Meet the millennial mayor of Berkeley, who changed his mind on the housing crisis. 'I can't sit back and see more people being priced out of my city.'

• Berkeley, California sits at the epicenter of a growing debate around the housing shortage.
• The city is among the first to outlaw zoning that limited lots to single housing units.
• Insider spoke with Berkeley Mayor Jesse Arreguín on his change of heart toward housing and how he aims to solve the affordability crisis.

The story of housing in Berkeley, California, is one of retribution.

The city was the first in the US to enact single-family residential zoning, an explicitly racist type of legislation that restricted each housing lot to one unit. The 1916 vote sparked a wave of similar zoning laws across the country. More than a century later, the status quo is changing. Those flawed zoning practices of old are just now starting to get tossed out, thanks in part to Berkeley's 37-year-old mayor Jesse Arreguín.

Berkeley is an affluent college town located just 14 miles from the center of San Francisco. While most of its residents are white, it's also home to fairly large Asian American and Hispanic populations. Median household income was $85,500 at the end of 2019 - 24% higher than the national average - but nearly one-fifth of its population lives in poverty. It's also endured a serious homelessness crisis for decades, making it a fitting proxy for the now-national housing crisis.

One flashpoint in the debate on how to solve the crisis is a generational divide. The boomers who want to protect their property values are loath to allow denser development, and the millennials priced out of the market advocate a YIMBY, or "yes in my backyard," approach. The alternative is the NIMBY, or not in my backyard, status quo.

Jesse Arreguín is such a millennial, but he also happens to be Berkeley's mayor, and a development-opposer turned YIMBY (although he told Insider he doesn't like to use the "pejorative" acronyms). He championed the contentious legislation that placed Berkeley among the few US cities to eliminate single-family zoning. The March vote kicked off an 18-month process that will overhaul the city's zoning, and shore up home supply.

The mayor previously pushed back against efforts to develop larger apartment complexes in the city. Now he's among the most vocal supporters of denser housing and more residential development.

The Berkeley overhaul comes as the entire country grapples with an unprecedented housing crisis. Home prices continue to surge at record pace just as millennials reach their peak homebuying years, the latest in a series of crushing economic blows to the generation. Most economists blame the massive deficit of available homes for the crisis. Yet Berkeley's zoning shift suggests the problem is deeper than a lack of new units - it's also about the land they're built on.

Insider spoke with Arreguín about his change of heart, his city's housing needs, and how he aims to solve the affordability crisis. Here's a transcript of the interview, lightly edited for brevity.

Insider's Ben Winck: Berkeley set the benchmark for exclusionary zoning around a century ago. How do you see that coexisting with its recent push for zoning reform?

Mayor Jesse Arreguín of Berkeley, California: There are many things that Berkeley is first for, and many things I'm proud of that Berkeley has initiated. But unfortunately, in 1916, neighbors in the exclusive Elmwood district advocated for single-family zoning as a way to exclude a dance hall. It goes without saying that some of the people that would be patronized in the dance hall were principally African American and people of color.

So, single-family zoning was established on a foundation of racism in Berkeley and it's the basis upon which our zoning is built. That was further exacerbated by racial covenants and racial discrimination. Lending and leasing of housing in our city really walled off parts of Berkeley to African Americans, Asian Americans, and working-class people. It created the foundation of racial exclusion that we are trying to undo now.

As the city that initiated single-family zoning, and as a city that's very committed to addressing systemic racism, we have to take the lead in dismantling single-plan zoning and the foundation of racial exclusion that has affected generations of people in our city. Part of Berkeley's efforts is acknowledging that what happened was wrong and that we're learning from our past mistakes and we're trying to correct them.
Winck: Your perspective on this has also shifted over time. You previously called an upzoning bill "a declaration of war against our neighborhoods," but more recently you've been very pro-housing and pro-development.

What prompted that change of heart, and how has that changed your view of Berkeley's identity?

Arreguín: I can't sit back and see more people being priced out of my city, more people experiencing homelessness, and say that the status quo is working. It's not working.

