Affordable Housing

'The poor are better off when we build more housing for the rich,' reports Washington Post

Says the notion that expanding the housing market benefits both poor and rich sounds "counterintuitive"

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HousingRight
lifewise

The WaPo is today reporting a study by the California Legislative Analyst Office (LAO) that reports the apparently astonishing fact that increasing the supply of a good tends to lower its price. The study concluded, "Encouraging additional private housing construction can help the many low–income Californians who do not receive [low-income housing] assistance. Considerable evidence suggests that construction of market–rate housing reduces housing costs for low–income households and, consequently, helps to mitigate displacement in many cases."

The Washington Post article begins:

To low-income residents and the groups that fight for them in expensive cities, new market-rate housing often feels like part of the problem. If San Francisco and Washington are becoming rapidly unaffordable to the poor, why build more apartments for the rich?

New housing, these voices fear, will only turn affordable neighborhoods into unaffordable ones, attracting yet more wealth and accelerating the displacement of the poor.

Then come along those pesky economists:

Economists typically counter with a lesson about supply and demand: Increase the sheer amount of housing, and competition for it will fall, bringing down rents along the way to the benefit of everyone.

It is understandable that skeptics raise their eyebrows at this argument. It's theoretical, based on math models and not peoples' lives. It seems counterintuitive — that building for people who are not poor will help the poor.

Not based on people's lives? Counterintuitive for whom? Never mind. The WaPo article goes on to observe:

In tight markets, poor and middle­-class households are forced to compete with one another for scarce homes. So new market-rate housing eases that competition, even if the poor are not the ones living in it. Over time, new housing also filters down to the more affordable supply, because housing becomes less desirable as it ages. That means the luxury housing being built today will contribute to the middle-class supply 30 years from now; it means today's middle-class housing was luxury housing 30 years ago.

Well, yes. In addition, the LAO report points out that low-income housing set-asides and vouchers utterly fail to fix the shortage for housing that government policies, e.g., zoning and rent control, have produced. The only way to end shortages is to permit entrepreneurs operating in markets to increase supply of the good that is being demanded.

In any case, kudos to the WaPo for teaching its readers this elementary lesson in economics.

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  1. “Says the notion that expanding the housing market benefits both poor and rich sounds “counterintuitive””

    Shockingly, if you produce more food the price of food goes down!

    Fuckin’ what?!?

    1. Hey, at least WaPo is starting to get it. But I will not don my shocked face if they disavow the article’s message in a “correction” article.

      1. News outlets like the WaPo occasionally stumble around these things on the edges, but don’t expect a large transformation in understanding.

    2. The economy was faltering? Solution: Stimulate the economy by destroying perfectly good used cars, and subsidizing rich people to buy more energy-efficient new cars!

      Ergo: Poor people need a stimulated economy so as to be better able to afford food? Destroy perfectly good food, and subsidize rich people to buy more energy-efficient new food!

      DESTROY those old energy-inefficient old houses! BURN them down!!! Pay rich people to buy better new ones!

      Duh?!?!? Am I the only rocket scientist around here that can solve all of these problems?!?!?!?

    3. It is understandable that skeptics raise their eyebrows at this argument. It’s theoretical, based on math models and not peoples’ lives. It seems counterintuitive ? that building for people who are not poor will help the poor.

      Duh, math, what’s that?

      No, seriously, they don’t like it because it’s tainted with the ick of the free market. Their friends won’t trust them anymore if they pretend to understand it.

      1. They don’t like it because society is scientifically illiterate, completely unable to conceptualize anything but linear relationships, and can’t face the fact that reality (aka: nature) doesn’t give a flying fuck about your feelings and whether you’re “oppressed”.

    4. It is understandable that skeptics raise their eyebrows at this argument. It’s theoretical, based on math models and not peoples’ lives. It seems counterintuitive ? that building for people who are not poor will help the poor.

      Duh, math, what’s that?

      No, seriously, they don’t like it because it’s tainted with the ick of the free market. Their friends won’t trust them anymore if they pretend to understand it.

