From WXXI news.

This is connections.

I'm Evan Dawson.

Well, our connection this hour was made with the construction of a new house in Rochester.

How much do you think it cost to build a new house?

Maybe 1200 square feet.

The number was already basically unaffordable.

And now the National Association of Homebuilders says that new tariffs have added $11,000 to the cost of an average home build.

Everyone agrees that housing is a huge problem in this country.

Not everyone agrees on why or what to do about it.

Last year's presidential campaign included promises to build millions of new homes across the country.

The Rochester mayoral campaign and city council campaign are focused on have a pretty heavily, at least on housing.

So why is it so hard to just build a house?

This hour?

We had planned on a panel discussion on this issue, but some of our guests have decided not to appear, and I realize there are sensitivities due to the political climate.

But one man is not afraid.

One man is here to tangle.

Matthew Denker, the owner of Labeled Living operator of Rochester Construction watch.

Not afraid.

A pleasure, as always, to be here.

Put it on your business card.

There you go.

How are you?

I'm good.

How about yourself?

I'm doing great.

Tell the audience what labeled living is.

Tell the audience what Rochester construction watch.

sure.

So labeled living is my small infill development firm here in Rochester.

We've built nine units over the last, I guess, six years now, and that's gone really well.

And we're working towards building more.

which is why I'm here and talking about how hard that is.

And then Rochester Construction Watch started as a Facebook group, a little more than five years ago.

And that still exists, but also exists as a website now with, more long form pieces focusing on specific development projects in town.

Well, the National Association of Home Builders says tariffs are already responsible for about an $11,000 increase per home build.

that's from the Na.

HB Wells Fargo Housing Market Index 2020 5th April survey.

does that sound correct to you?

it doesn't sound too far off.

I mean, it kind of depends on what size home you start from.

And, and construction methods and things.

but that that sounds about right.

a big chunk of that, especially locally here, is going to come in the form of lumber tariffs on Canadian lumber, which have been in effect nonstop, at varying levels for eight years now.

they were introduced, I believe, in 2017 and have continued, as I said, at different levels ever, ever since.

So what else is is impacting we're going to get really into, some of the weeds here in a moment here, but I'm curious to know if other newer policies, 2025 policies, for example, are builders going if builders are able to build, if there's projects, that are greenlit, are they going to find work crews?

Is there any concern about, immigration crack on work crews?

there's a little bit of that for sure.

a little bit of immigration craft crackdown, but but even more so there's just a shortage of skilled labor to do these projects.

And why is that?

a lot of businesses, went under in 2007, 2008 when the market crashed last time.

and those workers are just gone, whether they retired.

And I know that's now, what, 17 years ago.

But they have retired.

They've moved on.

They went on to sell cars or do something else.

And it's been challenging to train more people to do it, partially because the demand, the demand for houses is there, but the building of the houses isn't happening.

And there's concern that even if we hired a bunch of people tomorrow to do it, that we'd end up with a glut of workers who would be laid off two years later.

Once we build all the houses that we didn't build over the last few years, I don't necessarily think that that's how it would play out, but there's always been that concern of ramping it up.

five years ago, during the pandemic, manufacturers didn't ramp up toilet paper production, knowing that once things were caught back up, they would have spent a bunch of money investing on, toilet paper plant that was going to go out of business.

And there's no reason to invest that way.

And so it's just been challenging to get our legs back underneath ourselves.

Well, so let's talk a little bit about why it's so expensive to build new houses.

And right now this is why Matt, such a good guest here.

You brought the book here.

Look at you.

You did some homework overnight, didn't you?

So the political discourse is obsessing over a new book from Derek Thompson and Ezra Klein called Abundance.

And the book goes pretty hard at democratically governed cities and states where housing prices are extremely high.

The cost to build new homes is extremely high, higher than in red states and cities on average, certainly.

So first of all, well, let me ask you that.

Do you agree with that general assessment that in cities and states primarily governed by Democrats, housing is more expensive?

Yes.

Yeah.

The numbers don't lie about that.

It's absolutely the case.

And housing is more expensive.

New builds are more expensive also.

Yeah I mean that's what's that's what's driving it.

it's the same for any, any good that the replacement cost is, is really part of what's driving driving the cost.

So why is it so expensive to build a new house.

Take us through what that process is like, why the costs are what they are.

And and as you do that, before the program, Matt was talking about, you know, if you're building new in Rochester, might not be the same as building new in Penfield.

And why that may be the case.

Sure.

So, I mean, there's there's a couple of big cost drivers to all of this.

one is the materials, as we talked about and things having tariffs on them or just materials getting more expensive, whether it's due to scarcity or demand.

So there's that piece of it.

And then there's also the labor piece of it that it's harder to find labor.

And and it's not just that you have to pay that labor more, but if you have to wait three months to say, put a roof on a house, then you're also paying the carrying costs of that house to a bank over that three months.

And we know interest rates are up over the last few years, partially to hedge inflation.

