The Veto Nobody Will Name

San Jose is at twelve times median income. The body that made it that way has never lost an election, because almost nobody knows it holds one.

I said last week that I'd stop picking on Texas. Let me pay that debt properly before I spend the rest of this piece on California, because the conservative version of this failure is real, it is not subtle, and pretending otherwise would make everything that follows worthless.

Donald Trump campaigned, explicitly and repeatedly, on protecting the suburban lifestyle dream from federal fair housing rules. The AFFH fight was, stripped of euphemism, a defense of exclusionary local zoning conducted at national volume by a President. The organizing principle of conservative housing politics is local control — which is the same veto, held in the same hands, exercised at the same Tuesday meeting, argued from property rights instead of community character. Red-state suburbs restrict thoroughly. Minimum lot sizes, parking mandates, single-family-only zoning, and covenants that do the work zoning isn't allowed to.

What they had was raw land. That bought thirty years of cover, and the cover expired around 2021.

Paul Krugman named this pattern in 2005, dividing the country into what he called Flatland [1] — the interior, where it's easy to build, so prices track construction cost — and the Zoned Zone along the coasts, where restriction converts demand into price. The framework was cleaner than the data even then, but the core mechanism has only gotten stronger with twenty more years of evidence, and Krugman has pressed it harder rather than backing off.

What's changed is that Flatland closed. Austin, Boise, Phoenix, Nashville, Bozeman, Coeur d'Alene: the permissive Sunbelt and Mountain West metros absorbed a migration wave between 2020 and 2024 and their price-to-income ratios deteriorated anyway. Two things did it. The sprawl frontier ran into commute-cost limits. "Drive till you qualify" is a strategy that gets repriced every time gasoline goes from under three dollars to over four, and the households that drove furthest are the ones running a truck twenty thousand miles a year with no transit alternative and no shorter version of any trip available. And those metros got repriced against imported incomes — remote workers arriving on coastal salaries the local labor market doesn't generate.

For the people already living there, that combination is brutal in a way Californians structurally cannot experience. Idaho, Montana, Texas, Tennessee: those states assess at or near market. There is no Prop 13. So when a buyer from Palo Alto pays over ask for the house next door, the existing owner's assessment follows it upward — appreciation arriving as a bill rather than a windfall, on a house they have no intention of selling, against a wage the local economy still sets. Add insurance, add the pump, and you have a household that is nominally wealthier every year and materially poorer every year, whose children cannot buy in the town they grew up in.

That's the anger, and it isn't culture war. It's a balance sheet. The natives face an affordability crisis caused by wage importation; the arrivals face a house priced against an income that isn't portable to a second employer. Both groups are furious, largely at each other, and neither is wrong.

So this isn't the installment where I discover Democrats are the real problem. It's the installment where I ask why the party that talks about housing constantly presides over the places where housing failed hardest — and what the answer implies about everywhere else.

Where I'm standing

Before the numbers, my position, because it's relevant and because you should be able to discount for it.

Eleven years ago my wife and I bought a 1,400-square-foot house on less than an eighth of an acre in San Jose for a hair under $700,000. It would sell today for $1.4 million, in under five days. I did nothing to it. I did not improve it, I did not work harder because of it, I made no decision that produced $700,000. It arrived while I was asleep.

The State of California taxes me as though it were still 2015, and will keep doing so for as long as I stay. In 2021 I refinanced at 2.85%, which means I'm carrying a liability that costs me roughly three and a half points less than the identical liability would cost anyone signing this year. That mortgage cannot be sold, gifted, or carried to another house. Neither can the tax basis. Both exist only as long as I don't move.

So the honest accounting isn't a house and some equity. It's a house, plus a six-figure financial instrument that self-destructs on use, plus a frozen assessment that self-destructs on use. Three assets, all conditional on staying put.

I don't need any of it. I've been putting money into retirement accounts for a long time and I'd be fine without the house money — a little less travel, no family compound wherever we land, comfortable. The million dollars is the difference between comfortable and comfortable with better seats.

And I'd still take a smaller number. If California actually fixed this, built enough that my house was worth less and a 32-year-old doing my job could buy one, I'd take that trade. I've thought about it and I mean it.

Nobody is going to ask me.

That isn't a question this system knows how to pose. What it will ask me, if it asks me anything, is whether I object to a specific building on a specific corner, on a Tuesday night, in a room full of my neighbors. Those are not the same question and there is no path between them. The planning commission has never once been informed that I'd take the haircut.

One more thing, because it's the part that unsettles me. Twenty-five years ago, a mid-career product manager in Silicon Valley could not plan on retiring here. It's on the table for me now — contingent on my equity compensation, which is its own kind of admission — and the reason has nothing to do with anything I did. I bought a house at the right moment and I work somewhere that grants stock.