  2. Yes but most free-market things sound counter-intuitive, which is why people opt for the feelz instead.

    1. What? No. No, they don’t sound counter-intuitive. Not in the least bit. What sounds counter-intuitive is that a government program managed to stumble on valid math and reasoning somewhere in their vapid quest to make up into down and left into right.

  3. Excellent work Bezos. The Kochtopus is satisfied with your efforts.

  4. Oh boy. Next they’ll figure out that the minimum wage is useless. Or are we being optimistic? To be continued…

  5. “Counterintuitive for whom?”

    This ^

    Who doesn’t think increasing supply decreases the price that can be asked for a product? It’s the whole fucking point of limited edition products. I don’t even think progressives are stupid enough not to believe in this. They just don’t believe that developers will keep producing new homes as prices drop, because they are fucking morons.

    1. Nevermind, I read the comments. Apparently the progressives actually are so dumb they don’t understand increasing supply decreases prices. I’m just going to go now.

      1. Never read the comments.

        You’d think my continual racist diatribes would have taught you that comment sections are vile dens of evil.

        1. That is your own fault for spending so much time immersed in Salon derp. We tried to warn you, but no, and finally what happens – your mind has to snap like an overstretched rubber band.

          Maybe you should file for disability benefits.

      2. And here I was all set to make some snarky comment about the “It is understandable that skeptics raise their eyebrows at this argument” line to the effect that “well, it’s understandable if you realize that skeptics of the law of supply and demand also raise their eyebrows when you show them the ‘got your nose’ trick” but now you’ve just given me a sad.

      3. Look, Illocust,
        Understanding that fact would force the progressive to reevaluate his entire worldview. You can’t expect someone to absorb facts that will shake the foundations of their identity. It’s like asking a born-against Christian to believe in evolution. To a progressive all that supply and demand stuff is an evil plot by the ruling class to brainwash us into supporting the capitalist system.

        1. Ummm…what? I am a born again Christian who believes in evolution. I know plenty.

          1. Ok, maybe I should have said biblical literalist. Whatever.

    2. Who doesn’t think increasing supply decreases the price that can be asked for a product? It’s the whole fucking point of limited edition products. I don’t even think progressives are stupid enough not to believe in this. They just don’t believe that developers will keep producing new homes as prices drop, because they are fucking morons.

      Your writing style seems to have changed a lot in recent days. I wonder why…

      1. Illocust is Tulpa?

        1. The voice shift is characteristic of when he gets tired of running a sock.

          1. I was around before this link, but either I didn’t post or I was going under ILoveLocust.

            https://reason.com/archives/201…..ts#comment

            1. Also, my tone shifts quite a bit depending on the time period. I take these comments a lot less seriously than I used to.

              https://reason.com/blog/2014/05…..-volunteer

              1. How cute. Time to try on the new sock. Be creative, dude. Your best is yet to come.

                1. Alright, now I know you’re just fucking with me OMWC.

                  I’m out. Taking the younger sibs to see Deadpool. Which I repeat you should all go see, because it is a freaking awesome movie.

                  1. Dude, you’ve been outed. Give it up, work on the next one.

                  2. Taking the younger sibs to see Deadpool.

                    Wait, how can you drive? Aren’t you a cripple?

                    1. Damn you people, you’re going to keep me here chatting until I’m late.

                      Yeah, I’m a cripple. I had tumor removed from inside my spinal cord when I was eleven (yeah, they actually had to cut half of it off then fuse it back together use a bone donation from hip. Upside, I’ve had perfect posture now days without trying) which quite predictably left me with spinal damage. My right leg is partially number (no hot, cold, pain, or high vibrations, but pressure and itching are just fine. Can’t feel scratching though FML), and my left leg is partially paralyzed. I drive with my right leg like a normal person, and I very carefully did not bring up the numbness to the driver’s license people.

                      I’m numb in other areas which I’m sure Crusty remembers me bring up before, but without a piece of paper we’d be hear all night if I tried to specify where the lines for numbness and paralysis are actually drawn (paralysis especially, it’s obvious that my left leg if fucked, but if one of the muscles in my abdomen isn’t working I’ll probably never know. Took me years to realize that I was feeling high pitched vibrations everywhere below my chest).