And so that cost gets greater.

So waiting costs more money.

And that's one of the drivers of development in the first place.

You know, you go to buy a piece of land if it takes you two years to get approvals to build a property.

All of that is incorporated in, look at the end game of that where something like Mark four is finally building Westport, landing in Pittsford.

And that's been, what, 20 years worth of lawsuits to do that.

And it's a materially different project now than when they started.

But there's enough money in building apartments on the canal in Pittsford that they're still doing it.

So those are the major drivers of it.

And that approval process really is what it is.

And and time is money, for better or worse, at least in an investment situation like this.

So the longer things take, the more they cost.

Okay.

And before anyone else say, well, you know, you know, there's, it's more complicated than that.

It is more complicated than that.

In fact, Matt, shared with me this morning and he and I both read a piece from Matthew Iglesias today on his slow, boring subs Substack and how in some cases, this is not always the case.

But there are plenty of examples of Republicans resisting, growth opportunities, growth, and by growth, I mean probably deregulation.

more green lighted lighting builds sometimes for very political reasons.

and sometimes in the name of deregulation.

Although I thought that piece was interesting, Matt, because if you drill down, you look at new Jersey, you look at other places where Republicans have tried to block local oil, builds.

It's always under the guise of, well, we want to deregulate.

We don't want more regulation, but usually what are they actually doing in those cases?

Yeah, they're they're enforcing the regulations that exist.

you know, in, in almost all of these cases, it's about, states, superseding local.

So some states with Democratic governors and red counties or red towns.

Yeah.

One of the one of the earliest examples of this, which isn't even in, Iglesias piece was Connecticut, looked, almost 20 years ago now that they were spending a lot of money to improve Metro-North stations and in a lot of the suburbs, nothing was happening.

There'd be a parking lot next to the Metro-North station that they just spent millions and millions of dollars on for more people to be able to ride more comfortably and to encourage that.

And they realized that, hey, there needs to be housing here.

And so Connecticut, took over, basically said anywhere near where we invest in a train station, you have to allow large scale apartment buildings and and it's made a big difference.

But of course, that was over the protestations of the towns themselves.

And while I don't have any specific examples, I'm sure some towns said, well, then don't fix the train station here.

We'll deal with it.

But for the most part, it did work.

And a lot of Connecticut towns and it's kind of run from there.

Yeah.

And in in new Jersey, you had a governor.

the state was basically saying, hey, we want to force the regulations to go away or to be lessened at the local level.

But the Republicans were saying, oh, just just another Democratic governor trying to run your lives.

We're not going to let you overburden.

Yeah.

Arguing that it was state overreach when what the governor was actually trying to do was to get more growth greenlit as opposed to overregulating.

So it I understand it becomes a very political battle in many places, however unbalanced.

Right now.

What you're saying is that the evidence shows if you're in a primarily blue state or primarily blue city, housing is probably more expensive.

Yes.

Can't argue that those numbers.

Okay, so now having read the section on housing in abundance, Clinton and Thompson are pretty tough on the political left, and they come from the political left.

They are trying to rally the political left to do things differently.

Do you think they're making good points?

I do, yeah, although I to their credit, they lead off that entire section explicitly saying that they're making this argument toward people who are on the political left because it's their minds who are most open to changing to try and meet the goals that we have purportedly set for ourselves, and that there's no real reason to argue with a bunch of Republicans who at least publicly purport to want the kind of deregulation that they then go on to advocate for, for pages and pages and pages.

So there is a little bit of that, but I think they make good points.

I think a lot of us say that we want housing to be more available, or that it's a human right, or that it should be more affordable.

But a lot of the things we then put in place are barriers to that happening.

And so here's an example.

As we said, Penfield in Rochester, if you're building a new house in Rochester and you're building a new house in Penfield, it could be a difference of a couple hundred thousand dollars different.

It depends on the project.

I mean, take the exact same house you'd build in a subdivision in Penfield.

Were you legally allowed to drop that in the city?

The cost would be marginally more, accounting for some city issues, but not vastly different.

But the difference is you can build things in Penfield that you can't build.

And that is true.

So.

So why is that?

Tell me about that.

the it's the best intentions.

roads paved with best intentions, right.

when the current zoning went into effect in 2003, the city had lost over 10% of its value over the prior decade.

And it was thought that if one that we were still depopulating, that values were still dropping, if we made it, that houses had to be nicer here, that would help support these dropping values if we made it that houses had to fit in.

If we made it, that houses were less dense because we didn't need all these extra units anyway.

that that would improve the situation, you know, that we were trying to arrest declining values, which is a challenge because even in 2003, people thought of a home as an investment.

That's not a new idea.

Sure.

Yeah.

For people.

And and so watching that, the road underneath them was very challenging.

And so a lot of those laws were put in place.

A lot of the rules in the current zoning were put in place kind of explicitly to arrest the, issues that had been going on in the prior 20 years when when you say nicer home would have to be nicer.

