Happy Homemakers

How would you like to buy a three-bedroom, two-and-a-half-bathroom house for less than $80,000? Thanks to housing deregulation, families in Seattle can do just that.

As media muckrakers wail about the nation's housing crunch and "middle-class squeeze," innovative policymakers are relaxing controls to let markets meet the need. In the Seattle suburbs, the U.S. Department of Housing and Urban Development has actually pressured local bureaucrats to exempt new projects from outdated regulations—allowing developers to cut costs with narrower streets, smaller lots, and cheaper building materials.

Outdated rules abound. For example, regulators in Seattle and across the country once demanded large cul-de-sacs to give firetrucks room to make U-turns. Most firetrucks now go in reverse. Towns are also waiving a costly rule requiring manholes every 300 feet, since new equipment can clean sewers for half a mile between manholes. The savings generated from deregulation are passed on to home buyers, who pay about $20,000 to $30,000 less for new houses in deregulated developments than they'd pay for similar homes in other Seattle suburbs.

Building codes are not the only regulations yielding to housing realities. Faced with dire apartment shortages, some local governments are legalizing the pervasive practice of families' renting out rooms and garages to singles and young couples. On Long Island, resistance to legalizing these apartments is high among some current homeowners, but local officials say it's the only way to keep up with housing demand. One official told the New York Times that the practice "is so widespread already, if you could get rid of accessory apartments, where are the people supposed to go?"

For the most fretted-over housing-crunch victims—the homeless—regulations are being swept aside to allow developers once again to build single-room occupancy hotels (SROs). Until cities imposed strict controls on them, forcing many out of business, these "welfare hotels" provided crucial last-rung housing.

New building standards in San Diego allow SRO developers to use plastic instead of expensive metal pipes and to exceed city parking and density rules. Renting one of the 565 new or renovated hotel rooms costs about half of the $500 a month that studio apartments go for.

Other city councils are expected to follow San Diego's lead—not because of a sudden conversion to free-market theory but because, faced with housing shortages and the public pressures they generate, cities can't afford not to. Regulating builders may make local politicians look powerful, but turning people out into the streets seems to make them look cruel.