The bargain we were sold was: work a good job for a long time, and you get to live where you work. That's one condition. I needed three, and two of them were luck.

The numbers

San Jose is above twelve times median household income. Los Angeles, 10.8. San Francisco, 10.5. New York, 7.3. Boston, 6.6.

The national figure is around five, itself near a record high.

Every one of those metros has a Democratic supermajority, a platform describing housing as a human right, and a mayor who has delivered a speech about the housing crisis. Every one has among the most restrictive land use regimes in the developed world.

You do not arrive at twelve times income by accident. That takes four decades of decisions, made by identifiable people, who were re-elected afterward.

And to put my own house back in the frame: a 1,400-square-foot ranch on an eighth of an acre is not a nice house in this valley. It is an unremarkable house, below the metro median in size and price, and it costs $1.4 million. The ratio isn't describing luxury. It's describing the floor.

The mechanism, which is not what people think

Here is where I want to slow down, because everything else in this piece depends on getting this right, and because the standard version of this argument — liberals are hypocrites — is both cheap and wrong.

Where the decision happens. Land use is decided at the municipal level. Planning commissions, zoning boards, city councils, design review committees. Not in Congress. Not, mostly, in the state legislature. Not in the party platform.

Who decides there. Off-cycle elections, frequently held in odd years specifically to decouple them from national turnout. Participation in the teens or lower. An electorate that skews old, long-tenured, homeowning, and possessed of both the free time and the social standing to attend a Tuesday night hearing and speak for three minutes. The median participant in an American land use decision is not the median resident of that city, and is nowhere near the median American.

And the decisive fact, which deserves its own line:

The constituency for housing that does not yet exist has no vote in the jurisdiction deciding whether it may be built.

The people who would move in — who would be neighbors, taxpayers, coworkers, parents at the elementary school — are not represented, cannot be represented, and by definition never will be. They are defined by their absence. The hearing is a conversation among the people who already won, about whether to admit anyone else, and the only participants are the winners.

This is why the partisan puzzle dissolves. A process weighted this heavily toward incumbent residents produces the same output regardless of what those residents believe about anything else. A 62-year-old homeowner in Marin and a 62-year-old homeowner in Fort Worth have identical balance-sheet exposure and identical revealed preferences at the hearing. They vote differently in November and identically in March.

The national Democratic Party can adopt whatever housing platform it likes. The Menlo Park planning commission is where the decision gets made, and it has never read the platform.

One local objection worth killing here, since I live in the worst market in the country and hear it constantly: this will resolve itself when the tech industry disperses. It won't. The dispersion story was always about employees; the capital never moved. Early-stage venture is a proximity business — board seats, weekly founder contact, deal flow that comes from being three offices away from whoever saw it first. Miami got announcements. Austin got headquarters. Neither got the seed ecosystem, because you cannot relocate a network by relocating its wealthiest nodes.

And the AI cycle has concentrated harder than the 2010s ever did, into a handful of neighborhoods in one city. Meanwhile hybrid work — two days in the office — didn't reduce Bay Area housing demand. It tripled the tolerable commute distance, which expanded the region subject to San Francisco wages without adding a single unit to it.

Demand here is structurally permanent. Which means supply is the only free variable, and there is no waiting it out.

Twelve days in Woodside

The clearest illustration I know of the veto operating in the open, and it happened eleven miles from my house.

Woodside's state housing allocation for 2023–2031 came in at 328 units, up from 62 in the prior cycle. In December 2021, the town council capped units built under SB 9 — the state law permitting lot splits and up to four units on a single-family parcel — at 800 square feet through its objective design standards.

Then, on January 25, 2022, the town placed an indefinite hold on all SB 9 projects, invoking a clause in the statute that excludes development in habitat for protected species. Woodside, the council suggested, was mountain lion habitat. All of it.

On February 6, the Attorney General warned town officials that declaring the town a mountain lion habitat was an attempt to avoid complying with state law. Facing a lawsuit and national attention, the council reversed on a Sunday and began accepting applications the following morning, after Fish and Wildlife advised that the entire town could not be so designated.

Twelve days, start to finish.

Two details elevate this from anecdote to evidence. First: no applications had been submitted under SB 9 before the freeze. Not one. They preemptively banned a thing nobody had asked to do — which tells you the objection was never to any particular building, or to any building at all, but to the possibility.

Second, the statement the town issued on the day it folded: that Woodside has consistently exceeded its state-mandated low and moderate income housing commitments, and that the council remains focused on doing its part to alleviate the regional shortfall in affordable housing. Delivered while retreating from a townwide wildlife declaration invented to prevent fourplexes.

The comment threads underneath the local coverage are the ethnography. A Portola Valley resident wishing they'd thought of it first. A Menlo Park reader asking whether it might work there too. Nobody was fooled, including the people cheering.