The rise in homelessness that we're seeing in Berkeley and the Bay Area is a direct result of our housing crisis. The fact that we do not have available and affordable housing is literally pushing people out onto the streets and pushing people out of our state. It's just wrong. We have a moral obligation to guarantee housing for all people. I do believe that housing is a human right.

My perspective on the issue has definitely evolved over the years. For a long time I was skeptical about market-rate housing as a solution to addressing a broader affordability crisis.

What I came to realize is, some of the challenges that we're seeing in the Bay Area are due to decades of underproduction of housing. The scarcity of housing is putting increased displacement pressure on people in Berkeley and throughout the Bay Area.

We have to embrace housing for people of all income levels.

The severity of the crisis is what really changed my perspective. Opposing new housing or putting restrictions on new developments stands in the way of progress.

Winck: This problem is a complicated one, but can be summarized by the NIMBY versus YIMBY debate. The former characterizes efforts to protect property values at the expense of new development, while the latter describes the movement for denser housing development championed by millennials and Gen Zers.

What would you say to people who would call your former views NIMBY-esque?

Arreguín: Well, I never really use those pejoratives, frankly. But it is true that I was very skeptical of market-rate housing and was very critical of new housing projects. I felt that we needed to focus our efforts on permanently affordable housing, strengthening renter protections, and preventing displacement.

I didn't understand that, if you build more housing, that reduces displacement pressure because somebody who can afford a new apartment can move in there rather than pricing out an existing tenant.

That's why I believe we need an all-of-the-above approach. We need to build housing for people at all income levels, from above-market to moderate-income, with a particular focus on workforce housing.

We need to build entry-level ownership housing so that people that have lived in their apartments actually have an opportunity to own the home and can pass on that wealth to future generations.

And obviously we need to address the needs of our low and extremely low-income people, including our homeless.

My views have been shaped by my own lived experience. I am a lifelong tenant. I grew up in San Francisco and during the last Dot Com boom faced displacement. So I know what it's like to be evicted. I know the uncertainty of not knowing where you're going to live next.

I'm also a millennial. Unless there's significant effort to build more housing, I'm never going to own a home in the community that I represent, with median home prices at $1.5 million. I'm never going to be able to afford that. I just think it's fundamentally wrong that we are literally pricing out future generations from being able to own a home.

Winck: Pivoting back to the YIMBY movement, those pro-housing ideas have picked up steam over the last few years. To what degree do you support its ideas? And where do you think it could improve?

Arreguín: I think it's critical that we hear from the voices of young people that cannot afford to live in Berkeley.

Oftentimes the people that we hear in city council meetings around projects or around land-use issues are people that own their homes. And their voice does absolutely matter, but so does the voice of young people and tenants who are directly impacted by the shortage of affordable housing.

It's extremely important to have a very vocal pro-housing constituency, certainly on the regional level. And there's an increasing awareness that the YIMBY movement needs to align with stronger rent control and tenant protections, and the need to understand the issues around gentrification and displacement.

I don't see the tenant advocates and pro-housing advocates as in conflict. I think they have a lot in common. At the end of the day, it's about creating more homes and opportunities for people to live in our region while also keeping people living in our region here.

I really subscribe to the three Ps: to produce new housing; preserve existing, naturally occurring, affordable housing; and protect existing tenants.

Winck: Do you see any way to achieve those three Ps while retaining the status quo in residential zoning?

Arreguín: As a state, estimates are that we need 3.5 million new homes. And we need 1 million or more new homes in the San Francisco Bay Area. So there's a really critical shortage.

It is going to require that we look very thoughtfully and look hard at where can we upzone? Where can we build? It will take looking at converting old malls into housing projects. Looking at densifying our transit corridors and building around our transit stations. And yes, looking at adding fourplexes and density in our single-family residential neighborhoods.

There's been a lot of fear-mongering over allowing fourplexes and multi-unit housing in residential neighborhoods. We're not talking about building skyscrapers in single-family residential neighborhoods. If you could go through the city of Berkeley, we have a diverse environment in our neighborhoods. We have single-family homes next to apartment buildings.

And it could be done very thoughtfully while also adding needed housing. We think this is critical not just to correct generations of racial exclusion, but to address our regional housing goals and to make sure that we can create new opportunities for people to live in our city.

I really see it as a moral imperative.