Shawnee, Kansas’s Ban On Roommates – A Deep Dive On Why and What This Means For The Future Of Homeownership

Joe: Have you ever attended a city council meeting in Beaverton?

Todd: No, but don't you have some connections there?

Joe: Yeah, I used to work on speeches with a local councilwoman. How many city councils would you say are homeowners?

Todd: 100% of them. Multiple houses, I would think.

Joe: You are totally right. The ones I have met, I think what gets them into politics is a sense of civic duty and want to make a change. Honestly, local government is more powerful than large government. You can affect change, you can actually do something, you can metal with zoning, and you can prep for the future. I watched them pass ordinances that actually did positive things. If you watch American politics or American democracy repeatedly trying to pass votes in the Senate or in Congress, you're basically setting yourself up for a very boring evening.

Todd: Mix it with alcohol, and you might slip into a coma.

Joe: And then you will watch them come to a dead even. Nobody reaches across the aisle. Everyone stays with their vote. Maybe there's a filibuster, and then everybody bores each other to death.

If lawmakers can't strike a deal on both, the federal government could shut down starting Saturday morning.

Joining us this morning to talk about how maybe something can get done here.

 Are you kidding me? This is the moment to debate new regulations that have nothing whatsoever to do with this crisis?

Joe: …and they move on to the next bill. So Shawnee, Kansas - a city council room full of homeowners, voted unanimously, 0-28 to ban roommates. Did you hear about this?

Todd: No, but this sounds like a social class episode, though. How the hell can you ban roommates? Poor people need a place to live.

Joe: You would think that if everybody has voted to ban roommates, that rent must be very low in Shawnee. But it’s not. Like everywhere else in the country, housing prices have climbed. The average home price in that county rose 37% between 2017 and 2021. So, you're looking at a half-million-dollar house. Now, these aren't just college-age kids; they're kicking out and saying, you’re not allowed to be roommates anymore. Go buy a house, be an adult.

Todd: Yeah, these are the mechanics who work at the Chevy store. These are the cashiers at Fred Meyers or the Kroger grocery store.

Joe: Right. These are adults with adult jobs who can't afford a third of a million dollars to buy one of these full-size houses. So, according to the new law they have passed, they have banned co-living in certain zoning districts targeting roommates who split the cost of a single abode rent. Meaning they can't have more than three people cohabitating who are not related. They specifically use the phrase unrelated. So, if you have roommates and you're splitting the cost of a house, they're like, no, get out. You have to go buy a house.

Todd: It's just not right. I kind of feel that the people who voted on this got some money given to them by their families. Or they bought it in 1958.

Joe: The average rent is $1,263. I don't know how anyone affords that. So, when Kansas did this, people started digging. They're like, why? It seems like a weird thing to unanimously pass to say we don't want roommates. But that's not the case. They found out that most of the people who are represented by the city councils - and this is in America, not just this county – most city councilors are homeowners, and this is yet another local government making sure that the cost of living stays up. Even though we are at just a screaming peak for property value, they're trying to drive it up.

Todd: It seems like an insider trader, like the government is putting its foot someplace it doesn't belong.

Joe: Okay, you said the words insider trading; That's what today's episode is about. We have a tradition in America: if you own a house, you are put on a pedestal. We used to think of it as you are invested in the community. Like, literally, that's the words we used - invested in the community, and you were respected because it's thought that a married homeowner is a responsible human. They will vote for the things that will benefit everybody else. They want to see the community grow and help good things happen to the neighborhood. Have you ever been to a homeowner's association meeting? Or a tenement meeting? We used to live in an apartment in East Portland that did this where the tenement meetings would be a bunch of people who were afraid that they were going to kick out because of rent. And they would come in, and they would be like, I've been here for 35 years, and they'd start their speech about why we need to raise the rent. Like, they don’t care about the young people being kicked out but bow down to the person who's been here the longest.

Todd: I know how it feels to be on the renting side of it. It sucks. They could just do whatever to you because you're living paycheck to paycheck.

Joe: I've seen political cartoons during the covid. This period where people aren't paying rent, and they're leaching off landlords who are not being paid. I actually do feel sorry for people, like retired couples, whose nest egg is a house and they rented it out because that would basically pay for their back pain pills and diabetic medication. Instead of a 401k, their retirement nest egg is their rental property. I actually do feel bad for them.

Todd: I do too, but I'll push back on that a little. People who are renting, who own multiple properties, they get spoiled. If you have a business and have bad months, you sometimes lose money. So don't cry when you need to do property updates after you had a steady income all these years from the rentals.

Joe: Okay, you said the keyword; you have a business. A lot of these people retire on a rental property, and that's their income. I've seen them run it like a business. It's beautiful. It provides for their old age. It gives them money to send Christmas cards to their kids. But when they don't treat it like a business, when they treat it like a monthly income, that is a different situation. One is a businessman who's running a business in their retirement. The other person is just fleecing a group of renters who are millennials who can't afford their own house. I feel deeply sorry for the people who ran it like a business, and they ran into a string of renters who are out of a job, and they legitimately lost a small business and their small business happened to be renting units.

