more familiar “NIMBY” (Not In My Backyard) stance, which opposes new developments due to concerns over neighborhood character, property values, and congestion, YIMBY supporters believe that building more housing, particularly in high-demand urban areas, is essential to solving the housing crisis.
YIMBYism has gained traction in cities like San Francisco, New York, and Austin, where housing demand far exceeds supply, leading to sky-high prices and limited availability. By encouraging local governments to streamline zoning laws, reduce regulatory red tape, and support higher-density projects, YIMBY advocates argue that we can increase the supply of affordable housing, benefiting everyone—including your relocating employees.
Recent YIMBY Successes
According to The Economist, in 2023, California Governor Gavin Newsom “…signed 56 bills designed to tackle the state’s housing crisis. Many extended existing reforms, making it easier to build accessory dwelling units (ADUs) and apartments — even in exclusionary coastal areas. Other bills closed loopholes commonly used to block housing. SB 4, also known as the “Yes in God’s Backyard” act, will allow faith groups to build affordable housing on their property.”
While the YIMBY movement started in expensive coastal cities, the drive for zoning reform has become national. The Mercatus Center at George Mason University released a report outlining over 200 housing bills introduced in 23 states last year. Florida opened up to further development with its Live Local Act, designed to increase the affordable housing stock.
The US Housing Shortage: A Chronic Problem
To fully appreciate the potential of the YIMBY movement, it’s essential to understand the scope of the US housing shortage. Over the past few decades, the pace of housing construction has failed to keep up with population growth and housing demand.
“Despite a pandemic construction boom, the U.S housing shortage grew to 4.5 million homes in 2022, up from 4.3 million the year before, according to a new analysis from Zillow®.1 This deepening housing deficit is the root cause of the housing affordability crisis.”
This housing shortage has been exacerbated by several factors, including:
Zoning Laws: Restrictive zoning laws, particularly those that limit density and impose strict regulations on multi-family housing, have made it difficult to build enough housing in urban areas where demand is highest.
NIMBYism: Local opposition to new developments, often rooted in concerns about property values or neighborhood aesthetics, frequently slows or halts new construction projects.
High Construction Costs: Rising land, labor, and material costs have made housing development more expensive, limiting builders’ ability to produce affordable homes. Pandemic supply chain issues followed by high inflation made the situation even worse.
Environmental and Regulatory Hurdles: Stringent environmental regulations and complex permitting processes can delay housing projects for years or kill them outright, further driving up costs.
These obstacles have contributed to a supply-and-demand imbalance that has left many cities struggling with skyrocketing housing prices, not only in traditionally expensive locations. This shortage presents a unique challenge for HR professionals tasked with relocating employees, as transferees often face limited housing options and unaffordable prices in their new destinations. This makes it even more difficult to persuade employers to relocate and often necessitates a costlier relocation package to sweeten the deal.
Why Is It So Hard to Build New Housing?
The obstacles to housing development in the US are numerous and deeply entrenched in political, economic, and social systems. Here are some of the key reasons why building new housing is so difficult:
- Zoning and Land Use Regulations
Many US cities have outdated zoning codes that restrict housing density and limit where developers can build multi-family units, such as apartment complexes. For instance, much of the land is zoned exclusively for single-family homes in cities like Los Angeles and San Francisco. This makes it challenging to build high-density housing that can accommodate more people and relieve pressure on the market.
The NIMBY movement has also played a significant role here, as residents often resist higher-density developments. Homeowners, particularly in affluent neighborhoods, may oppose new housing due to concerns about changes to the neighborhood’s character, increased traffic, or strain on public services.
- Cost of Construction
Building homes, especially in major urban areas, has become increasingly expensive. Between rising labor costs, the high price of land, and skyrocketing material costs (which were only exacerbated by pandemic-era supply chain disruptions and the ensuing inflation), developers often find it challenging to build homes at price points affordable to middle- and lower-income families.
This means that even if new housing is being built, it may still be financially out of reach for relocating employees, limiting their options.
- Environmental and Legal Hurdles
Developers must navigate an intricate web of environmental reviews, permitting processes, and legal challenges in many states before breaking ground on new housing. For example, while well-intentioned, California’s Environmental Quality Act (CEQA) is often cited as a reason for delays and cost increases in new construction. Lawsuits and legal battles can delay housing projects for years, preventing them from addressing urgent housing needs.
How the Housing Shortage Affects Employee Relocation
For HR professionals, the impact of the housing shortage on relocation programs is profound. Relocating employees are often forced to compete for scarce housing, which drives up not only purchase prices but also rental prices.
According to Construction Coverage, “Over the past decade, which has included recoveries from both the Great Recession and the COVID-19 recession, U.S. home values grew by more than 100%.” Increases have been far more significant in some areas, like Florida.
This lack of affordable housing can increase company relocation costs, as they may need to offer a more generous corporate relocation package to attract employees. Additionally, the stress of finding a home can negatively impact employee morale, making it harder for your transferees to settle in and maintain productivity during the relocation.
How the YIMBY Movement Can Help Ease the Housing Supply for Relocating Employees
The YIMBY movement offers a partial solution to these housing challenges by advocating for policies that increase housing supply, particularly in high-demand areas. Here’s how the movement’s principles could ultimately benefit your relocation program:
- Increased Housing Supply
By advocating for relaxed zoning laws and supporting higher-density housing developments, YIMBY activists are working to increase the number of available homes in urban areas. This increase in supply could make it easier for relocating employees to find housing, particularly in markets that have long been under pressure.
In cities like Austin, for example, YIMBY-backed policies have led to new developments that increased housing availability. This helps stabilize prices, giving new residents more housing options at more affordable price points.
- Downward Pressure on Housing Prices
As the housing supply increases, basic economic principles suggest prices will begin to level off or even decline. For example, a 2021 report by Freddie Mac found that if the US could add 3.8 million new homes by 2030, it could help bring housing prices down by as much as 10-15% in some markets. By promoting policies that enable faster, more affordable construction, the YIMBY movement aims to relieve the supply constraints that currently drive up costs.
Lower housing prices could eventually lessen the need for some relocation support, such as duplicate housing allowances and extended temporary living benefits, ultimately reducing the cost of your relocation program.
- Improved Employee Experience
Relocating is one of the most stressful life events an employee can go through, and the added stress of finding a home in a tight market can further complicate the process. By increasing housing availability in desirable areas, the YIMBY movement can help alleviate some of this stress, making it easier for employees to find homes that meet their needs and budgets.
A smoother relocation process can lead to higher employee satisfaction and retention, which are critical objectives for HR teams managing relocation programs.
Conclusion
The US housing shortage is a critical issue for businesses and HR professionals managing employee relocation programs. With limited housing supply and high prices, relocating employees often struggle to find suitable homes, increasing stress and potentially affecting employee morale and retention. The YIMBY movement offers a partial solution by advocating for policies that increase housing supply, reduce costs, and make it easier for employees to find homes.
At TRC Global Mobility, we understand that housing availability and affordability are integral to successful employee relocations. By keeping informed about housing market trends and advocating for policies that improve housing access, we can work together to ensure your employees have the best possible relocation experience.
In Part Two of this blog, we’ll discuss the role accessory dwelling units (ADUs) can play in increasing the housing stock for relocating employees.