The vocabulary

Here's what makes the progressive version of this more interesting than the conservative version, rather than merely worse.

Conservative NIMBYism says property values and neighborhood character. Crude, but legible as self-interest, and therefore easy to argue with.

Progressive NIMBYism says displacement. Gentrification. Developer profits. Luxury condos. Community input. Environmental review.

Same veto. Better credentials. And considerably harder to argue with, because every one of those terms names a real thing that has really happened to real people.

The demand that emerges from that vocabulary — 100% affordable or nothing — is morally coherent and produces nothing, for arithmetic reasons. Affordable units require subsidy. Subsidy is scarce. Per-unit costs in California now run to several hundred thousand dollars and in many programs well past that; Los Angeles voters approved billions through Measure HHH and got units at prices that made the math self-defeating. If your affordability strategy requires subsidy, and the subsidy costs more per unit than the median American home price, you don't have a strategy. You have a moral position with a budget line attached.

The strongest objection, which I'd rather raise myself. There is a genuine empirical dispute about whether new market-rate construction lowers rents in the immediate blocks around it in the short run. Metro-level and regional evidence for supply is strong and has strengthened. Block-level evidence is messier. That ambiguity is where "luxury condos won't help us" lives, and it isn't a stupid argument.

The answer is that a metro-level crisis does not have a block-level solution, and a movement that will only accept interventions with locally observable benefits has ruled out the only thing that has ever worked anywhere.

CEQA

The California Environmental Quality Act was signed by Ronald Reagan in 1970. It was drafted to stop freeways and refineries from being rammed through communities without study, and in that purpose it was entirely defensible.

What it became is the primary instrument for blocking dense infill housing near transit — which is, by any environmental accounting anyone would actually defend, the most beneficial form of housing available. Meanwhile greenfield sprawl on the exurban fringe faces comparatively less friction, for the simple reason that there are fewer neighbors standing there to file.

Who uses it is the part that reveals the machinery. Neighbors seeking delay. Labor organizations seeking leverage on project labor agreements. Businesses seeking to obstruct competitors. The environmental claim is frequently the vehicle rather than the motive, and the vehicle works because delay is itself the remedy — carrying costs kill projects that litigation never has to defeat on the merits.

California began carving housing out of CEQA in 2025, under visible duress, after decades in which the reform was unthinkable. Which proves two things at once: the coalition can move, and it required the crisis to become undeniable first.

An environmental law that makes it easier to build on a hillside than above a train station is not failing. It is succeeding at a purpose nobody ever gave it in writing.

Three referenda

Now the hardest fact in this piece, and it cuts against every easy story including mine.

California — bluest state in the union, renters roughly 45% of households — has voted three times on repealing the state limits on local rent control. Proposition 10 in 2018. Proposition 21 in 2020. Proposition 33 in 2024.

All three failed. None narrowly.

Landlord money mattered. It does not explain a three-for-three wipeout in a state where nearly half the electorate rents and where the opposition had every structural advantage of numbers.

The mechanism is this: renters vote as aspiring owners, not as renters. They identify with the tenure they expect to reach rather than the one they occupy, which means tenant protection registers to a large share of tenants as a policy for people who lost. That's not a Democratic failure or a Republican one. It's an identity operating against a material interest, and it is the deepest layer of this entire problem.

It's also next week's subject, so I'll leave it there.

$785

My stepfather moved from Illinois to California in 1974 and bought a house in Sunnyvale — a long base hit from where Apple's spaceship campus now sits — for $28,000. He died in late 2018 and I was executor. Going through the paperwork, I found the last property tax bill I had to pay while liquidating the estate.

Seven hundred eighty-five dollars. For the year. On a house we sold for $1.8 million.

That's an effective rate of about 0.044%. The nominal Proposition 13 rate is one percent. He was paying roughly one twenty-third of the statutory rate, not through any loophole or avoidance, but simply by having stayed. Someone buying an identical parcel next door that year paid north of $18,000 and will keep paying it. Same street, same schools, same fire department, a factor of twenty-three between them, sorted entirely by arrival date.

He did nothing wrong. He bought a house, paid his bill, and lived in it for forty-four years. He also received an enormous, involuntary, permanent public subsidy that he could not have declined if he'd wanted to — there is no mechanism by which a California homeowner volunteers to pay current-market assessment. That's the shape of this whole thing: not villainy, but a transfer nobody can refuse and nobody has to defend.

And note who created the value. He paid $28,000, roughly $180,000 in today's money. The house sold for $1.8 million. He didn't build the spaceship. Apple did. Intel and HP and forty years of accumulated agglomeration built the land value, financed substantially by public investment in roads, water, schools, and the defense contracting that seeded the whole valley. The value was created by the region and captured entirely by the parcel — and the mechanism that was supposed to return some fraction of it to the region was disconnected in 1978, four years after he arrived.