I know that's a general term, but give me an example.

And I I'm not picking on Penfield.

I'm just saying give me an example of a suburban versus a Rochester rural on what nicer?

What?

Sure.

I mean, I don't mean to pick on any one builder in town.

I think that would be wrong.

But if you've been in a new subdivision off of Jackson or Stone or somewhere in in Penfield, you know, I think you get the idea of what a basic house can look like in in a place like that.

And the houses that are built in the city are held to higher standards than that.

They have front porches.

They can't have street facing garages that line up with the house.

they are required to have the parking in the back yard of the house, which makes for a longer driveway, which costs thousands of dollars more.

It's it's a bunch of little things that all add up.

Okay.

And then there's also the question of is union labor required?

Is minority and women owned business part of the equation in terms of contracting.

So tell me a little bit about that.

Sure.

So those are cost drivers for houses that the city takes upon itself to develop.

I don't have any requirement to build a house with union labor or with contractors meeting certain hours when I own a piece of land.

And then I go, I go build a house.

so that doesn't apply to market rate construction or private construction.

Okay.

But anything receiving subsidies from the city and beyond that, because those many of those requirements exist on subsidies that come from the state and federal levels to about the accessibility of a house, about the labor makeup of who's building it.

I think the example I gave you before the show was the Hop funds from New York State's, which is $200,000 towards building houses that are affordable to the am I of an area about 100% to 120% ami and the program was built mostly to try and help downstate homes where the Am.

I could afford a 500,000 ami is the area median income income.

So those regulations that that fund was imagined as a way to help residents of Westchester be able to buy a house for $500,000 that otherwise would have cost $700,000 for the market to provide.

We're using it here for various projects as well.

Group and the city are using it for projects.

but it wasn't necessarily imagined to be money for upstate cities per se when the project was come up with, at the same time, that adds work requirements and adds costs in some interesting way.

It takes a house that maybe would have been 700,000.

It makes it cost 750.

That then gets subsidized down to $100,000.

It can be challenging talking to Matthew Decker, the owner of Labeled Living and the operator of Rochester Construction Watch, and I'm going to start welcoming some of your feedback.

I have a couple of emails to share it from connections at Cyborg on the phone.

This is Samuel and Spence report.

Hey, Samuel, go ahead.

Hi, Evan.

Thank you for taking my call.

Sure.

I just wanted to offer my insight as a younger person.

You know, I'm in my 20s right now.

I'm beginning my career as a social worker.

you know, and I'm looking at a landscape in Rochester where, you know, what I see is, you know, the market is responsible for providing housing to people.

And the people that make those decisions, I think, are people with multi-million dollar, you know, investments in the area.

And the problem I see, and I think a lot of young people see, is that housing in America is based on or is used as speculative investments.

you know, there's there's a constant drive to push home values as high as they possibly can go.

And real estate developers and builders have a lot of say, and I think they often downplay how much say in they have in what gets built, where it gets built.

the one other thing I'd like to say is that a lot of local governments have a lot of control over what gets built and where.

and, you know, I think the unsaid things, that those governments have, and in play in their decisions is, you know, racial prejudice, a fear of, you know, lower income people, working class people, you know, and there's no, there's nobody with multi million dollar war chests fighting for those people.

you know, I hear what's being said about Ezra Klein book and what Matthew Iglesias has to say.

You know, I think that they all have very vested interests in, you know, totally market based system or at the very least, a market based system where you do grants and, and subsidies are afforded to, again, multi-million dollar property developers.

it makes life and, family planning very difficult for young people.

So can I ask you a question?

Can I ask you a question about that?

So, I'm going to tell you what I think I'm hearing from you.

Correct me if I'm wrong.

I think part of your critique is a lot of the proposed solutions would work within the framework that keeps housing in the investment class, and that's still going to drive.

No matter what you do.

It's going to drive prices up.

It's going to be it's going to keep people on the sidelines as opposed to seeing housing very differently.

Seeing housing is something that, if not a human right, should be accessible for everyone and maybe not in the asset class.

Is that correct?

100%.

Okay, okay.

Because that's a big theme that we're going to be talking about in a moment here.

And in fact, we're going to we've got some sound to share on that.

And Samuel, this is I really appreciate the phone call.

And as someone in your 20s, I wish you luck.

people are the stats are pretty interesting.

The stats are showing that the average person average American is buying a home.

If they're buying a home at all, almost, you know, approaching 40.

I mean, it's later than it was generations ago.

more homes are out of reach.

So first of all, Matthew Denker, what do you make of Samuel's points?

I think it's letting governments off the hook a little more than they should.

But also, if the problem were just with developers, it would not be as hard to fix.

In the same way that the reason for switching to electric cars is pretty effective, because it's easier to decarbonize electric generation than it is to say, decarbonize something more diffuse.

if it were just developers, you could stand up better developers, or you could limit their profit.

The problem is, every single person today who already owns a home has a vested interest in their values not dropping.

