Europe, A.C., and the Housing Exception to America's Economic Success Story

Happy Tuesday, and welcome to another edition of Rent Free. 

This week's newsletter includes stories on: 

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• Los Angeles officials' decision to charge six men with felonies for offering to build an accessory dwelling unit on a fire-ravaged property in the Pacific Palisades
• South Carolina's enactment of a new law that creates an expedited court process for removing squatters
• And a Florida city wielding the threat of eminent domain to prevent developers from using a state upzoning law to turn a shuttered golf course into more housing

But, first, since the U.S. just celebrated the 250th anniversary of our independence, I wanted to start this newsletter by making a quick point about housing as the exception to the economic success story that is America in the 21st century. 

The High Cost of a Little Less Housing 

If you were on social media during the lead-up to the Fourth of July holiday this year, you almost certainly witnessed the wave of Americans dunking on Europeans for their lack of air conditioning. 

While us Yanks take climate control for granted, central air remains a luxury in the Old World, reserved only for the highest floors of the E.U. bureaucracy. 

This is a common point of national pride here at Reason. The air conditioning discourse featured heavily in Sam Bowman's 2025 cover story on America's relative wealth and opulence when compared with our counterparts across the pond. 

Bowman's top-line thesis for why Americans are richer is a pretty simple one: The American economy grows just a little bit faster than Europe's every year. 

An extra annual percentage point of GDP growth has added up to the point where your typical American could stop working in October and still make more money than the average Frenchman working until the end of the year. 

Bowman's cover story came to mind when I was reading a recent essay by housing writer Kevin Erdmann about how even low-cost, slow-growth cities need zoning reform to overcome their housing shortage. 

As Erdmann says, almost everyone agrees that New York City has a housing shortage. Prices are high because regulation prevents many feasible housing projects from ever being built. 

There's less of a consensus that a place like Buffalo, New York, has a housing shortage. Prices are a lot lower, and even under the most permissive zoning regime, there are plenty of neighborhoods where nothing would get built. 

If housing-starved New York upzoned broad swaths of the city tomorrow, argues Erdmann, it would build a lot more housing, even though only a small minority of properties would actually be redeveloped in any given year. 

"In New York City, there are many locations where upzoning would not lead to adequate construction. If you made sure to avoid the locations best suited to more infill growth, you could upzone 90% of New York City to minimal effect. And, yet, broad upzoning would easily lead to construction activity multiples of New York's current rate of building," he wrote.  

None of that is particularly controversial. Erdmann's perceptive point is that it's essentially the same story in Buffalo, which allegedly does not have a housing crisis.   

"There are places in Buffalo where nothing would be built under any zoning regime. But broad upzoning, or lending reform, or construction capacity, or expanded rental market options, that applied to all of Buffalo, would increase construction and lower rents," he continued.

In other words, restrictive zoning regimes are costing every city in the country some amount of new housing construction. What's true for the superstar cities is true for much of the rustbelt as well. 

Whether one looks at Buffalo or New York City, land use regulations are resulting in a marginal reduction in annual production. That has compounded over time to give us a nationwide housing crisis. 

The crisis is most evident in places like New York City. Liberalizing land use regulations would have the biggest benefits there. But deregulation would benefit everywhere on the margins. 

All patriotic Americans can understand this logic when it's applied at the macro level to compare Europe and the U.S. 

We've grown a little more each year for a few decades. The difference is that most Americans have air conditioning while most Britons are slathering their homes with yogurt to cool down. 

Housing is a micro exception to America's macro success story. 

Our land use regulations cause a little less housing to be built in almost every city every year. The costs of that stagnation have slowly compounded over the years into a nationwide housing crisis. 

One can only imagine the benefits of getting the housing growth machine rumbling again. 

6 Men Face Years In Prison for Allegedly Bidding on Wildfire Rebuild Without Having a Contracting License 

In January 2025, the Palisades Fire ripped through the Pacific Palisades neighborhood of Los Angeles, destroying some 5,000 single-family homes and killing 12 people. 

Some 18 months later, only 28 homes have been completely rebuilt and issued with certificates of occupancy, per the city's rebuilding dashboard. 

That's the context in which prosecutors are bringing felony charges against six men who allegedly submitted bids on a wildfire rebuild project despite not being licensed contractors. 

The charges are the result of a sting operation conducted by the Los Angeles County District Attorney's office and the state's Contractors State License Board (CSLB).

According to criminal complaints that state and local officials publicized last week, the defendants came to the attention of the CSLB in April, when its investigators reviewed online advertisements that allegedly offered contracting services without listing contractor license numbers. 

Following that discovery, investigators responded to the ads and made appointments for the respondents to come out to a Pacific Palisades property and make bids on a project involving demolition work and the construction of an accessory dwelling unit (ADU). 

The complaint claims the defendants visited the property and provided estimates for the work. 

