Affordable Is Not the Same as Affordability

Too much housing news is based on the failure to distinguish between affordable housing and housing affordability. Affordable housing is government-subsidized housing for low-income people. Housing affordability is the general level of housing prices relative to the general level of household or family incomes, often measured by dividing median home prices by median family incomes.

Areas where housing is affordable, such as Dallas or Raleigh, may still need some affordable housing for very poor people. But areas where housing is not affordable, such as Portland or San Francisco, will not solve their housing affordability problems by building more affordable housing. Despite this, politicians, reporters, and editors all promote more affordable housing to address housing affordability issues.

The San Jose Mercury News, for example, accuses Republicans of “sabotaging” the Bay Area’s affordable housing plans by cutting federal housing budgets. But the federal government didn’t impose urban-growth boundaries that have restricted development to 17 percent of the Bay Area, so why should federal taxpayers subsidize affordable housing that isn’t going to solve the region’s self-inflicted housing crisis?

In Portland, meanwhile, planners are talking up an affordable housing bond measure for the 2018 ballot. This measure would increase taxes on existing housing to pay for the construction of subsidized new housing. That’s like cutting a strip off the top of a blanket and sewing the strip to the bottom to keep your feet warm.

As the Oregonian points out, Portland voters are suckers for these kinds of bond measures, no matter that most of them fail. (But not, apparently, for light rail, about which even Portland voters are skeptical: TriMet is postponing a planned 2018 rail ballot measure, probably because polling showed it would lose.)

The problem with using affordable housing to address housing affordability is that the government can’t build enough new housing to put a dent into housing prices. According to the 2016 American Community Survey, the Portland urban area has over 800,000 homes and the San Francisco Bay Area (including San Jose) has nearly 2 million. The few thousand housing units built by various affordable housing programs are not going to influence prices, especially when it is the local governments themselves that are sabotaging housing affordability through high impact fees, time-consuming permitting processes, increased taxes on housing, and requirements that homebuilders dedicate of share of what they build to affordable housing, which forces them to sell the rest of what they build for higher prices.

In the hands of urban planners, affordable housing has become just another tool to densify cities. You don’t see many single-family homes built with affordable housing subsidies; instead, they are increasingly directed to so-called transit-oriented developments, four- and five-story complexes built near transit stations.

Worse, many affordable housing programs create second-class citizens who aren’t allowed to resell their homes at fair market value. To prevent people from buying subsidized affordable homes and then flipping them, cities restrict resales to the original prices plus some factor for inflation. These rules recently caught a Denver woman who wasn’t informed that her 2003-built house was “affordable” when she bought it in 2012. She tried to sell it today only to be informed that she can only sell it to a low-income buyer for far less than its market value.

Politicians, planners, and the media are all being deceptive when they present affordable housing programs as solution to housing affordability problems. Reporters who aren’t housing experts might be excused for confusing “affordable” with “affordability,” especially since the people they quote fail to make the distinction. But planners and politicians have no such excuse, especially since they are the ones who caused the affordability problems in the first place.

Affordable housing is the wrong tool for the job of improving housing affordability. The right tool is the elimination of those land-use restrictions that made housing unaffordable in the first place, including urban-growth boundaries, punitive impact fees, and other regulations that impede new development.

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11 thoughts on “Affordable Is Not the Same as Affordability

  1. metrosucks

    Politicians are fully aware that it is their policies that created the crisis in the first place. They are just repeating libtard talking points, many of them obviously wrong and incorrect. For example, after densifying the shit out of the central Seattle area, planners are “discovering” that this has intensified runoff pollution, threatening fish, as their asphalt paradises don’t have any capacity to soak up and filter all that storm runoff. Instead of admitting they were wrong, they all point fingers at the suburbs and “sprawl” as the REAL cause of the pollution, where wide open spaces and lawns are actually much healthier for fish than anything dense. Yes, they know they are wrong and lying. But like the assholes writing down everything the fat dear leader is saying, they can’t admit it.

    Planners are the “experts” the talking head politician scum trot out occasionally to justify religious bromides about how cars are the devil and toy trains will save metro areas where 3% of the population commutes via transit. Obviously, a absurd fantasy. The Great Default can’t come fast enough.

  2. prk166

    At face value, I don’t care about the Denver woman. The program made the house affordable to her and her daughter. They wouldn’t have been able to buy it if it wasn’t for that program.

    They don’t _need_ a bigger home. They’re not getting thrown on the street. It’s just a classic issue of some murky legality. There is something wrong there but not really a good example of issues with housing affordability, is it?

  3. NoDakNative

    Affordable housing is housing built 30-40 years ago whose construction costs have been recouped. Thus leaving maintenance as the only remaining cost.

    Didn’t build enough housing 40 years ago? Tough luck, nothing you can do except get more new housing built now so housing will be affordable in a few decades.

  4. JOHN1000

    Building ‘affordable housing” is similar to railroad boondoggles. A few connected developers get government subsidies to build housing for a higher price than comparable non-governmental units.

    To the few who get in (assuming it is a worthwhile property or neighborhood) It is basically like winning the lottery. And politicians sell this to poor people who come out in droves to support them – and then are left wondering why they didn’t get a new place to live. And this goes on and on forever.

  5. Sandy Teal

    Please explain more about how affordable housing is supposed to stay affordable in the long run. Even restricting selling price for a while is ridiculous because the built up capital value will surely get priced into the selling price one way or another.

  6. CapitalistRoader

    prk166, I didn’t get that out of the article. The house was apparently built as “affordable housing” back in 2003. But Lopez bought it secondhand in 2012. There is no documentation saying that the house is restricted. The City says it is but so far there’s nothing showing that it is.

    Worse, the City actually is threatening to kick her and her daughter out of the house:

    Instead, two weeks after Solivan’s interview, a city inspector sent Lopez a notice of violation informing her she had 30 days to “offer the unit for resale” and she would have to list her home at the city’s affordable housing rate of $186,000.

    “Are you kidding me? Explain to me again, 30 days. This is the result I get? I’ve been asking for help. Let me sell at market value, and you tell me, ‘No, you need to provide proof of income’ or you are forced to sell,” Lopez said.

    The notice of violation states that if Lopez’s income in 2012 did not qualify as low income, and she knows it didn’t, then she has to sell her home in 30 days.

    What a nightmare for this poor woman. Unfortunately now she has to hire a lawyer to keep from being kicked out of a house she owns.

    A Frenchman wrote abut this kind of thing over 180 years ago:

    After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.
    ? Alexis de Tocqueville, Democracy in America (1835)

  7. prk166


    prk166, I didn’t get that out of the article. The house was apparently built as “affordable housing” back in 2003. But Lopez bought it secondhand in 2012. There is no documentation saying that the house is restricted. The City says it is but so far there’s nothing showing that it is.
    ” ~CaplitalistRoader

    Correct. That is what she is claiming. It’s important and I would not be surprised if the city dropped the ball. I have some empathy for her for that aspect.

    In the grand scheme of things, she got the price for the house she did because of the program in the first place. Either she didn’t do her homework on housing prices or she knew there was a reason why this house was priced significantly lower than the market as a whole.

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