Todd: You can also tell by how well the properties are taken care of. I've run a lot of rental properties prior, and we took care of things. If something was broke, we fixed it. Not all landlords do that. Many landlords should have replaced something 20 years ago yet blame the new tenant when it breaks while they live there.

Joe: Here's the problem. People who run small businesses budget for it, or they know the business. They have some qualifications. They've been in it for a while. They've done this before, and to rent a rental property is a skill set. It is a business.

Todd: It is work, and it is an investment. Don't feel sorry for these people, and I'll tell you why; they have a genuine lack of gratitude, a lack of how much their house has appreciated since they bought it, and it has been their single best investment. They forget that.

Joe: Todd and I did an episode about the housing crisis. We talked about an economist in Britain who wrote the book, The Pinch, which is about how people have invested in a couple of houses, and they've bought up all the starter homes that anyone under the age of 40 would have purchased by now but couldn’t because they are being used as rental properties. We talked about how everybody bought these houses in the 2000s just as sort of a minor little investment and they are now accidentally sitting on Fort Knox. Nobody had any right to expect that their house would become their personal bank,

Todd: I guess when I say not grateful about it, they did take the risk and they did by the house when no one else wanted it or no one wanted it for that price, but just tell the whole story. Most I'd say it's probably 50/50. I think you're either a slumlord or you're not.

Joe: I think these city councilors in Shawnee are not all the good type of rent manager. You don't have to have an economics degree to rent a house to somebody. I'm guessing of these 8 to 0 who voted to get rid of people with roommates, I'm betting they're doing that because they all have houses where there are four roommates or more and they're also putting the rent because they're afraid they're going to be homeless and the homeless population there is going up. Have you heard about the state law that passed in California about granny flats?

Todd: God, you’ve been staying up late studying even other weird shit? Where do you find the time to do this? Aren’t you busy with our show and other creative products?

Joe: You would think so. When I call my girlfriend, she'll ask how are the short stories coming. And I'll be like, I can't sleep. I'm reading about Shawnee, Kansas! I think it's important for everyone to hear about the process. And the process of this podcast is something that keeps me up at night, and it's not what I'm supposed to be doing. The guy that does the show Adam Ruins Everything covered basically what will fix all this. This episode should be called what caused the housing crisis, and I will legit try to title this appropriately. Todd and I started this episode by saying we're going to pass a law, and it's going to solve everything. We actually do kind of know what that is. The problem is Kansas has proven or demonstrated what the real issue is - we expect local governments to solve the housing crisis. We keep looking at these little cities and we keep looking at the local municipalities and we keep looking at city councilors and saying, won't you do something? Your town is filled with the homeless. Your town is hurting for small housing for Millennials to start families. What are you people doing? And what they're doing is, they are protecting their gold bars. We are looking to the people who stand the most to gain by not having affordable housing, not allowing small houses, not allowing roommates, and not allowing 1,400 square foot houses to be built. They keep saying we're only going to zone for large houses to keep property value up.

 Todd: But what's the long-term problem with that, Joe? We talked about local economies, where people need to do work as well. And so, then the separation of classes gets even wider. And you're dealing with people who are living in YMCAs like the 70s and going to food banks and can't be comfortable. This sounds like the sounds like hell on Earth for the lower class.

Joe: The way it works is we are now having a class war in America. It is between people who have degrees and a house and people who don't have degrees and don't have a house.

Todd: And I bring this up, and I talk about this almost daily now, but when I tell people that you need generational money to buy houses now, people with money know that now. So, they are preparing that for their kids; they're getting further ahead. They're getting ready for this.

Joe: You said something magical there. I have now met people who have money, wealth, and multiple houses. They are planning which house to pass on to their kid. So, generational wealth is a real thing. The class division is people are giving their kid a college degree and a starter home. Do you want to ask what our classes will look like here in America? It's going to look like serfdom. We're going to have people who aren't allowed to own houses coming in from the outskirts, where they rent and they're going to come into the inner city to work. And the people on the inside of the city will be people whose parents bought them a bachelor's degree and gave them their starter home out of their hoard. So, let's talk about the Californian solution. We talked about each state in America being able to run its own government. We are aware that each state and county is has its own laws and knows what's best for its people, hopefully. The problem is, for example, Spokane, Washington is trying to accommodate all the new growth by building and trying to put in new affordable housing. They're trying to make sure they can become sort of a place everyone can like buy a starter home and work and grow as a family and enrich the community. Other places are treating new growth as a revenue stream. They don't see people moving in, like Shawnee, Kansas. They see revenue walking in on legs. They see a stack of dollar bills with a pair of dirty jeans under it pedaling the money like walking the money up to the front door. And all they want to do is rent a house. So, what we're going to talk about is the idea that we need to take some of this out of the hands of the smallest government, those eight city councilors who are voting to keep their small house of gold bars, and we want to take that out of their hands and put that into the state. Now, I know there are some Libertarians and some people who believe in County laws should be the highest form of law. They're going to come at me with guns for saying this, but I think California has the right idea. California passed a law last year called government code section 65 85 2.2, which is known as the second unit law. Have you ever heard of the term granny flat?

