Why Are Housing Costs So High? The Elevator Can Explain Why.

Opinion | Why Are Housing Costs So High? The Elevator Can Explain Why. - The New York Times

"A developer in a much poorer Eastern European country could afford to include an elevator, but the developer of my luxury five-story building in Brooklyn, built 25 years after the passage of the Americans With Disabilities Act, could not? I quit my job in real estate and started a nonprofit focused on building codes and construction policy.

Through my research on elevators, I got a glimpse into why so little new housing is built in America and why what is built is often of such low quality and at high cost. The problem with elevators is a microcosm of the challenges of the broader construction industry — from labor to building codes to a sheer lack of political will. These challenges are at the root of a mounting housing crisis that has spread to nearly every part of the country and is damaging our economic productivity and our environment.

Elevators in North America have become over-engineered, bespoke, handcrafted and expensive pieces of equipment that are unaffordable in all the places where they are most needed. Special interests here have run wild with an outdated, inefficient, overregulated system. Accessibility rules miss the forest for the trees. Our broken immigration system cannot supply the labor that the construction industry desperately needs. Regulators distrust global best practices and our construction rules are so heavily oriented toward single-family housing that we’ve forgotten the basics of how a city should work.

Similar themes explain everything from our stalled high-speed rail development to why it’s so hard to find someone to fix a toilet or shower. It’s become hard to shake the feeling that America has simply lost the capacity to build things in the real world, outside of an app.

The passenger elevator was invented and popularized in the United States and helped our country grow into an economic powerhouse...

Nobody is marveling at American elevators anymore. With around one million of them, the United States is tied for total installed devices with Italy and Spain. (Spain has one-seventh our population, 6 percent of our gross domestic product and fewer than half as many apartments.) Switzerland and New York City have roughly the same population, but the lower-rise alpine country has three times as many single-family houses as Gotham — and twice as many passenger elevators.

In Western Europe, small new apartment buildings of just three stories typically include a small elevator (and sometimes buildings of just two stories as well). These types of buildings have almost never had elevators in America, and developers are planning and building new five- and six-story walk-ups in some cities. When a developer in Philadelphia or Denver comes across a piece of land zoned for a few stories, elevator expenses are often one reason they build townhouses rather than condos — fewer in number and with higher price tags.

Behind the dearth of elevators in the country that birthed the skyscraper are eye-watering costs. A basic four-stop elevator costs about $158,000 in New York City, compared with about $36,000 in Switzerland. A six-stop model will set you back more than three times as much in Pennsylvania as in Belgium. Maintenance, repairs and inspections all cost more in America, too.

The first thing to notice about our elevators is that, like many things in America, they are huge. New elevators outside the U.S. are typically sized to accommodate a person in a large wheelchair plus somebody standing behind it. American elevators have ballooned to about twice that size, driven by a drip-drip-drip of regulations, each motivated by a slightly different concern — first accessibility, then accommodation for ambulance stretchers, then even bigger stretchers.

The United States and Canada have also marooned themselves on a regulatory island for elevator parts and designs. Much of the rest of the world has settled on following European elevator standards, which have been harmonized and refined over generations. Some of these differences between American and global standards result in only minor physical differences, while others add the hassle of a separate certification process without changing the final product.

If physics is the same everywhere and there are no measurable differences in safety outcomes, why reinvent the wheel (or elevator)? America’s reputation for unbridled capitalism and a stereotype of Europe as a backwater of overregulation are often turned on their head in the construction sector.

Not only do we have our own elevator code, but individual U.S. jurisdictions modify it further. More accurate and efficient electronic testing practices, for example, are still mostly viewed with suspicion by the nearly 100 boards and jurisdictions that regulate elevator safety in North America. (The exact number in the regulatory patchwork is hard to nail down.)

And then there’s labor. Americans, and citizens of almost every other high-income country, rely on immigrants in construction. But there are few legal ways in for construction workers; H-1B visas, which allow foreigners in tech and other industries to work in the United States, are usually only for professions that require college degrees. Immigrant workers without papers therefore typically stick to nonlicensed construction trades like painting and framing.