And that's where the rubber meets the road.

That, for better or worse, for everyone who's in their 20s and doesn't own a home, it's not them versus developers, developers or business they'd like to make money.

Apple sells a $500 iPhone so they can make more money than only selling thousand dollar iPhones.

If there's money that can be made from building and selling 800 square foot houses, developers will do this.

And where they're allowed to, you see that happening?

Take a look at a couple of the subdivisions of 800 square foot houses being built in Austin, Texas, just to see what the end game of that is.

developers are a business and they like making money.

The houses being more expensive doesn't necessarily translate to that.

I mean, on a grand scheme, there's more margin in a more expensive house, but there's more margin, a more expensive car.

And Toyota still makes a Corolla.

They haven't stopped making those.

So I think that's a big driver of it.

And every one of those people who has a vested interest gets that, say because of local control, that the minimum house size in Spencer support is 1200 square feet.

So I need approval to build something smaller than that in Spencer Port.

And when I go to get that, everyone who owns a $300,000, 1200 square foot house is not going to be okay with me trying to build $200,000 900 square foot houses.

So Samuel's point about how we view housing generally is at the core of this.

It's really important, and we're going to be getting back to that in just a second.

Let me tie up a couple of other points before we get there.

Alex emails to say, Evan, I'm not entirely sold on the abundant premise that deregulating new builds and changing zoning laws is the best, easiest solution to the housing crisis.

At what point do municipalities bring construction fully in-house?

I have to imagine a public housing project built by city, county or state laborers would be markedly cheaper than RFP.

Yet another contractor that's from Alex.

That's difficult.

I don't know it, maybe, but if they're going to put the same requirements on themselves that they put on RFP is no right.

That's one of the big drivers of this, I can build a house for cheaper than the city can build a house.

But I'm also not going to guarantee that 30% of my workforce is women owned businesses.

And I'm not going to build a basement necessarily, or any of the other design requirements that the city puts on homes.

So it can be very challenging.

It's it's certainly possible in the same way that we say overland nonprofit could do it cheaper because they don't have profit, but it would be very easy to set up a system where in the units that the city builds are not, cheaper.

You know, there's very little if you go look, there's a very little developer fee to the buy the block homes that we were talking about.

Group is not can you can you briefly remind the audience what buy the block is.

Sure.

So they're now the CS now in the second phase of it.

but they have been building a series of homes focused in a couple different neighborhoods over the last, 3 or 4 years that they're building, exclusively to be for sale for first time home buyers who are approximately 60% ami, that we talked about earlier.

So I think as of this year, that is households with an income of approximately $55,000 a year, because I believe the Ami this year for Monroe County is $74,000.

Okay.

And the the mayoral campaign has included both the mayor defending this program, the other, candidates criticizing the program as wasteful because the average cost per house in the Bible block program is around 500 to 550,000 per house, very high.

And the mayor has basically said it is high.

That is what we're dealing with right now.

And it is worth it because it is part of a city mission to redress a history of redlining discrimination.

And he doesn't apologize for that.

So, but but I mean, everyone acknowledges that's a high cost.

It is a high number.

But I think you said it best before that.

This is more a question of values than it is waste that that number.

We get to that number by making a series of decisions about the design of the house, about the makeup of the people building the house, about the process by which we're going to sell the house and make sure that that house is built and sold to the right people isn't the right term, but but sold to the groups of people we are trying to help by building that house in the first place.

And all of those are real drivers of cost.

Okay.

so now let me get Linda's point here.

Linda from Naples emails to say thank you for doing the show today.

I was very frustrated ten years ago when we were home free, having taken care of.

Oh, Linda, I accidentally just deleted her email.

This is this is literally going to be me.

This is going to be great radio.

Do you want to talk for a bit while did that?

I'm I'm going to pull it up myself Megan.

Oh okay.

Oh it's great radio.

Matt Decker I got it.

she says we were home free, having taken care of both our parents, and we were looking into building a very small home.

And we were shocked to find that many communities will not let you build something smaller than 1500 square feet.

This is a huge problem in today's economy.

Today's awareness of carbon footprints and the movement against McMann and Linda goes on to say the following.

She says, sorry, Linda.

She says, I would love to build a tiny house community for people with low incomes who are single or simply don't need very much space.

We need to change the zoning laws to meet the needs of a burning planet.

So that's Linda in Naples.

Thank you for the emails there.

And so that's ten years ago.

She says.

We're just looking to build.

We don't need a lot, and we're looking at a lot of places that won't let us, because what we wanted to build was too small.

And you've already addressed part of this.

But then she goes on to say zoning laws are a problem.

Well, here's Rochester, new zoning code coming here years and years and years in the making.

Are you optimistic that a new zoning code can really crack the code to creating a much better, more affordable housing market in Rochester?

It can certainly help.

Yes.

and at least in the case of single family homes, the new zoning code is wildly more permissive than the current one.