                      Okay, now I’m really gone. I want tacos before the show, and I need to go. Maybe I’ll respond when I get back.

                    2. wasn’t feeling not was feeling

                    3. Yes, Tulpa, it was good work, better than your usual. You have more potential than most give you credit for. Take your time with the next one, you have set the bar higher.

                    4. So.

                      Are you mm-m-m-more Jimmy or Timmeh!

                    5. Maybe I’ll respond when I get back.

                      No, you won’t.

            2. HAHAHAHAHAHAHA

              Oh Tulpy-Poo, you are so pathetic when you flail and try to recover. I love it.

              For once in your insignificant life, just accept being busted. Again.

        2. I’m pretty sure everyone at this point is a Tulpa sock.

          Except me, I’m a Warty sock.

      2. Not enough sleep, actually having work to do at work, you’re just fucking with me by commenting on my posts then never replying to my replies?

        1. I’ll be happy to talk to your next sock. I’ll give you that this one was more creative than Bo, looking forward to your future work.

          1. Why do you think Illocust is a sock?

            1. Tulpa got tired of it- notice the entire change of voice recently, and in exactly the direction that previous Tulpa socks took. He’ll do the same thing with the next one. And the next one.

              1. You have a problem. Seriously, seek help.

                1. LynchPin1477 is Tulpa! OMG! The mask just slipped!

                2. I’m starting to think this is his hobby. Accuse someone of being Tulpa and see how much he can get them to flail around trying to prove their not.

                  That or he’s serious. In which case, I don’t know what the fuck he’s talking about.

                  1. You said the same thing when Bo was accidentally unmasked. That’s the part of the sock personality you need to work on for the next one.

    3. Who doesn’t think increasing supply decreases the price that can be asked for a product?

      I know plenty of progs who grudgingly accept this, but they will still say it doesn’t matter. In a free market you would have rich neighborhoods and slums. Yes, by increasing the supply of rich neighborhoods, they would drive down house prices over the entire city, but you would still have segregation of high and low income populaces.

      In Denver, when they built the Stapleton area, they required low income housing to be mixed in with everything else. In my current neighborhood (in CA) there are similar areas where you have fancy houses, townhouses and apartments within a square mile*.

      The Progs will gnash their teeth about the class segregation if they get past the price discussion.

      (* – It is noteworthy that my current neighborhood mixed its housing by plan, not by government fiat. And many people- including me- like the diversity. Nevertheless, Progs will insist that greedy developers only want to build McMansions)

  6. My question: How long before the California Legislative Analyst Office is forced to disavow this study and commission a new one (at twice the previous expenditure) to explain how California needs more rent control?

    1. Yeah, how did this get printed by a government agency? I thought the law of supply and demand had been overturned?

    2. Unless things have changed the LAO has always been a beacon of sanity in the midst of Sacramento asininity.

  7. I disagree. I have a plan that is similar to “cash for clunkers.” Much of the inexpensive housing in this country is old, unsightly, and just not safe. So, my plan is for the government to buy any unwanted houses and demolish them. This will not only help the environment, it will make all housing safer, which will improve the appearance of neighborhoods while raising the property value for those houses that are good enough. This in turn will help the poor.

    1. You could just pave over all poor people.

      1. Imelda Marcos approves.

      2. If you want shitty roads, sure.

        1. I’d pave over libertarians, but the crushed monocles cause flat tires.

    2. They did this already. It was called urban renewal. And it was really progressive. Whole neighborhoods were lost. Cool(proggy) architects made millions designing vertical prisons,, though some were only a few stories. They had to implode most of them. Most of the others have been torn down. They became something no one wanted to live in. And destroyed ethnic neighborhoods for the good of the many. Public housing is what they called it. Kinda pre section 8.

      1. Didn’t they pour milk out onto the ground during FDR’s term, in order to increase prices?

      2. They had to implode most of them. Most of the others have been torn down.

        ORLY?

  8. WaPo lacks ambition. The problem is that we are relying on the market to determine what houses are built. What we need to do is conscript the home builders into a national service program to build affordable housing. Think “Habitat for Humanity,” but compulsory and therefore better. This plot plan would also create innumerable jobs for inspectors and other bureaucrats to make sure that the quality does not rise above the level set by the Board of Affordable Housing.