The standard defense of Prop 13 is half true and worth taking seriously. Assessments in the seventies were rising fast, reassessment practice was erratic and in places genuinely corrupt, and there were retirees on fixed incomes being priced out of houses they owned outright. Real problem. It has narrow, obvious solutions — circuit breakers, deferral programs, exemptions tied to age and income — which existed elsewhere then and exist elsewhere now.

What passed instead capped assessments for every property owner, including commercial and industrial, forever, with no means test, no age test, and no sunset. The retirees were the pitch. The permanent commercial carve-out was the product.

Which is why the 2020 split-roll measure is such damning evidence. Proposition 15 would have removed Prop 13 protection from commercial and industrial property only. Residential untouched. Homeowners were asked to surrender precisely nothing. It failed, narrowly, in a state Biden carried by twenty-nine points. The defensive reflex now extends to parts of the law that were never about grandmothers at all.

And then the second-order effect, which is the one that shaped my stepfather's neighborhood. With property tax revenue frozen, municipalities lost their marginal revenue source and pivoted to sales and hotel tax. Which made the rational move for a Santa Clara County city council: approve the office park, approve the auto mall, approve the hotel, avoid the apartments — because residents consume services and generate almost no marginal revenue, while a car dealership generates sales tax forever.

That's how a county zones aggressively for jobs and defensively against housing for four decades. Not sentiment. Municipal budget math, created by a ballot measure.

His house appreciated to $1.8 million partly because of a law that made building near it fiscally irrational for the city that would have approved it. The subsidy and the scarcity came out of the same statute.

The veto is tenurial

Step back and look at what all of this describes.

Not a party cleavage. An owner/non-owner cleavage, running straight through the middle of both coalitions, which the two parties are reflecting from different angles with different vocabulary to identical effect. That's why it reads as bipartisan paralysis, and why neither side can attack the other's version credibly: they're the same position wearing different clothes.

Which is, oddly, the hopeful part. Cleavages that don't map to party are the ones capable of moving, because switching sides carries no tribal cost. Nobody's identity is threatened by supporting a duplex.

And the money is not unified behind the veto, which almost nobody says. Nonbank originators now dominate mortgage lending and live on transaction volume; a frozen market is killing them. Homebuilders spend real money lobbying against permitting delay and impact fees, which puts a Republican-aligned industry in direct conflict with a Republican-aligned local constituency. Title, appraisal, and what remains of the realtor lobby all want turnover, not appreciation.

The genuinely scarcity-loving money — institutional single-family rental, long-hold landlords — is real, and far smaller than its reputation, and it happens to be the one interest both parties have already discovered they can attack for free.

The people who want this equilibrium preserved are not on Wall Street. They are the two-thirds of American households who own, holding most of their net worth in the house, who don't need a lobbyist because they are the electorate.

Where it's actually breaking

There will never be a federal zoning bill. Ever.

What there is instead: fifty state legislatures preempting thirty thousand municipalities, one at a time, with roll calls that look nothing like ordinary partisan votes. Montana, Texas, Florida, Washington, Oregon, Utah, Maine, California. Different coalitions, same direction.

Montana is the one worth studying, because it's the ideological on-ramp. A Republican trifecta passed serious preemption by framing it as property rights — your neighbor doesn't get a vote on what you build on your own land. That is a genuinely conservative argument, it requires abandoning nothing, and it arrives at the same destination as the progressive supply argument. It passed because Flatland closed and Bozeman got expensive, which is to say it passed for the same reason everything else in this piece happened: the numbers became undeniable.

Notice what preemption actually does, though. It doesn't defeat the veto. It relocates the venue — moving the decision to a level where the off-cycle homeowner electorate isn't decisive.

The reform that works is the one that takes the decision away from the people who have been making it. That is an uncomfortable thing to advocate in a democracy. It is also the only thing that has worked anywhere. Both of those are true at once, and I don't have a way to dissolve the tension.

Everything in this piece describes people acting on a rational financial interest in scarcity — mine included, involuntarily, at 2.85% and a 2015 assessment.

Next week: why the people with no financial interest in scarcity vote to protect it anyway. That's the load-bearing wall, and it's the one nobody knows how to move.

[1] - The name comes from Edwin Abbott Abbott's 1884 novella, and Krugman — a lifelong science fiction reader who has said Asimov's Foundation is why he became an economist — surely knew exactly what he was borrowing. Abbott's Flatland is a two-dimensional world whose inhabitants are sorted into a rigid hierarchy by their geometry: a shape you inherit, which your descendants can improve only slowly, across generations, if at all. The narrator is shown a third dimension, returns to explain it to his countrymen, and is imprisoned for the rest of his life. A book about people who cannot perceive the thing that would account for their own position, in a society where that position is fixed at birth. My father gave me a copy when I was a wee lad. I have thought about it a great deal in the past month.

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