Op-ed: The 'NIMBYS' are destroying housing opportunity for entire generation of families

  • The average monthly rent for a market-rate, three-bedroom apartment in San Francisco County has soared to $4,613.
  • Zoning strategies employed by "NIMBYS" ("Not in My Backyard!") homeowners in desirable communities to limit housing construction also limit supply and cause real estate costs to skyrocket.
  • Members of largest generation in American history (those born in the late 1980s and early '90s) will face hurdles in finding affordable housing for families.

The highest-ranked states in CNBC's annual Top States for Business are dominated by places that build housing to accommodate new workers and their growing families. Conversely, an overriding reason some states fail to rank in the top tier despite many other positive attributes is their unwillingness to add enough housing. Perhaps these states have been taken hostage by the "NIMBYS."

NIMBY is short for "Not In My Backyard!" It has become synonymous with zoning strategies in many of the most desirable communities in the United States. The playbook for neighborhood associations in these districts has remained relatively simple over the years: Restrict construction of any kind (but particularly high-density housing construction) in an effort to keep congestion down and local schools' test scores high.

But policies that prevent new housing construction force residents to compete aggressively for a limited supply of homes. This has come at a heavy cost in places such as San Francisco County, where average monthly rents for a market-rate, three-bedroom apartment have soared to $4,613 today according to CoStar, a commercial real estate information and marketing provider based in Washington, D.C. Over the past 10 years, the number of working-age residents has grown at 40 times the rate of the population of children under the age of five.

Members of the largest generation in American history (those born in the late 1980s and early '90s) are fast approaching their 30s, the point in life when families are growing and access to spacious, budget-friendly housing takes priority. As these young people's families grow, their housing needs will change, and access to reasonably priced housing will become even more important.

Cities and states that are friendly toward residential development are better able to keep housing costs from skyrocketing by increasing the supply of homes and providing the reasonably priced housing options that young, growing families demand.

Businesses in housing-friendly states can attract workers with skills for the new economy, without having to pay astronomical salaries that go toward housing, and a reinforcing cycle takes hold, raising job prospects in residential development-friendly locations.

More from America's Top States for Business:
10 best states in America to live in
Why Washington is the No. 1 state for business
10 most expensive states in America

Many of the below-average-ranked states in CNBC's annual ranking are facing severe shortages of high-paying industries, but let's focus on what separates a state ranked in the top 5 (like Washington, for example) with a state that ranks just below average, say, California.

Both Washington and California are powerhouses in the technology sector, and both have nearly identical percentages of residents with bachelor's degrees. Average incomes of working residents are very similar in both states ($55,810 in Washington and $56,840 in California).

But a key difference between these two states is the pace of housing construction. In Washington the number of apartment units has increased by 21 percent over the past 10 years, more than twice the pace in California. Increasing supply keeps prices under control, and at $1,560, according to CoStar, the average monthly rent for a three-bedroom apartment in Washington is more than 20 percent below that in California.

When we compare leading cities in both states, California's problem and Washington's wisdom becomes even clearer. Based on local wages, a couple consisting of a computer programmer and a pharmacy technician would pay approximately 14 percent of their pretax income to rent a three-bedroom market-rate apartment in the Seattle-Tacoma-Bellevue metro area, compared to 27 percent of income in the San Francisco-Oakland-Hayward metro area. This is a very large difference for young households under financial constraints and for the employers who will ultimately need to retain them.

Housing-friendly states, like Georgia, Texas and North Carolina, top the list of best states in which to do business, and not by coincidence. NIMBY approaches to housing development are not sustainable for businesses or for the families they depend on.

By Andrew Florance, founder and CEO of CoStar Group

Top States Past Year Rankings

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    CNBC unveils its 10th annual America's Top States for Business ranking, scoring all 50 states on 10 key measures of competitiveness.