So or at least the drafts that I've seen, the drafts that you've seen.

Right.

where it's at right now, I couldn't exactly say.

But at least the drafts that I've seen, single family homes are much more permissive than the current zoning code.

other forms of housing are a little more up in the air, but certainly being able to say, build, an 800 square foot house cottage is much more doable under the new zoning code than the current one.

so.

Okay.

And the zoning code is a whole different show that we're going to do soon.

What's the most important thing?

I'm going to give you the keys to the castle.

Now, what is the most important thing that could happen that is going to fundamentally affect how difficult or how easy it is to build new houses here, the review process for new houses, the review process, the review.

It's part of the zoning code, right.

But under the current zoning code, you cannot build an apartment building in the city of Rochester of rights that no matter what other things you meet, you will have a public review process for your new apartment building under the new zoning code.

Despite having a whole bunch of new rules and allowances and things, you are still required to go through a public hearing process for a new apartment building that no new apartment building.

Even if you show up with finished designs that meet building code that meet all of the design requirements of the zoning code, you will still end up in a hearing process, which is the case for everywhere.

That's not the city already that you can't build something in Penfield without a hearing.

Frankly, you can't open a new store front in Baytown without having a public hearing for your store, which is insane to me, because why build a shopping plaza if you can't just open stores in it?

I'm trying to come up with the argument.

Says Denker.

Is wrong here.

And is is it something like, well, if there's got to be hearings, there has to be a review process here.

Why would you be against review?

All we want to do is review your proposal.

We would like the project to be better.

We would like it to look.

Yes, we would like you to integrate with it.

So why are you in hers to this?

That is what's driving these costs.

That review process is what's driving these costs and and the and the way by which zoning is fixed.

I'm making air quotes.

I'm sorry people can't see that on the air.

The way by which zoning is fixed is by eliminating those review processes, by making the things that we say we want smaller houses, more houses, denser housing, townhouses of.

Right.

So that if someone pays an architect for plans that are then that meet building code, which is a whole separate thing from zoning code that they show up, they say, I want to build this.

And the person at the city says, great, they need building code.

They've got sprinklers or stairs or egress windows or whatever it is that they need for health and human safety.

Go ahead and build it.

And it's that process by which these things happen faster and less expensively.

It's the process by which new subdivisions are built so inexpensively in Texas that there is not this public veto process over a new subdivision.

And so the review that you're opposed to tell me if I'm wrong here is, number one, arduous because of the length of time and the number of reviews and time is money, and two leads to veto processes by the NIMBYs who are going to find something to oppose.

Yes.

Is that correct?

Yes.

Okay.

Does this the proposed zoning code in Rochester doesn't fix this problem in your mind or does it varies again, how?

single family homes are wildly more permissive.

The ability to build a small house, to decide that your small house no longer works for you when you want to tear it down and build a larger one.

All of that is much more permissive in the new zoning code.

But other things that happen in a city apartment buildings are not more permissive in the new zoning code.

But can't I just argue that?

Well, you just sound like a steamrolling developer who doesn't want to be challenged and just do whatever you want, and we've got to review what you want to do.

Sure.

I think that's the case.

And then people can continue to not affording their homes.

That's all there is to it.

I don't I, I yes, if you want to be able to slow the process down, then do exactly what we've been doing.

And it's led to 20 year olds not being able to buy a house in Spencer for it.

That's it's the solution, for better or worse.

Okay.

And so one other point before we'll do is we'll take a break, then we're going to come back and we're going to circle back to Samuel's point about how we view housing in general.

Is it an asset that should appreciate in value?

Is it something that should be something close to a human right or a human right?

So here we go, Mark.

Right.

To say I'm curious about something.

The population of Rochester has declined 2.84% since the last census, and about 0.58%.

yeah.

We keep I think what he's saying is over time, the population has gone down and the the max Rochester population was well over 300,000 300,000 people, you know, a couple generations ago.

But he's saying yet we keep talking about building.

If people buy and move into new houses, they are moving out of apartments or smaller homes.

And yet the population has declined.

Isn't this a zero sum game?

He's saying, why do we need to build more?

We've lost a lot of population.

Shouldn't we have enough housing?

We've lost 150,000 people from the population peak at 360,000 in, I believe 1960.

But it might have been 1959.

It was right around there in that same same time period.

We've lost only 3000 units of housing.

the 150,000 people who left Rochester did not live together in those 3000 homes.

at our populations peak, I believe the average occupancy in each household in the city was 3.5.

Today it's 2.1.

Yeah.

It's not going back up.

We are not about to persuade people to live together.

And mass for people to stay together after they divorce, for unmarried daughters to live at home until they're 30 or grandparents to live there.

Right.

And none of that is a thing.

And we have more single person households than ever.

55% of all households in the city are now single person households.

55%.

Yeah.

Wow.

And so at the end of the day, if we want more space to ourselves, if we want more units to ourselves, then we need more units that we have to build more housing, or the price will continue to go up because the market speaking is going to try and keep people living together because they can't afford to live on their own like they'd like to.