  9. The only way to end shortages is to permit entrepreneurs operating in markets to increase supply of the good that is being demanded.

    People are “demanding” housing that is cheaper than the market is offering. So the politicians will offer something that will simultaneously crush housing prices for the poor and keep housing prices high for others. They create housing bubbles and then complain the poor can’t afford housing. They got balls, give em that.

    1. I disagree. Politicians can easily craft a program that will increase the price of housing for all in the name of affordability.

      1. *Checks Fed balance sheet*
        Yes, I see how that could work.

  10. It is understandable that skeptics raise their eyebrows at this argument. It’s theoretical, based on math models and not peoples’ lives. It seems counterintuitive ? that building for people who are not poor will help the poor.

    One, that conclusion is not drawn from “math models” but from sound economic thinking. The greater the supply of a good, the lower the price because the marginal value of the good will drop. This is called the Law of Supply.

    Two, it is NOT understandable that critics raise their eyebrows at this argument because the argument is sound. What the economist should do is tell the skeptics to go read a book.

    And the problem is not the building of low-cost housing, by the way. The problem starts when the government builds low-cost housing without even considering the market properly and allocating it based on political motives rather than profits. The result is, of course, housing nobody wants, populated by people with no real stake in the property itself. That does NOTHING to drive down the price of housing overall.

    The WaPo should’ve taken a look at the problems created by zoning laws in the real estate market. Building new housing in many large cities is, in these days, nearly impossible.

    1. Yep. It’s like doing a tracheotomy on someone while your wringing their neck.

      1. *you’re*

  11. OT Slippin Jimmy is back !!! =D

    1. I just finished the first season on Netflix and thought it was really good.

  12. They might notice that housing supply does wonders for integration, as well.

    During the housing boom, there were lots of new developments sold as lily-white neighborhoods in places like Las Vegas. Once the crash came, casino jobs dried up, foreclosures started piling up in those new developments, and people started leaving town, investors that came in and bought those homes out of foreclosure on the cheap were suddenly willing to rent to people no one was willing to rent to before.

    So, it wasn’t just that rents started dropping along Martin Luther King Blvd. It’s that the people there were moving out of North Las Vegas and into white suburbs like they’d never been able to before.

    And Las Vegas is just one example of that–that happened everywhere in the west, more or less, in the contraction after the housing boom.

    If having an abundance of affordable housing options is bad for the poor, then gasoline prices dropping must be putting them through hell.

    P.S. If a Republican had created a new agency to limit the ability of private banks to offer home loans to people who traditionally couldn’t afford them, everyone would have called him a racist. Since it was Barack Obama who did that, he gets a free pass I guess?

  13. George Will just assured me that “McConnell can be trusted” to stop Obama’s SCOTUS nomination. Judging by Mitch’s slack jaw, I’m not sure his spine is anymore robust.

    1. It isn’t just McConnell. Cruz is on the Senate Judiciary committee.

      As a serious contender, Cruz has a lot of leverage. Cruz isn’t going to go weak in the knees so long as he’s running for the Republican nomination.

      He’s the only contender who can seriously put his money where his mouth is on judicial nominations.

      1. How ridiculous is it to look and see Al Franken’s mug on that committee?

        It might as well be Chris Farley.

      2. Lee I could see standing strong. Fortunately Obama doesn’t have time to nominate a total loon first and then nominate a lesser loon who the media will claim is a moderate. My guess is he’ll just go with the lesser loon first and make the Rs obstructionists!

  14. Not based on people’s lives? Counterintuitive for whom?

    You’re a WaPo reporter. You’re sitting in a large office. Everyone around you from the Editor in Chief to the first year intern believes that increasing the supply increases the price.

  15. From the sidebar:

    It’s time to kill the $100 bill
    By Lawrence H. Summers

    I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seigniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption and crime. Since the crime and corruption in significant part would happen outside European borders, I suggested that, to paraphrase John Connally, it was their currency, but would be everyone’s problem. And I made clear that in the context of an international agreement, the U.S. would consider policy regarding the $100 bill. But because the Germans were committed to having a high denomination note, the issue was never seriously debated in international forums.