That works for single-family houses, with their simpler construction. But it’s led to skyrocketing construction labor costs in cities, where stricter licensing and physical complexity of multifamily construction can make it untenable to hire a large slice of the construction labor pool. Workers’ lack of legal status and stability makes it tough for them to get licensed or enroll in apprenticeships or other formal job training programs. The fewer workers available to do a job, the more the job costs.

This tight market for skilled and licensed labor has strengthened the hand of the elevator union — power it uses to create even more of a labor squeeze.

Architects have dreamed of modular construction for decades, in which entire rooms are built in factories and then shipped on flatbed trucks to sites, for lower costs and greater precision. But we can’t even put elevators together in factories in America, because the elevator union’s contract forbids even basic forms of preassembly and prefabrication that have become standard in elevators in the rest of the world. The union and manufacturers bicker over which holes can be drilled in a factory and which must be drilled (or redrilled) on site. Manufacturers even let elevator and escalator mechanics take some components apart and put them back together on site to preserve work for union members, since it’s easier than making separate, less-assembled versions just for the United States.

American building codes and federal law may dictate how large an elevator must be, but they often have little to say about whether one is required at all for apartments. Given the expense, our apartments often just go without.

Beyond the elevator itself, you’ll find a byzantine mess of absurdities and contradictions behind the U.S. construction industry’s slowness, inefficiency and expense. For example, Americans cannot use the latest heat pumps — a critical tool for fighting climate change by electrifying heating systems — because of the same sorts of barriers imposed by U.S. regulators. Instead, Americans rely on obsolete heat pumps that don’t have a market abroad. And plumbing codes in America require an entire network of ventilation piping that has been deemed largely unnecessary in much of the world.

America’s single-family suburbs largely avoid this dysfunction. Over decades, single-family homebuilders and politicians responsive to their concerns have kept a close eye on building codes and the costs they may generate. The National Association of Home Builders has negotiated guaranteed seats on the national model code committees that regulate single-family houses, and it doesn’t shy away from making its case directly to legislators when it feels that those national model codes threaten affordability and should be overridden.

But multifamily developers, traditionally a weaker and less organized constituency, are mostly checked out, so materials manufacturers and organized labor — for whom higher prices mean more money — have run amok.

And it shows. Construction costs for detached single-family houses average about $153 per square foot. In America’s most in-demand coastal cities, multifamily construction costs have exploded. Even subsidized multifamily housing in California can cost $500 per square foot (or more).

A generation of young would-be homeowners locked out by skyrocketing housing costs has taken notice. Their first target was a century of tightening land-use regulation, in which existing homeowners enriched themselves by blocking development through restrictive zoning measures. In recent years, the rise of the so-called YIMBY — or “yes in my backyard” — movement has succeeded in all but abolishing single-family zoning on the West Coast.

But as zoning codes were liberalized, architects and developers soon began ringing alarm bells about the hurdles buried in the finer points of building codes and standards and other more technical rules.

And so, a new front is opening in the housing war.

The advocacy group California YIMBY and its partners have sponsored a bill to rein in an overly litigious legal climate that has made condos almost impossible to build in the state. With the help of the Center for Building in North America, the organization I founded, another bill passed directing the California fire marshal to study national model building code provisions that limit the height of small, single-stair apartment buildings to three stories (one of the most stringent limits in the developed world). And in Vermont, the state legislature and fire marshal are reviewing building and fire code provisions with an eye toward increasing production of housing (including cheaper elevators).

If elevators are ever to be as inexpensive and abundant in North America as they are in Europe and Asia, deeper reforms will be necessary.

Adopting the European elevator standard would open up the market to more competition and parts. We should grant some leniency when it comes to elevator size for small apartment buildings that are at risk of having no elevator at all (or not being built in the first place). Some thought should be given to accommodating less credentialed immigrants like those who work in construction, as in the European Union. In the meantime, vocational and technical training in public high schools should be improved to supply the elevator industry with more native-born workers.

