There is an interesting debate taking place in urbanist circles.
Is more density good for families because it helps reduce housing costs, or bad for families because it creates a lifestyle and environment that is not conducive to large families?
Indeed, we might consider changing our policies and regulations based on what we think is the answer to this question.
But do we have a reasonable answer?
Daniel Hess runs the
Substack and is on Twitter @MoreBirths. Daniel has taken up the case against density because of its potential fertility effects and is my guest for this FET podcast video episode.Here is one of his articles on the topic.
But Daniel is not alone in his concerns. The negative correlations between urban density and fertility are clear to many.
In this episode, we discuss global and national fertility trends, and I push Daniel to justify why we should be concerned about these trends—after all, low-fertility places are the better places to live, have more opportunities for women, and many nations historically encouraged lower fertility to generate economic growth. In Hong Kong, the saying was “Two is enough”. In South Korea, it was “Stop at two, regardless of sex”. In Bangladesh, it was “One child is ideal, two children are enough”.
Were they all wrong?
I press Daniel to make the case for why low fertility is so bad, given that low fertility countries are generally the most desirable ones to live in.
Here are three previous FET articles on the general topic, which show that I am not so concerned about declining fertility.
A main issue Daniel identifies when it comes to the effect of housing density on fertility is the step-change in appropriateness of housing for families when increasing density from detached homes to apartments, even if the internal space in each dwelling is similar. Because of this, suburbia could be the secret sauce for high fertility.
This makes intuitive sense to me.
My own home is about 100 sqm internally, which is not too different from many nearby apartments. But it is on a 300 sqm lot and is therefore much more family-friendly than the 100 sqm apartments available in buildings just down the road.
Maybe intermediate densities, like the small homes and townhouses that are more popular in new subdivisions these days, can still be as conducive to family formation as homes on large lots while economising on space and infrastructure.
Unfortunately, this density is the most difficult to promote in existing areas where incremental change to much higher density and towers is usually the most economical for the property owner.
We didn’t have a chance to dig into the popular idea in urbanist circles that the market will accommodate all needs at all locations, but regulations prevent large apartments that can accommodate families from being built. If we could deregulate to unleash the large-format family apartment, then this fertility and density issue might be resolved.
For example, here’s one such statement
The fastest growing category of Toronto homes have zero bedrooms: Bachelor units grew by 28 per cent, jumping from 22,355 to 28,765.
"Basically, the only housing getting created in Toronto tends to be high-rise: 30, 40, 50 storeys," Mr. Moffat said. It's hard to put in units with three-plus bedrooms in those types of buildings.
A mix of high land costs, restrictive zoning, using investors as preconstruction funders and high development charges pushes builders away from creating family-style units, according to Mr. Moffatt.
I think such claims are 180 degrees wrong on the effect of regulations. Generally, if town planning rules limit housing types, they do so by preventing apartments so that detached homes are built instead, or requiring apartments that are built to be above a minimum size (or, in the language of The Great Housing Hijack, they restrain uses below the density equilibrium).
But even having more three-bedroom and larger apartments would miss the step-change benefit of detached housing for families.
Daniel comes down on the side of zoning regulations that promote detached homes where they would otherwise not be the market outcome.
A key economic pattern that comes up in our conversation is that although young people have many detached housing options in smaller towns, they still commonly move to large cities and pay a premium to live in smaller apartments.
For example, in Japan, small towns are giving away houses for free to try and attract families. In Australia, as in most places, housing is large and cheap in regional towns, yet the young people who grow up in those towns usually leave for higher-density places.
Should we take this as evidence that low fertility and higher density lifestyles are a choice being actively made? If so, why is it bad?
Finally, what of fertility policy?
Should we pay a $5,000 per-child baby bonus, like Australia has done, and now Donald Trump is proposing? Or are social and cultural factors more important? After all, a lot of the decline in fertility was promoted through intentional moral suasion and cultural shifts, so perhaps this is the way it will reverse.
I hope you enjoy the episode. I am keen to read comments from you all.
As always, please like, share, comment, and subscribe. Thanks for your support. You can find Fresh Economic Thinking on YouTube, Spotify, and Apple Podcasts.
Theme: Happy Swing by Serge Quadrado Music—Creative Commons Licence CC BY-NC 4.0
Interested in learning more? Fresh Economic Thinking runs in-person and online workshops to help your organisation dig into the economic issues you face and learn powerful insights.
Share this post