So it's a good question from Mark, but 2.1 people per household versus 3.5 is a huge difference.

And if we were still at 3.5 per household, we would not need to build nearly as much as we're going to need to build.

Correct?

Yeah, I did the math on this once, and I think we need something on the order of 80,000 units of housing to get Rochester's population back to where it was before, and 80,000 is game changing.

The county of Monroe for all of this century has built approximately 1500 new units of housing every year, like clockwork.

We haven't built 80,000 units of housing since the turn of the century in Monroe County, but that's what it would take just to get the city's population back to where it was.

Wow.

Okay, this is the only break of the hour, and we're going to come back and we're going to dig into this question of can housing be both a human right and a great investment?

or do you have to choose, as the society does government have to have a clear view of that, or can you keep saying no, we can do both because that affects certainly policy and that affects, you know, what may come next?

Here we're talking to Matthew Decker, the owner of Labeled Living and the operator of Rochester Construction Watch.

We're right back on connections.

Coming up in our second hour, a conversation about how villages plan for the future, how they want to attract more people to live there and make it more walkable, more bikeable, to simply move around the village.

Our eye is on Fairport next hour, where a lot has been changing and we're going to talk about how they're doing it next.

Our.

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This is connections.

I'm Evan Dawson, Dallas writes in to say wait, Texas doesn't have building codes, right?

They absolutely have.

That's what codes they do.

They follow the same IRC that we do here.

International Residential code, which despite having international in the name, is only used by the United States.

It's a real great, scheme of naming scheme.

So the major building code difference from New York to other states is actually, each, each state when they pass, when they adopt the IRC, tends to exempt certain things from it.

In California, nothing is exempted from the IRC requirements.

When you build a house, it has to have sprinklers.

It has to do all these other things.

New York state exempts single family homes and two storey townhouses from IRC requirements, such as having sprinklers.

Other states exempt more things than that.

In Texas, you can build a four unit apartment building without sprinklers.

You also can build three storey townhouses.

And you just if you travel to other states, you can see that the major, major form of new built housing for the last ten years is three storey townhouses.

They're absolutely prevalent everywhere.

The town I grew up in, outside of Philadelphia is awash in them because it's really the cheapest, densest form of development.

It acknowledges that we're all still going to own cars, and it has a garage on the first floor.

It's two stories of living above that.

They're more popular in Long Island and closer in New York City, where the values are much higher.

It's very challenging to do them here in Rochester because of the sprinkler requirement that the market's not strong enough to build many of them.

So what has Austin done?

Well, the city of Austin, Texas, it's often held up as this hey, look how much they've built.

They pulled back the red tape and they've helped address their crisis by building a lot.

It's true.

But it is still a lot of sprawl.

same thing with Houston.

one of the crazy things is Austin could even be doing more if they if they got rid of more parking requirements.

They have a pretty robust public transit system.

And you've seen new apartment towers being 13, 14 stories, a parking garage underneath 40 storeys worth of apartments, which is just crazy.

I can't even imagine how much more and how much better and how much more affordable Austin could be if they got rid of even more requirements still.

But in general, what is this?

What's the short version of the story that you see in Austin?

Just building more building translates to lower, lower prices build more prices go down.

So then the question becomes if you are as successful, if you are way more successful than Austin in Rochester, if you built more than any American city is building, if you built the 80,000 units that Matt Duncan is talking about, what would happen to prices?

Well, prices, of course, would be affected in a big, big way.

And is that what I mean?

Is that ultimately the goal because on the flip side of that, your home values would also be affected.

What are you going to sell your house for?

Is this a long term investment?

And so I want you to listen to part of the conversation I had on this program in April of last year with Mayor Malik Evans, about whether we can really see housing as both an asset that will appreciate and be a big part of our portfolios and help families with intergenerational wealth or something that looks like a human right.

And our goal is just to make sure everyone has housing.

Let's listen to this conversation.

I've listened to experts in the field of housing say that, you know, essentially you have to kind of make a choice.

Housing can be an investment that should significantly increase in value over time, or housing can be truly affordable and abundant.

But it's hard to do both.

In the city of Austin, Texas, in the last couple of years has responded to their own crisis of rising home prices, some of the highest rising prices in the country.

They built dramatically more housing, and as a result, David basically eliminated the price increases.

Now, some people have complained and they said, wait a second, my value is not going up anymore.

But a lot of people are saying, well, I can finally afford something now.

And there are officials are like, well, what did you want us to do here?

You don't want prices to go up.

So we build a lot more, right?

So do we need to build a lot more housing and do you see that as, as a an either or choice.

The housing can be an investment you don't fear does.

No I think it's I think I think it's a good question.

But no you first off you have to build more housing because first off, owning a home to me is like going to college.

You may not want to go, but you should have the opportunity to.

So we need to make sure that we create the opportunity.

And you know why we need to create the opportunity.