Todd: Granny flat, no.

Joe: Okay. Have you seen in Portland when somebody will have like two roommates already, and they're so desperate for rent and space that they end up putting somebody in a garage? It is like that. Building an extra room out of a shed or garage. So, California kept trying to pass local laws and they're now known as nimbys - the eight Shawnee Kansas City counselors that are like, no roommates – they are called not in my backyard. They don't want to build small single-family homes because it lowers property value generally. So, when they say not in my backyard, they want affordable housing. They just don't want it on the other side of their fence. They don't want to lower their personal Fort Knox value. Now, California came in and they said, no local government in their right mind would get rid of their own personal gold bars, so we're going to enact a code and this code is going to say if you want to put a shed in your backyard, throw a bed into it, Insulate it, plumb it, and put wiring out there, you can do that.

Todd: That's interesting. That's just because it's just supply and demand; It's going to burst. They don’t want to do that, but it is a necessity.

Joe: Yes. It's not a full solution. Like this isn't going to fix overnight the homeless problem.

Todd: This is firefighting.

Joe: Exactly. It's not the best thing, but it is something states should have been doing from the start, which is taking it out of the hands of city councilors, who are homeowners and start letting the states decide. If everywhere looks like downtown Portland or these downtown areas where the homeless problem, it's not a problem of the homeless; it's a problem for the state because those are potential taxpayers and renters who are no longer participating in that system.

Todd: When you see homelessness on TV, it is not the same as when you live in a city. It's scary, it's uncomfortable, and it's sad.

Joe: When I was when I was young, almost every homeless man or woman I would meet had a mental disability. Many also had addiction problems, and many were Vets having trouble finding resources. That's not the case anymore. Most of the homeless I meet are skilled workers who are working out of a tent; they're going to their job every day, and then they come home to their tent. So, California passed this law, and it actually has helped. It made it to where it was legal to build unpermitted accessory dwellings (ADUs), also known as granny flats or residential units on properties. Basically, it means that they can absorb maybe one or two more people per property willing to build out extra living space. Now, I don't want the end of our episode with me crapping on city councilors.

Todd: Don't worry, let me save this for you, Joe.

Joe: Thank you, because I worked with city councilors. I love local government, and I can't believe I'm going to end an episode on such a downer. But please take it from me.

Todd: Well, I've just been studying here because I’ve never heard of Shawnee, Kansas before. When you started talking about this area, I pictured some little town in the middle of Kansas with a couple of cows. But I was wrong; this is a big place with 65,000 people. We're not just talking about some island off Alaska here. So, I looked up the prices of houses there. They're less than here and less than west prices, but they're expensive. But what makes it worse is that the median income is only $39K - not enough to mortgage any of these houses.

Joe: So, we have these solutions available to us. We've seen sponges on the floor of the flooding bathroom of America. We know that we can do small steps, but that small step might be, unfortunately, in this case, taking it out of the hands of local government because local government is made up of people who want to protect their property value. What we ought to do is if you don't own a home, if you're a renter, or even worse, if you are homeless, go run for local city government. If you don't run, just get involved and talk to a city councilor. They're very approachable. You can go to a city council meeting. They're very boring but go sit in on one, and what you have to say can affect these people. I have seen city councilors break down and cry when they are confronted with tough issues when people speak to them on a human level.

Todd: When they hear someone's individual story about a single mom or an army vet who came back from war and is having problems. But like you said, they're making these laws not with these bad intentions. They think what they're doing what's right, but they just haven't heard the whole story.

Joe: Right. And I know from experience some of these city councilors and these local municipalities, their friends play bridge with them. They are in book clubs. They go to yoga. They do things like everyone else; they are in their own bubble. They read their own Facebook group. They do not know your struggle. If you are having rent problems, they haven't heard from you. They have only heard what they watch on the news and what they pick up from their local media, and they have a media diet like everybody else. So, break them out of their bubble. Go participate in local government, or at the very least, call a city councilor. Have a conversation with them and/or go sit in on a meeting. Speak your piece and talk about it. I swear if everybody got involved in local government, we wouldn't need the California solution. We wouldn’t need sweeping state or federal changes to fix housing for us. We would have Shawnee Kansas counselors passing not quite so a unanimous vote to make it illegal to be a goddamn roommate.