Let America’s Cities Become More Crowded to Ease the Housing Burden

Abstract： The article argues that America’s housing crisis stems from restrictive urban planning and a resistance to increased density. Despite rising demand, new housing construction has declined due to zoning laws and local opposition—often masked as concerns about community character or environmental protection. This has made cities unaffordable for middle- and lower-income residents, pushing many out or into homelessness. The author calls for removing these barriers, promoting urban density, and embracing inclusive growth. Drawing on examples like Tokyo, the piece emphasises that denser cities can be engines of innovation, mobility, and economic prosperity for all.

Today, housing prices in the U.S. have risen to more than six times the average household's annual income, making housing a heavy burden. You might laugh when you read this, thinking, “That’s nothing compared to China.” In China’s first- and second-tier cities, housing prices have long reached more than twenty times the annual household income—if six times is considered a burden in the U.S., then what should we call the situation in China?

This reaction is understandable. Some so-called “problems” in the U.S. wouldn’t even register as issues in China. But that might lead you to ask: If China’s problems are even more severe, why is China’s economy growing so much faster than the U.S.’s?

The fundamental reason lies in the different stages of economic development the two countries are in.

Over the past 40 years of rapid growth, China has benefited from multiple development dividends. First, there was the demographic dividend; second, the latecomer advantage; and most significantly, the dividend of globalisation following China’s entry into the WTO. In the 1980s, simply getting farmers to do some basic industrial work led to rapid growth; in the 1990s, sending rural youth to work in cities was enough to significantly boost the economy; and later, with globalisation in full swing, there was both technology and orders—if you could attract investment and build a factory, you could generate solid economic output… These are advantages the U.S. no longer has.

Simply put, China over the past 40 years was like a teenager in the midst of growth: minor ailments like headaches or fevers didn’t matter much—growth itself could resolve, or at least mask, many issues. In contrast, the U.S. is more like a middle-aged or elderly person: even small health problems can’t be taken lightly, as they can seriously impact overall function.

Of course, the U.S. was young once, and China too will grow old. Regardless of your stage, problems are still problems—they more or less hinder growth. Solving one problem means unlocking a bit more growth potential.

With that in mind, let’s talk about urban issues in the U.S.—which, at their core, are really housing issues.

If you’ve never been to Silicon Valley or San Francisco, your impression might be this: there are tons of high-tech companies and well-paid engineers, housing prices are among the highest in the U.S., so it must be extremely crowded. Perhaps you imagine towering buildings, bustling streets, nonstop activity. You’ve probably seen news reports describing San Francisco as a hub for the homeless, with tents on sidewalks, people loitering or using drugs, making the streets dirty and chaotic—even human waste on the pavement. Maybe you’ve also heard about frequent store thefts, or that parking your car on the street could result in smashed windows. You might think: I’d rather live in a smaller city with lower housing prices and better public safety.

But the reality is that Silicon Valley isn’t crowded, and San Francisco is quite livable. If you walk around, you’ll find that most homes in Silicon Valley are single-family houses with lawns and yards—not apartment complexes. While there’s some traffic at peak hours, it’s not packed with people. Going to events, shopping, or dining out, it’s usually easy to find parking. There’s still plenty of undeveloped land in Silicon Valley.

As for San Francisco’s homeless population, it’s concentrated in just a few neighbourhoods. Areas with high-rise buildings are relatively small. Much of the city still consists of detached houses and low-rise buildings. You can stroll, enjoy ocean views, browse boutique shops—the pace of life here is relaxed.

Compared with first-tier cities in China, the urban landscape of San Francisco and Silicon Valley is far less developed.

But to urban economists like Klein and Thompson, that’s not a good thing. For San Francisco and Silicon Valley to look more like China’s dense urban centres—that, they argue, is the right path for America’s economic future.

Why? Because the bigger and denser a city is, the more creative and opportunity-rich it becomes.

If you’re facing a choice between staying in a big city to work or returning to your hometown, the answer is clear: if you want to achieve something significant, you should stay in the big city. This has been proven by countless studies, and it’s advice my father has often given me as well.

Even today, with advanced transportation making travel from small towns to big cities increasingly faster, and with many people able to work remotely from home, large cities still hold a major advantage.

