'Affordable Housing' Policies Have Made Housing Less Affordable
Progressive politicians from L.A. to New York face a crisis partly of their own making
City governments from Los Angeles to Portland to New York to San Francisco to Seattle are declaring various levels of "crisis" to deal with an unexpected rise in homelessness and a chronic shortfall in lower-cost housing. As I argue in today's Los Angeles Times, they need to take a long hard look at their own role in exacerbating the very problem they aim to fix. Excerpt:
Government exertions — and there have been plenty — have barely amounted to a rounding error in the total supply of housing stock. Since the mid-1980s, California's various programs to subsidize, incentivize and mandate affordable housing have produced all of 7,000 units a year, "or about 5 percent of total public and private housing construction," according to a May 2015 report by the California Legislative Analyst's Office. […]
Prices — even in housing — are a function of supply and demand, and politicians along California's coast have been systematically pinching supply for decades.
For example: "Development fees — charges levied on builders as a condition of development — are higher in California than the rest of the country," the LAO report notes (and the difference is substantial: $22,000 versus $6,000, on average). […]
When you make a good more expensive to produce, you're going to get less of it. Housing stock in the L.A. metro area grew by just 20% between 1980 and 2010, according to the LAO report, compared with 54% on average in other American metropolitan areas. […]
This government squeeze is not limited to the creation of housing in the first place, but also to what owners can do with their property. The L.A. City Council has in recent years placed restrictions on landlords wishing to change their rental units into condominiums, homeowners wanting to tear down their own houses and replace them with mansions, and renovators whose add-on plans create an extra-large footprint.
The mother of all supply-crimping landlord restrictions, of course, is rent stabilization.
Whole thing—including a quote from Paul Krugman!—here. A related piece from July: "The 'Affordable Housing' Bait and Switch, California Style."