    The fact that ? as Sands points out ? in certain circles the 500 euro note is known as the “Bin Laden” confirms the arguments against it. Sands’ extensive analysis is totally convincing on the linkage between high denomination notes and crime.

    The powers that be hate cash. They fucking hate it. They really really want to kill it so hard.

    1. So sad for them that by the time they get what they want cryptocurrency will have made the point moot.

      1. And who the fuck actually called a ?500 note “the bin Laden”? No one. That’s who.

        1. Prolly the same people that conflated Iraq with Bin Laden?

  16. Deadpool is awesome by the way you should all go see it.

    1. I saw the Clint Eastwood version in the late 80s, took my little brother I think. Barely remember it. Their was a remote control car and cool cars-cresting-the-SanFran-street-hill stuff. Don’t recall much else except that they were betting on who died first?
      Wasn’t there a real life deadpool taken out by the feds (I seem to remember it was offshore, poor was that a CSI Miami episode?) a decade ago?

      1. The Dead Pool suffered mightily from the lack of an Albert Popwell role.

    2. I’m looking forward to seeing the one about the witch this weekend.

      https://www.youtube.com/watch?v=iQXmlf3Sefg

      The movie was officially endorsed by The Satanic Temple.

      How much more legitimate does it get than that? It has a goat in it and everything!

      1. Hmmm….I’ll wait on reviews.

  17. Case 1 – The feds keep up their fight to force nuns to comply with the contraceptive mandate, unless the nuns sign paperwork to which they are religiously opposed.

    Case 2 – The feds force a private company to pay damages to an employee because the employee should have gotten a religious exemption. Speifically, the employee shouldn’t have been required to put his hand in a biometric scanner, because that shit is straight out of the Book of Revelations.

    So the feds’ message to the company is “who do you think you are – us?”

    1. I’m quite far from religious but reading that first link really pissed me off. Thanks.

      The second one is just so fucking stupid I can’t believe it. I can’t believe that not only did it not get laughed out of court, but that the guy was awarded over half a mil because the employer wasn’t party to his delusions. That can’t be real!

    2. “Case 1 – The feds keep up their fight to force nuns to comply with the contraceptive mandate, unless the nuns sign paperwork to which they are religiously opposed.”

      If the Senate confirms a new Supreme Court justice, that justice will decide that case–right? That case is already on the docket.

      So is the one about affirmative action.

      So is the one about whether Obama’s amnesty stands.

      But the one about religious freedom is the one with the biggest long term implications.

  18. So has everyone turned into a Tulpa sock on H&R? Am I the only non-sock left?

    1. Am I the only non-sock left?

      Just what a Tulpa sock would say.

      *darts eyes*

  19. “Over time, new housing also filters down to the more affordable supply, because housing becomes less desirable as it ages.”

    FFS… Jane Jacobs pointed out exactly this 55 years ago but it’s almost like everyone who claims to be a fan haven’t actually read her.

  20. It is understandable that skeptics raise their eyebrows at this argument. It’s theoretical, based on math models and not peoples’ lives. It seems counterintuitive ? that building for people who are not poor will help the poor.

    Behold the fruits of public education.

  21. It is understandable that skeptics raise their eyebrows at this argument. It’s theoretical, based on math models and not peoples’ lives.

    Only if you ignore several thousand years of economic history.

    1. But that was old, white, slave-owning, cisnormal…. I can’t even finish it’s just so… futile … to argue.
      Ah. Somebody else said it today, but I’ll repeat: Arguing with an idiot is like playing chess with a pigeon: No matter how good you are, the bird is going to shit on the board, then strut around like he won.

  22. Do you ever feel that, when trying to explain economics to a progressive, it’s like that scene in the Cape Feare episode of the Simpsons where the FBI agent is trying to explain to Homer how to act in the witness protection program?