Because what's the what's the what's the.

And I'm going to test you.

What's the what's the black white homeownership gap in in the city of Rochester by percentage.

Yeah.

I mean it's it's probably 40 pretty large.

Yeah.

Huge 40% 40% gap.

Yeah.

We need to increase the homeownership rate in Rochester because one of the ways in which you built generational wealth is through homeownership period.

Now not everyone is going to to want to own a home.

And that's fine.

And that's why that's why Rochester has been the leader in the state.

And I said this last night of building affordable housing, for people who might want to rent and then maybe transition to owning a home.

So, I think that you have to build more housing is why we're doing this without buying a black program.

And I think you want to make sure Rochester has always been a pretty stable market with home prices for the most part.

Right.

across the country in the last, you know, 2 to 3 years, you saw this increase.

But I think that, Austin, is doing the right thing by building more housing.

The governor is doing this.

This is what's holding up the state budget right now, right?

How how you are able to build more affordable housing units and how you're able to do that.

So do we need to build more units?

Absolutely.

Because that keeps prices stable.

That keeps more to supply.

there is a huge demand for it.

And we're seeing it because we have in downtown Rochester alone, over 10,000 people living there.

And if you look at some of the projects that we have going on right now in terms of, in terms of the in the affordable housing space, but also just in the housing space, there's market for it.

164 Center City Courtyard, right, 123 at Canal Commons 128 at the old Hickey Freeman on North Clinton, 76 at Alta Vista.

Repurposing the Edwards Building for 114 units of affordable housing units.

So I kind of share that Austin belief that you do need to make housing as abundant as possible, because we know that there is a demand for it.

That's Mayor Malik Evans in April of last year, 2024, talking about his view that you can see housing both ways as something that ideally becomes abundant and ever present and easy to access, but also a great investment that builds intergenerational wealth.

Can it be both?

Matthew?

No, it's just that simple.

They it cannot be.

Both investments operate on scarcity and if it's scarce, then it's not a human right.

You're not giving everyone housing.

It just can't be both.

It's someone smarter than than I am.

Told me earlier this morning.

It might be neither, but at the end of the day, it'll it'll never be both an end.

And this is not a knock on Mayor Evans at all.

I think any politician you ask is going to tell you it can be both.

And they're going to try for that.

In the recording that you played.

He goes on to say that we need to keep building things to keep prices stable.

By what mechanism is a house, an investment?

If prices are stable, if we build and keep prices stable, like he says right there explicitly, where does the investment come from?

What exactly is driving any amount of wealth generation if the price is stable?

Because I gotta tell you, in 12 years that house is going to need a new hot water heater.

And in another 25 years it's going to need new windows and a roof.

And those things aren't free, and they're going to be needed to keep the house standing.

But if the house prices are stable for that same 25 years, you haven't even create enough value from it to pay to put a new roof on it.

So what does that actually look like?

I'm going to give you the answer that I think he would give, but I'm not going to claim to speak for the mayor.

I'm going to give you the answer that I think people who say it can be both have often said to me, but before I do, do your point about scarcity is important here.

A rare baseball card, a one of a kind baseball card, could sell for $100,000, $1 million.

If all of a sudden we find out, no, there's actually a million of those out there.

There's not one.

There is a million.

Is anybody going to be paying $100,000 for that card?

Now all of a sudden it's abundant.

You don't have to pay a lot.

Yeah.

If you get Warehouse of Babe Ruth's rookie cards, it's easy to decide and it would not be worth anything.

All of a sudden you kill the value of the scarce number that already were known to exist.

And that is how that's how I know.

I know this sounds really ridiculous and sort of econ 101, but that's why you're saying it can't be both correct.

Here's what I think the mayor saying.

I think what he's saying is, realistically, are we going to a world where there is a a key to be presented to every single person who wants their own house and it cost essentially nothing or something close to it?

No, but we can do a lot better than where we are now.

Which is to say, it is just murder for buyers out there.

They can't find any inventory.

Nothing is for sale.

Nothing is being built.

And as a result, prices are up, up, up in a way that we hadn't seen for decades.

And it feels disruptive.

I think what the mayor saying was we've got to stabilize that realistically, we don't want to see prices doubling in a decade like that.

That puts so many people out of the market, but we're probably not going to build enough to get to where we can just give everyone a key.

So let's do both.

Let's stabilize the prices.

Let's build as much as we can aggressively.

Realistically, that will turn houses back into the investment that they were in 2003, which is a good investment.

It's not a it's going to double every 510 years, but it is a good investment and it's important to have I think that's what he's saying.

I also can't speak for the mayor, but the math of that does not math.

as we discussed earlier, why doesn't the math math there, the value of houses in the city were, as I said, down 10% from 1990 to 2000 or some range like that.

Nothing about something that declines over in value by 10% is a good investment.

But people could afford houses in the city of Rochester if they wanted them.

And we're now the other direction that houses here have gone up by 50 to 100% over the last 3 or 4 years, and lots of people can't afford houses.

