To address the housing shortage and affordability crisis, North America needs to break up with the McMansion. McMansions, a term that describes generic and oversize mass-produced suburban homes at the core of urban sprawl, are not the specific target of urban economist James’ Macek latest paper, but the are a symptom of the problem he has identified.
Macek, a PhD student with the Department of Economics, has investigated how municipal regulations concerning minimum lot size for houses affects people’s well-being, city structure, and housing affordability.
“Housing costs and affordability issues have become worse over time and are absolutely detrimental to young people and those on the cusp of being able to afford a home, in both Canada and the US. One of the reasons why housing is so unaffordable is because the housing market, both in the US and Canada, is one of the most regulated on Earth,” Macek explained.
“These regulations, like the minimum lot size regulation, artificially constrain the supply of low-quality housing. The government can come in, deregulate, and meet that demand for lower-quality, affordable housing.”
By ‘lower quality housing,’ Macek is not suggesting that the smaller houses on smaller lots won’t meet current building standards.
“I mean lower amounts of floor space, which is more affordable,” he said. “Low-income households are willing to trade off less luxurious housing features for more affordability. I’m not talking about compromising on safety standards. It’s about offering housing without high-end features like granite countertops but still providing safe and decent places to live.
Macek conducted a series of experiments using mathematical and theoretical models to explore what would happen if these minimum lot size rules were removed. Overall, the study shows that if municipalities dropped these rules, the price of buying a house would fall by 17% overall.
The greatest barrier Macek sees to achieving the benefits of this kind of deregulation can be described as the classic NIMBY (not in my backyard) reluctance of wealthier landowners to appreciate the need for a diversity of housing types in their own neighbourhoods, ranging from single person to multi-family dwellings.
“I don’t see the issue with micro studios. Many people, especially young people, don’t need a lot of space and prefer private space,” Macek said. “Rich homeowners use regulation to stop the supply of these housing units to keep these people out of their neighborhoods. I think that meeting the demand for small apartments is actually what people want relative to the current situation.”
The broader economics community is paying attention to Macek’s work. His paper Housing Regulation and Neighborhood Sorting Across the United States recently won the Bank of Canada’s Best Paper Award and was runner up in a similar contest at the European Meeting of the Urban Economics Association in Copenhagen.
“James’s job market paper studies an important and pervasive housing policy in the United States — minimum lot size regulations — and quantifies its effects across households of different income levels,” said Professor Kevin Lim, a member of Macek’s supervisory committee. “It is a highly impressive piece of work, demonstrating a wide range of theoretical, empirical, and computational skills. The Bank of Canada has clearly recognized these qualities of James’s scholarship.”
Macek’s involvement in the larger economics community both here at UofT and out in the world has shaped his commitment to both teaching and developing a culture of civil discourse in the field.
“In terms of image and career building, there is no real incentive for anyone to diminish others’ work to prop up their own for more career accolades. It’s not inclusive and, if it makes me uncomfortable, imagine how it makes people of colour and women feel,” Macek said. “I’m determined to bring and support a place in the econ profession where we can debate, where we can have free intellectual discussions, but not make it personal or adversarial.”
Macek and his cohort colleagues implemented this philosophy of discourse here at the Department of Economics where their seminar style has made significant contributions to the culture of interaction.
” I had the privilege of helping organize the ECO5060 seminar,” Macek said. “This seminar by students and for students where faculty are not invited. It gives students a safe space to present their work and get feedback from peers without the political pressure of having faculty members present. It created a sense of community for me.”
These values also extend into the undergraduate classroom where Macek now has several years of experience as a teaching assistant in microeconomics, international trade, and data analysis among other topics.
“I believe in challenging students and not compromising on educational standards,” he said. “I put effort into effectively presenting difficult concepts and using incisive examples. Students from any social or economic background have the tools to succeed academically. When students don’t do well, it’s likely a reflection of my teaching quality. Introspection is just as important as any teaching task, and I should be learning as much as the students.”
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