A subsequent investigation allegedly found that none of the six men had contracting licenses. In late June, the men were all charged with one felony count each of contracting without a license during a natural disaster. 

Five of the six men face up to three years in prison if convicted. Another defendant faces six years in prison due to a prior conviction. 

Following the Los Angeles area wildfires, local and state officials took an uneven approach to the rebuilding process. On the one hand, both Gov. Gavin Newsom and Los Angeles Mayor Karen Bass issued executive orders waiving regulations and expediting permits for wildfire rebuilds. 

At the same time, the two also made rebuilding more difficult by suspending a state law that allows property owners to build duplexes on single-family properties and, in Newsom's case, prohibiting unsolicited, below-market purchase bids on wildfire-affected properties. 

The city reports that rebuilding permits have been issued for 1,400 unique addresses. 

Depending on where you set the bar, one can consider that a success or failure. 

Los Angeles is permitting rebuilds a lot faster than Maui after its disastrous fire in 2023 but slower than Boulder, Colorado, which suffered through a wildfire the previous year. 

Regardless, people don't live in building permits. And the physical rebuilding of homes is taking much longer, as evidenced by the mere 28 completed projects thus far.  

Prosecutors justify their decision to criminally prosecute the alleged unlicensed contractors as a consumer protection measure. 

"Hiring an unlicensed contractor is never a good deal, leaving you at risk of illegal down payments, fraud, unsafe construction and an inability to sell your home down the line," said L.A. District Attorney Nathan Hochman in a statement. 

One could argue that a home built by an unlicensed contractor is better than no home at all. While natural disaster recovery efforts often attract scammers and unscrupulous builders, the defendants in this case are not alleged to have harmed anyone. They merely offered their services to willing buyers and were ensnared by a sting operation for their trouble. 

It's worth noting too that illegal ADU construction, the type of project the defendants are accused of submitting bids for, is commonplace in California. 

A 2024 study found that a large majority of ADUs in San Jose were built without the proper permits. Presumably, much of that illegal construction work was performed by people operating without the proper licenses. 

Suspending occupational licensing requirements is a common practice in the wake of natural disasters. 

Unfortunately for the defendants in this case, the Palisades fire happened a year and a half ago. Instead of loosening licensing requirements to kickstart building, state and local officials are vigorously enforcing licensing requirements to ensure nothing gets built without the proper paperwork. 

South Carolina Streamlines Squatter Removal 

Last week, South Carolina Gov. Henry McMaster, a Republican, signed into law a bill that creates an expedited process for kicking out squatters.

Under the newly signed H. 3387, county courts are instructed to immediately issue ex parte orders authorizing sheriff's deputies to remove squatters from residential properties upon receipt of a petition from an owner asserting "sufficient evidence" that the occupant of their property was never invited onto it, is not a current or former tenant or family member, and has already been asked to leave. 

The court must hold a hearing on the ex parte order within 24 hours, where it can deny the property owner's petition or impose restraining orders or other sanctions on the squatter. 

Violating the removal order is a felony punishable by up to three years in prison. As a safeguard, a legitimate occupant who is removed via this expedited process is entitled to sue the property owner for damages.  

As I detailed in a recent feature for Reason on for-profit squatter removal companies in California, squatting is ultimately a process problem. 

In states where courts and law enforcement are slow to remove squatters, a practiced class of scammers has realized they can invade homes and occupy them for months, or in extreme cases years, without serious consequence. 

Owners' only options are to spin their wheels in costly court proceedings, pay the squatter to leave, or hire a gray market squatter removal service to evict the unlawful occupant (sometimes with the aid of guns, swords, and smoke grenades). None of these options is ideal. 

Hard figures on squatting are hard to come by. Per The Post and Courier's reporting, South Carolina lawmakers don't believe the state is suffering a serious squatter problem but want to adopt reforms prophylactically. 

"We wanted to make sure that it didn't become a real problem here," state Rep. Weston Newton (R–Bluffton) told the paper. Lawmakers are "trying to take care of a molehill before it becomes a mountain." 

Between May 2024 and July 2025, 15 states criminalized squatting, according to the Pacific Legal Foundation (PLF), a public-interest law firm that has advocated for states to adopt expedited processes for removing squatters.

H. 3387 closely mirrors the PLF's model Stop Squatters Act legislation. The primary difference is that the PLF bill would have property owners request a removal order directly from law enforcement. And under the PLF bill, the department would be required to conduct preliminary fact-finding before acting on a removal order.

That fact-finding requirement would appear to be a reasonable precaution to prevent an owner from getting a removal order for a lawful occupant.

The model PLF bill also does not cap damages that a wrongly removed occupant could receive.