And then there are bigger-picture questions about what to do about our complex system of rules and the groups that oversee them. The federal government could raze the existing system by setting uniform rules for construction with more of an eye toward global best practices and cost, perhaps starting with elevators. The federal government could condition the billions of dollars it hands out for housing assistance on the adoption of new codes, as it has done with highway funding and the now-uniform 21-year-old minimum drinking age.

America has grown extraordinarily rich from white-collar industries like software engineering and finance. But with email-job couples earning well into the six digits now struggling to afford to live in many American cities, we are bumping up against the limits of what quality of life an economy built on apps can provide. Software and financial engineers can’t make my apartment building accessible, so at some point we must relearn how to build things in the real world. Maybe the elevator can teach us how."

 

Clearly, we need even more regulation to force greedy developers to include lifts in low rise apartments.

Related:

Hal Singer on X - "Why have housing costs skyrocketed?
Progressives: Hedge fund/private equity have been buying up hundreds of thousands of homes. Pricing algorithms allow landlords to coordinate price hikes.
New York Times Op-Ed: No no. It's the high cost of elevators and the elevator union!"
Sandeep Vaheesan on X - "The nyt op-ed calls for weaker building codes, attacks unions (private sector union density is ~6% now), and supports expansions of guest worker programs, which bind people to their employer. Why would progressives endorse this standard right-wing program?"
Jason Cox on X - "The NYT op ed in question outlines that we pay 4x more for an elevator than EU countries and how the building code, itself dictated by a ~private~ organization subject to corporate capture, reflects similarly wasteful requirements that makes housing excessively expensive for Americans.  But sure, let’s focus on making sure elevator unions get paid to disassemble and reassemble parts and ignore the systemic issues as well as any good faith efforts to improve on."
Vanyali on X - "There’s a reason an entire generation turned against unions. The younger generation thinks unions are all daisies and unicorns, but this is the reality."
Gary Meyers on X - "Leftists: Europe is better in every way and we should be more like them
Okay here’s a relatively concrete and actionable item Europe does that we could emulate and probably get conservatives on board
Leftists again: wait no not like that"
sam on X - "it’s sad how people like you are so afraid of learning from best practices *from social democracies that are more equal than we are* in a way that would benefit everyone. The problem isn’t the unions, Europe has stronger unions than we do. The problem is the rent seeking."
Why the left love unions so much
Left wingers complain about how right wing the US is, but they have so much union-created nonsense and inefficiencies
Hilariously, Singer claims that elevator costs are fixed so they don't matter, and also that they are insignificant compared to the rest of the house (when the op-ed explicitly said that the problem wasn't confined to elecators, and that was just an example of the many problems with housing)

Jason Cox on X - "It’s important to understand the difference between the cost of construction (a massive problem for housing costs) & rent-seeking behavior of companies that… are able to do so because of the high cost of new construction to expand supply. If one cares about the latter, you should be supportive of ways to reduce those costs instead of pointlessly attacking a thoughtfully articulated and researched way to try to do so."