Obviously, people some people can't afford the houses that are here.

They're not sitting empty.

But but the group of people who can have it and the people who stand to be hurt most by stabilizing prices are the people who bought the house right now.

Someone who bought their house 30 years ago will still have seen some amount of appreciation.

And that time period they wouldn't be as affected.

Correct.

But you're saying it's politically a very hard sell for the full market of of homeowners.

It this is a problem that is difficult to dig yourself out of, though thankfully at a society level, if we give it enough time and are thoughtful about it, we can fix it with relatively minimal disruption.

Housing won't necessarily be a good investment if it's stable, but we can generally do it over a long enough period of time without people losing their shirts.

the best example of this is what happened to all of the borrowing for World War Two, that over the course of 30 years, via inflation and economic growth, ultimately all of that borrowing was gone.

It was fractional GDP quadruple.

We didn't borrow more money for World War 2 in 1970.

So all of a sudden the the actual debt was much smaller as a percentage.

In that same vein, if we could keep housing stable for 30 years, inflation and other societal changes will erode it.

Such that we've made it to a point where housing is largely affordable for everyone and no one has.

Streets lost 30% of the money that they've put in.

I've got to take two more phone calls, but just briefly.

So you're in the we've got to make it more stable.

And we have to create an understanding that it is not in the future.

It will not be the investment that it is today is ideally, I'm I'm willing to go further than that.

Usually, even as someone who does own my home, if it was suddenly worth half tomorrow because we built enough that more people could afford homes and there weren't, there wasn't the homeless problem that would be a part of downtown that would be better, and we'd be better off.

Yeah.

Okay.

let's move fast here.

Samantha in Rochester.

Go ahead.

Samantha.

Oh, hi.

I was wondering real quick if you could address the, the Airbnb situation in Bilbao and short term housing and how that affects the market, and if there should be more regulation on that so that people can actually live in those apartments that are just being there for short term gain.

and also like, obviously people don't need all that space there.

They're renting it temporarily.

So those that housing stock I feel should be limited to a certain percentage so that the people who need those homes can live there.

Okay.

Samantha.

Thank, I'm sorry, I think thank you.

Samantha, go ahead.

Matthew Decker.

So short term rentals, rentals of any kind, holding units vacant is a kind of fractional issue.

Would there be a little bit of relief to housing prices if we suddenly banned short term rentals tomorrow?

yes.

And that relief would come from the hides of the people who invested in short term rentals.

And without making a morality play here, we can decide whether we're okay with that or not.

But ultimately, the reason short term rentals are an investment.

Just like you buying a house is investment.

Is that same scarcity that it's all of this money competing for the same limited housing stock, and you can build your way.

If you built 100 new apartments, they wouldn't all get absorbed as short term rentals either.

We can still build our way out of it that if you don't allow additional units, the second to ten short term rentals are gone.

Prices just keep skyrocketing.

Again, it's not a long term fix to it.

And Samantha, we're going to try to address that on a future program.

It's a it's a good question Lisa in Rochester I've got about 30s.

Go ahead Lisa.

So so I want to know how the, investment opportunities in urban areas, because of the limited housing subsidies through public assistance, are affecting this.

My son and daughter in law live in California.

They called me excitedly a couple of years ago, saying their investment advisor were recommending that they buy a house, my street.

And I said, please don't write these houses are turning into rentals.

They were stable, working class, value homes that families could pass down and they've become first rentals and now short term rentals that are empty most of the time.

All right.

I got a jump in your list just because we got about 30s for Matthew.

Go ahead Matthew.

It's the same answer.

Short term rentals.

What you're talking about is investment driven in scarcity, that you can make money buying a house and renting it out for more money in that way, because we're not building enough houses.

That's that's all there is to it.

That it's the same pool of demand fighting for the same limited number of houses.

That's not increasing fast enough.

So what you're saying is you recognize the problem, but the solution is still in that bucket of we need to build more, build more.

Exactly.

Build more.

Okay.

as the music plays, anything else on the list of what has to happen to see more building you talked about, approval and review.

What about what else?

What's going to happen?

That's the big thing in the cost of money needs to come down somehow.

and that's going to be tough because we don't have a lot of control over that, that interest rates are where they're at for other reasons than just greed or anything.

It's not it's not like that.

Tariffs helping or not helping.

Not helping, not helping increasing prices there too.

Okay.

I want to come back to zoning.

later this year I hope so.

I really hope we get to talk about zoning later.

Oh, you'll be invited.

Do you recommend people read abundance?

Are you enjoying it?

Yes, it's been really good.

Okay.

The other book I have in this pile is good too.

What is that, stuff by Yoni Applebaum?

It's a lot of the same abundance agenda.

Thank you for being here.

Thank you so much.

You'll learn more about Matthew Denker with labeled living, labeled, labeled living in the operator of the Rochester Construction Watch.

We've got more connections coming up.

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