Most German localities welcome new homes; their budgets depend on it.

If Cascadia has a European cousin, it’s Germany. Cascadia and Germany both tend to the serious and practical, not the flashy or fashionable. Both are more nature-loving than God-fearing. Both display a marked fondness for beer and mountains. And both are powerhouses of engineering, making products that dominate markets worldwide.

Yet for all the harmonies between these far-off cousins, one difference jangles like a broken guitar string. Germany has a housing economy that provides an abundance of affordable dwellings for its people in compact, low-carbon neighborhoods. Cascadia, for its part, suffers an enduring housing shortage and resulting high prices; its homebuilders are walled out of most neighborhoods, unable to construct enough apartments, rowhouses, and other dwellings for its fast-growing population. Cascadia’s dearth of housing entrains a litany of woes, from worsened traffic to displaced minorities, from forgone prosperity to climate pollution.

How does Germany do it? Not the way Japan does. Japan’s lesson, as I previously wrote, is that pushing power to higher levels of government is a tonic for housing. It counteracts NIMBY obstructionism. Germany’s lesson is that decentralized control can be fine, as long as local authorities have strong incentives to welcome homebuilding. Already, Sightline and others are trying to put this lesson into practice in Cascadian capitols—but I am getting ahead of myself.

Germany’s success is doubly important because Germany is a better analog for Cascadia than Japan. Japan has one of the most centralized governments in the industrial world, while Germany governs itself more as Cascadia does, through a decentralized system that corresponds to the states, provinces, counties, regional districts, and cities of Cascadia in the United States and Canada. Germany is not as decentralized as North America overall, but it’s similar to Cascadia’s most populous jurisdictions of British Columbia, Oregon, and Washington. All have land-use planning systems, for example, where localities are expected to harmonize their plans with those of higher levels of government through processes of review and consultation.

Modest prices, extreme stability

“The German system [of housing] is the best in Europe,”

says Paul Cheshire, emeritus professor at the London School of Economics and a leading housing scholar. Housing is dramatically more affordable in Germany than in hot housing markets elsewhere in Europe or North America. It’s more like Houston than Cascadia’s high-priced cities. Beyond its modest price and rent levels, Germany also stands out for the stability of its housing costs: they’re uncannily, freakishly stable.

Residential prices in Germany have changed little in the last 45 years, never varying by more than 21 percent from their 1995 level. Straight through German reunification, European Union expansion, and the 2008 global financial crisis, German home prices stayed the same. Germany’s housing economy is the most stable around, rivaled only by Japan. Germany’s housing prices are more stable than any other country in the Dallas Federal Reserve Bank’s dataset (from which the figure is drawn), or the Economist’s larger dataset, or the International Monetary Fund’s even larger one.

German housing isn’t perfect, of course. Prices have edged upward in recent years. The country has suffered a shortage of construction labor since the housing crash of the late aughts, while its urban population has grown quickly, as young Germans, immigrants from elsewhere in the Eurozone, and refugees from abroad have flocked to cities. Germany has fallen behind its own homebuilding goals. Like home prices, rents in new buildings have climbed more in the past decade than in previous ones, although rents in existing buildings have not.

Carolin Schmidt, a scholar of German housing at Cambridge University, finds plenty to criticize about German housin...