    FBI Man #1: Tell you what, Mr. Simpson, from now on your name is Homer Thompson,at Terror Lake.Let’s just practice a bit, hmmmm? So when I say hello Mr. Thompson, you say hi.
    Homer: Check!
    FBI Man #1: Hello, Mr. Thompson.
    [Homer stares blankly]
    FBI Man #1: [pause]
    FBI Man #1: Now, remember, your name is Homer Thompson.
    Homer: I gotcha!
    FBI Man #1: Hello, Mr. Thompson.
    [again Homer stares blankly]
    FBI Man #1: [FBI men stare at each other]
    [hours pass by]
    FBI Man #1: [frustrated] Argh… Now when I say “Hello Mr. Thompson” and press down on your foot, you smile and nod.
    Homer: No problem.
    [stepping hard on Homer’s foot]
    FBI Man #1: Hello, Mr. Thompson.
    [Homer stares blankly again for a few seconds]
    Homer: [whispering to the FBI man next to him] I think he’s talking to you.
    [FBI man gives up]

    1. *squints*

      “That’s some of that trickle-down theory you’re talking? I heard of that.”

    2. I’ve always felt it to be more of the Hedley LaMarr/Gov. Lepetamaigne dynamic:

      -Oh, I’m sorry sir, I didn’t mean to overstep my bounds. You say that.

      “Say what?”

      -Meeting is adjourned.

      “It is?”

      -No, you say say that.

      “Say what?”

      -Meeting is adjourned.

      “It is?”

      *hands him paddleball* Here, play around with one of these, they’re sweeping the country.

  23. OMG THE PAIN

    “30Concept
    2/13/2016 5:48 PM EST
    the government needs to build a lot more housing for low and middle income people in big expensive cities like san francisco, new york, LA, and chicago—where are they supposed to live???

    There are 100s like it

    1. AGGGGHHHHHH

      “”John Hutchinson
      2/13/2016 11:58 AM EST
      “Trickle Down housing” was exactly the first sentiment I received from this sociopolitically obtuse member of the elite (she went to the Sorbonne). However, it is not exactly rocket science to reach that conclusion since she unabashedly states, “over time, new housing also FILTERS DOWN to the more affordable supply, because housing becomes less desirable as it ages.”

      However, Ms. Badger’s self-serving suggestion might be better described as “prima nocta” housing. Let the lords of the nation have first dibs on that fresh and virginal residence, and after they have worn her with use, and she has become old and ragged, and the lords have lost interest with her and seek a new and improved model, the peasants can have their way with what’s left of her.

      Madame Lafarge has just another name to knit into her quilt. And the timbrels come ever so closer and louder.

      1. EEEGERGGRRGRGGRR

        “FwMystic
        2/12/2016 12:55 PM EST
        The poor get less hungry when the rich have more to eat.”

        1. That’s right, because the rich literally consume the houses they live in. After they are finished living in them, nothing is left but some knawed on columns and a giant pile of poop.

        2. This is the best one. So easy to disprove, and so delusional.

  24. More like: Developers go nuts in a housing boom and overbuild and inevitable crash follows, making once-luxury housing “affordable”. Where I live outside of DC, they built 5000 high-end condos on an old rail yard over about a year, they seem to be very poorly constructed but are selling for $600K and up. My guess is that once they start falling apart in a few years, they will no longer fetch such a high price and will become very affordable (i.e. ghetto).

  25. Re: the “it seems counterintuitive” nonsense – only if you’ve replaced your intuition with the progressive religion.

    Now, yes, it’s easy to build a logical case for “building nice houses doesn’t help poor people” if you completely ignore the obvious fact that houses can (and arguably must) cross class lines if there’s sufficient supply.

  26. Not based on people’s lives? Counterintuitive for whom?

    Progressives.

    Markets are confusing, and obviously rich people hurt poor people because reasons.

    (“You mean, in any given market, if demand exceeds supply, rich people can outbid poor people? And if you make more fancy stuff rich people like they’ll move there, and the middle class will bid into their old places, and poor people into where the middle class left?

    That’s CRAZY! And it’s bad, because poor people should get awesome houses because housing is a HUMAN RIGHT, you MONSTER.”

    Sorry, I read too many comments at places where people like that comment.)

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