Opinion | Let Flannery Associates Try to Build a Bay Area City - The New York Times - "A company backed by Silicon Valley’s most powerful investors, including the LinkedIn co-founder Reid Hoffman and the venture capitalist Marc Andreessen, assembled a land empire outside San Francisco and announced a bold vision to build a brand-new city — and was immediately castigated by the world’s urbanists.  Critics describe the effort by the company, Flannery Associates, as greed in urbanism’s clothing that would create an environmental disaster in the form of a mere commuter suburb...  The Bay Area needs a lot more housing, and we may need privately built cities to get there.  There is nothing new about cities built by investors and corporations. Celebration, Fla., was developed by the Walt Disney Company and includes buildings from architectural giants like Philip Johnson and Robert A.M. Stern. (Disney has sold off most of its holdings.) Not far from Seoul, the Songdo International Business District was developed by a consortium of real estate developers; it is planned around a two-square-mile eco-friendly, high-tech downtown that is meant to house over 60,000 people.  There is also no rule that cities planned by governments are morally superior. In 1910 the mayor of Baltimore, Barry Mahool, signed America’s first racial zoning ordinance, explicitly barring Black Americans from moving into majority-white city blocks, leaving the city hypersegregated for decades. During the 1960s, the high-water mark of racial segregation, a private developer named James Rouse planned an integrated city in nearby Columbia, Md. Columbia is not perfect, but it remains racially diverse, and according to data from the Opportunity Atlas, it does vastly better than nearby Baltimore at promoting upward mobility for Black American children. Another planned community, the Woodlands in Texas, was born out of the Columbia experience. It offers a powerful example of how a privately conceived city can provide a great deal of public good... The schools-ranking website Niche lists it as one of the best U.S. cities to live in... while the Woodlands does not share Columbia’s history of racial equality, 19 percent of its households are Hispanic, and the Opportunity Atlas shows that upward mobility for low- and middle-income Hispanic children is higher there than in most of Houston.  Deng Xiaoping justified China’s move to free enterprise by saying that “it doesn’t matter whether a cat is black or white, as long as it catches mice.” The California version should be that it doesn’t matter if the developer is private or public, as long as it builds the housing that the state needs to become more affordable. Even if these would-be city builders make boatloads of mistakes, getting anywhere close to the goals of Flannery Associates to house 400,000 people — up to 5 percent of the Bay Area’s current population — would significantly help make the region more affordable and inclusive... In recent decades American growth has moved to the Sun Belt, and people are going there not just for the nice weather. As Southern cities like Houston and Atlanta build enough housing to keep prices low, they are siphoning population away from the booming metros of yesteryear.  Today, California is one of the most productive places in the country, but it doesn’t let people in because homeowners figured out how to block new construction, which pushes prices up and productivity down. Work by Chang-Tai Hsieh and Enrico Moretti found that limited access to America’s most productive places “lowered aggregate U.S. growth by 36 percent from 1964 to 2009.” Even though opponents to development in coastal California often base their arguments on environmental grounds, building there is one of the best things that America could be doing to counter global warming. One of us, Professor Glaeser, and a University of Southern California environmental economist, Matthew Kahn, calculated that coastal California was easily the least carbon-intensive part of the country because of its mild climate."
Left wingers hate the rich so much that they want them to suffer even if the poor suffer too

Jason Cox on X - "We like to make fun of over-regulated “socialist” European countries but we can’t build a railroad or a subway or basically anything other than a highway and anytime we do it costs like 4x more so I dunno maybe we aren’t so free after all
“Progressives” attacking reform as deregulation turn around and give cover for cronyism and corporatism, then complain that we don’t have better outcomes"

Mike Eliason on X - "why aren't any of the folks whining about the excellent NYT piece on elevator costs asking why US building regulations are undemocratically written by a private corporation, and not the government - resulting in far inferior housing to zurich, vienna, tokyo or singapore. you guys spanish *social housing* is far more affordable, livable, family-friendly, and climate adaptive than anything being built in the US, market rate or affordable. are people really not the least bit curious as to why?"
Aaron Lubeck, Designer | Builder on X - "They are not. For many, the construction of “social housing” is purely about promoting their own brand of anti-development activism. It has nothing to do with actually building housing for social benefit. Therefore, real-world reforms that enable lower cost housing, such as social housing, are seen as a threat. That’s why they are not the least bit curious."
To left wingers, the problem is always capitalism and the "solution" is always Revolution. The actual issue is secondary

Sam Alcorn on X - "• American exceptionalism is alive and well. To the International Code Council, international codes might as well be applying in a different universe."
Armand Domalewski on X - "That was by far my strongest take away: while making the case for single-stair reform, @MarketUrbanism pointed out over and over again that THE REST OF THE WORLD does single-stair and has BETTER safety, and the opponents just…pretended the rest of the world doesn’t exist"
Jason Cox on X - "I would recommend you read some of this. Then the origins and the structure of the ICC, its board. First - the entire world is ignored. It simply, doesn’t exist. It also sounds nice to pretend it’s some sort of collaborative democratic process, but it is not. It is also driven by a profitable private company at the end of the day. Which is not elected by any public process or accountable to the general public as a government body making such decisions would be. Which means no larger considerations have to be considered. Or even acknowledged."