That’s because nothing compares to the trust built through face-to-face interaction. In the U.S., video meetings are usually held via Zoom—a company whose stock price soared during the COVID-19 pandemic because everyone was working remotely. But now, even Zoom itself requires employees to come into the office at least a few days a week. The impact of in-person collaboration simply can’t be replaced.

This leads to a core truth: the larger a city is, the greater the innovative capacity of its individuals. And this is not just a linear relationship—it’s superlinear. If you multiply a city’s population by ten, its innovation capacity grows by more than tenfold.

Every city also has its own specialty. If you want to work in AI, you need to go to San Francisco. If you’re in finance, you go to New York. Once an industry cluster is formed in a city, it’s extremely hard to dislodge. That’s why, no matter how high the cost of living becomes, big companies still choose to stay. The network effect is nearly irresistible.

Walmart is known for its low-price model and a culture of frugality. That’s why its headquarters is located in an obscure town in Arkansas, and even executives are required to work there. But when Walmart wanted to sell goods online, it had no choice but to set up an office just a few miles from San Francisco and hire local engineers. If you want the best engineers, you have to go there.

You might ask: does this mean only innovators should move to big cities? What about people with regular jobs and lower incomes—should they move to smaller, cheaper towns? Not necessarily. As long as you have hopes for the next generation, you should try to stay in a big city.

Cities are not only engines of innovation, but also engines of social mobility. Economist Raj Chetty conducted a study showing that children born in Silicon Valley have three times the chance of becoming wealthy compared to children born in economically stagnant regions. And if your child wasn’t born in one of these innovation hubs, the earlier you move there, the better it is for their future.

…That is, if you can actually stay. For Chinese citizens, there’s the issue of the household registration system (hukou)—you not only have to move to the city, but also gain access to the education and services it provides.

For Americans, today’s innovation-driven cities are becoming increasingly unfriendly to the poor.

In China, it’s common for young people to receive help from their parents when buying a home. Most Americans don’t have that luxury. In the U.S., housing is considered affordable if it takes up no more than 30% of your income. If you spend more than that, you are classified as "house poor." And around 30% of Americans fall into this category.

Before the 1980s, while New York was expensive, salaries were also high. On balance, living in New York was worth it. But after 2000, as housing costs soared, moving to New York meant lower real income for most people.

New York is no longer a place where people go to chase dreams—it’s become a luxury. Living there is now a symbol of wealth, no longer a badge of hard work and ambition.

In a reasonable system, at the very least, a city should be affordable for the firefighters who serve it, right? Imagine this: you’re protecting the safety of a city, yet you can’t even afford a home there. You’re forced into long commutes every day, and your children can’t attend the city’s public schools. How does that make any sense?

But the U.S. still has plenty of living space, and the population hasn’t exploded. So why have housing prices risen so dramatically since the 1970s—so much so that even city service workers can’t afford to live where they work?

Because new housing construction has dramatically declined.

This isn’t purely an economic issue. If the U.S. housing market were truly governed by free-market forces, homes would be far more affordable.

For example, suppose there’s a large plot occupied by a single-family house. A developer would be eager to redevelop that land. Buy the house, tear it down, and replace it with a small apartment complex—the profits are nearly guaranteed. Turning one unit into multiple always increases the return.

So logically, as cities develop, single-family homes should gradually give way to apartments. Smaller apartments should eventually give way to taller buildings. Populations should become denser, and public transportation should become more efficient. But in reality, U.S. cities don’t look like that.

Single-family homes remain single-family homes—and zoning laws often mandate that only such homes can be built in certain areas.

That’s because the people who got there first don’t want their neighborhoods turning into apartment zones. To put it bluntly: they don’t want to live next to poor people.

Of course, they often dress it up in nicer language. They might say, “We need to preserve the unique character of our community, so no apartments,” or “If apartments must be built, they need to meet very high standards and include full amenities.” Others invoke environmental concerns, saying high-density housing will damage the ecosystem. The reasons are many, but the underlying goal is always the same—understood by all without needing to say it: restrict development, maintain property values, and make sure only the wealthy can afford to live here.

These regulations began to emerge in the 1970s and have become increasingly common. That’s why new housing construction in the U.S. keeps declining.