The South Carolina bill also caps statutory damages a wrongly removed occupant can receive at $1,000, in addition to damages they can receive for any personal property that's destroyed during the removal. In comparison, Florida's recent anti-squatter reforms allowed wrongfully removed occupants to claim damages equal to triple the fair market rent of the unit they're evicted from. 

Given how easily squatters have been able to exploit the process in places like California, there's clearly a desire among lawmakers in other states to give owners greater protections from these home thieves. 

As states approach reform, they should be mindful that a process that's too deferential to owners could risk the contractual rights of tenants or other lawful occupants. 

A Florida City Wants To Buy Golf Course To Prevent It From Being Turned Into Housing

A few months ago, this newsletter covered Marblehead, Massachusetts' attempt to come into paper compliance with a state housing law intended to boost home production by upzoning an active golf course that is very unlikely to be redeveloped. 

That episode went viral after a resident at a Marblehead Town Meeting asked, "Are we kind of being pricks?" by going to such lengths to prevent new apartments from being built in town. 

As I noted at the time, a golf course should be an ideal site for residential construction in a housing-starved state like Massachusetts. It was thus a sad commentary on the state's housing law that it could be neutered by upzoning a golf course. 

Clearly, the upzoning it requires is not enough to entice builders to proceed with what should be an attractive project. 

Florida is now experiencing the opposite problem. In 2023, the state passed the Live Local Act. The law gives home builders relief from local zoning and density limits if they include a share of affordable units in their projects. 

Localities are required to approve qualifying Live Local projects "administratively." That means planning boards and city councils can't vote to reject a project, so long as it conforms with the requirements of state law. 

Because the law's regulatory relief is quite generous, and its affordability mandates have turned out to be relatively modest, the Live Local Act has enabled an impressive amount of new residential development. 

Indeed, the law is so effective at getting projects approved over the objections of local officials that the City of Palm Bay is rushing to buy a shuttered local golf course to prevent a builder from turning the site into a Live Local development. 

The Space Coast Rocket reports that the five-person Palm Bay City Council voted unanimously to start negotiating the purchase of 135 acres of the 189-acre Majors Golf Course property. 

The course, which was designed by famed golfer Arnold Palmer, permanently closed in 2022 and has since become overgrown and disused. 

In 2024, its owner proposed a 703-unit residential project on the site. That met with fierce opposition from the neighbors. The owner scaled back the project to 460 units, but its rezoning application was nevertheless denied. 

City officials openly state that their motivation for purchasing the property is to prevent a potential Live Local project from going on the site. 

"It's only a matter of time before that state infill development act affects our community," said Deputy Mayor Mike Jaffe at a Thursday City Council meeting, per Space Coast Rocket. 

The purchased land, which the city is considering spending as much as $10 million on, would likely be held as parkland or some form of open space. The remaining, unpurchased part of the golf course could still be redeveloped into a primarily commercial project, said Jaffe. But "strictly no apartments whatsoever" would be permitted, he said. 

If the Majors Golf Course is such a prime site for residential development, one might assume that a prospective developer could easily outbid the city for the land. 

To prevent that, a number of Palm Bay City Council members suggested the city might end up taking the land via eminent domain. The city's resolution authorizing negotiations for the purchase of the land leaves open the potential for an eminent domain seizure. 

It's perhaps no surprise that a law intended to circumvent local opposition to housing is attracting local opposition. That's the typical story for most state zoning preemption laws. 

And in that tug-of-war between state preemption and local control, localities are often the victors. 

Florida's Live Local Act is a notable counterexample of state preemption yielding a serious amount of new development. The Florida Housing Coalition counts close to 10,000 Live Local Act units under construction. Some 67,000 units have been proposed using the law. 

State lawmakers have also continually amended the law to close loopholes that localities can use to prevent Live Local projects. 

It's not great that a city would spend taxpayer dollars to prevent new housing from being produced under the law. The fact that Palm Bay is going to such extreme lengths to prevent a Live Local project nevertheless shows that more typical measures of neutering state zoning reform aren't available to it. 

Quick Links 

• The U.S. Supreme Court has agreed to hear the case of Daniel Grand, an Orthodox Jew who sued zoning officials in University Heights, Ohio, after they blocked him from hosting prayer meetings in his basement. Read Rent Free's coverage of the case here."
• Delaware lawmakers override a gubernatorial veto of a bill that limits the zoning restrictions localities can apply to marijuana dispensaries. 
• Matt Yglesias on how zoning regulations breed socialists
• A court blocks President Donald Trump's changes to homelessness funding programs. 
• The president says that Congress' bipartisan housing bill is "fine," raising hopes that he will let it go into effect after all. Read Rent Free's coverage of that bill and the politics behind its passage here. 
• California's new law allowing apartments near transit stops across much of the state, a longtime goal of the state's YIMBYs, goes into effect. 

The post Europe, A.C., and the Housing Exception to America's Economic Success Story appeared first on Reason.com.

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