The progressive’s “preferred two-pronged housing approach . . . is government-owned real estate plus restrictions on private-sector developers,” notes Reason magazine’s Matt Welch writes in the Los Angeles Times, but this strategy will only “make a bad problem worse.”
Though California cities spend hundreds of millions of dollars trying to subsidize “affordable” housing, Welch notes, that money has only helped build 5 percent of the new homes constructed in the state. This is a mere “a rounding error in the total supply of housing stock.”
Meanwhile, high developer fees, lengthy permitting processes, rent control, and statutory limits on housing growth in some cities all do far more to make housing unaffordable than subsidized housing does to make it affordable. Welch cites Paul Krugman saying, “The analysis of rent control is among the best-understood issues in all of economics, and — among economists, anyway–one of the least controversial. In 1992, a poll of the American Economic Assn. found 93% of its members agreeing that ‘a ceiling on rents reduces the quality and quantity of housing.'”
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Welch also cites a state Legislative Analyst’s Office publication on high housing costs. Unfortunately, neither that publication nor Welch himself mention the fundamental problem: urban-growth boundaries that have put 95 percent of the state off-limits to development. Instead, the LAO report focuses on building denser housing, a solution that doesn’t make sense if people don’t want to live in dense housing.
One letter writer responds to Welch’s article with skepticism; another in support. Welch is just “another free-market cowboy,” says the skeptic, suggesting that it is just as absurd to think that eliminating rent control would make housing more affordable as to think that eliminating minimum wage laws would create more jobs. Obviously, the letter writer is either not an economist or lives in a rent-controlled apartment or both.
Krugman is against rent control??? Amazing!!!
Rent control is also being proposed in Seattle.
“the fundamental problem: urban-growth boundaries that have put 95 percent of the state off-limits to development”
I’m still waiting for the Antiplanner to address my questions on how specifically and to what degree urban-growth boundaries have affected rents and land/housing costs in Seattle.
Here are my questions again:
I was in Issaquah and Snoqualmie yesterday where many townhouses and massive new developments are underway. When I look on Craigslist for rentals in that area, there are very few, and certainly very few under 2000 a month.
Can you please explain how the growth boundary is affecting this area that is seeing a tremendous amount of new housing developments?
Can you please explain how the growth boundary is responsible for these high prices in these areas?
What’s interesting is the proximity of these developments to I-90, which may attract commuters who drive to Bellevue and Downtown Seattle.
How much of a role do you think amenities like proximity to a freeway, waterfall, quaint towns, hiking, boating, skiing, etc., etc. contribute to the high housing prices in these communities?
How much of a role do you think high wages from Amazon, Boeing, Microsoft, etc., etc. contribute to the high housing prices in these communities?
I’m still waiting for the Antiplanner to address my questions on how specifically and to what degree urban-growth boundaries have affected rents and land/housing costs in Seattle.
Here’s an example.
Thanks for sharing, MJ.
Certainly brings up some interesting points. Will try to find the actual study and read it when I’m not busy watching baseball playoffs.
Here’s one interesting point, though, about the study:
“While his data reflect owner-occupied homes within the city of Seattle only”
Big caveat when HALF of all people in Seattle rent. This is also apparently for owner-occupied homes as in SFH? Or condos? Not clear. At any rate, it doesn’t necessarily address my question as what effects UGBs have had on rents.
I also don’t buy this cause and effect:
King County few options but to require that landowners in rural areas that haven’t already cleared their land to keep 50 to 65 percent of their property in its ‘natural state.’ This forced greater density in Seattle.”
Rural areas such as east of North Bend, which is an hour from Seattle at 5:00 pm? Rural areas such as Orting, which is nearly two hours away at 5:00 pm?
Working in Seattle, there is NO way I’d want to do either commute. I would want to live at maximum 20 minutes way.
I do see the other land use regs, such as the long permitting process, affecting prices, though.
Again, thanks for the link.
The “affordable housing” government programs has to be the most wasteful program and the most full of graft in the USA in the last 40 years. The whole approach, if it works as planned, is that a few people get huge subsidies and the government “outsmarts” the private sector. Neither of those strategies is good public policy.