A city council member from a town in Silicon Valley once said that local Chinese residents are particularly opposed to building apartment complexes. No matter what arguments are made, they protest as soon as the idea is brought up. He earnestly tried to persuade them, saying, “Only if we provide housing for low-income people will there be someone to serve you!” But it didn’t work. They’re okay with being served—just not by neighbors living next door.

San Francisco residents are even more ironic. On the surface, they’re all liberal Democrats, often placing signs in their front yards that say things like “Black Lives Matter,” “Kindness is Everything,” or “No Human is Illegal.” They appear to care deeply about marginalized communities. But the moment you propose building an apartment complex nearby for low-income residents, they strongly object.

As a result, poor people in the Bay Area have been pushed out. Some, who truly have nowhere else to go and don’t want to leave, end up homeless and living on the streets. Many people think the large homeless population in San Francisco is due to the mild climate, generous welfare, or tolerance of drug use—but these aren’t the main reasons. Research has shown that there are many other places in the U.S. with even better conditions for street life. So why don’t these people move? Because this was their home to begin with.

They’ve lived here their whole lives, and they’re unfamiliar with anywhere else. Now, because of job loss or other misfortunes, they’ve lost their housing—and you expect them to just leave?

If you’re a reader from China, this phenomenon might feel familiar. Beijing once tried to limit so-called “low-end populations” from living in the city, mostly for ease of management—using administrative measures. In contrast, the U.S. uses “democratic” processes, with local residents opposing the poor from staying as a way to protect their own interests.

Regardless of the rationale, if a city becomes a place where only the rich can afford to live, it’s never a good thing. That’s a surefire way to stifle its growth potential.

Therefore, there should be a strong push to eliminate restrictive regulations and let cities grow freely.

You might ask: if a city is allowed to develop without restraint, with all kinds of apartment complexes and low-income housing springing up, won’t it become chaotic, overcrowded, and unlivable? Actually, there’s no need to worry—human adaptability and creativity are incredibly strong.

The best example is Tokyo, Japan. Tokyo is one of the largest cities in the world, but it has never implemented policies to exclude the poor. Nor is it overwhelmingly crowded—it has simply expanded outward over time. Tokyo’s streets aren’t wide, nor are they laid out in a rigid grid, but traffic is still fairly smooth and congestion is rare. Housing prices are not absurdly high, and infrastructure is excellent. The city offers development opportunities for people from all social classes.

If U.S. cities could also develop freely, there would indeed be more pressure on public services, but those problems are solvable. You’d see a full range of housing—from high-end condos to temporary shelters—ensuring that low-income workers, young people, and singles all have a place to live. With people from different walks of life living together and interacting, social mobility would improve significantly. Urban communities would become vibrant again, with small businesses and street vendors returning to thrive, making services more accessible. Isn’t that a good thing even for the wealthy?

A country’s economic growth has never unfolded evenly. It always depends on a few engines to drive the rest forward. And mega-cities are the best engines for growth.

Have you noticed? The laws that stifle growth in U.S. cities aren’t the result of any single policymaker’s mistake.

Everything is perfectly logical. Residents want a nice environment around their homes—is that wrong? Restricting land development to preserve quality of life—what’s morally objectionable about that?

It’s precisely these seemingly unassailable rational choices that end up crushing opportunities for newcomers and impeding growth for everyone.

Perhaps the deeper truth is this: sustainable growth is not a natural state—it is a social miracle that goes against human instinct.

By nature, once you’ve achieved a certain level of material comfort, you instinctively resist change, avoid risk, reject outsiders, and protect the familiar order. Instead of seeking growth, you crave stability and security. In China, after forty years of rapid growth, “safety” has become the ultimate slogan.

What people don’t realise is that all of this runs counter to the open-mindedness, innovation, and risk-taking spirit required for continued growth.

Conservatism and protectionism are truly human instincts. To maintain growth from a high starting point, we must intentionally design institutions to remove barriers, push past instinct, and step outside our comfort zones.

Growth always means welcoming strangers, giving up a little personal space, and accepting a bit more risk. This holds profound significance for the residents of New York, Los Angeles, ，San Francisco and other big cities.