Will Density Make Housing Affordable?

California left-wingers who want to densify cities to make them affordable are getting some push-back from other left-wingers who think density will push low-income people out of neighborhoods. A proposed bill to eliminate zoning in transit-rich areas in order to allow developers to build high-density housing would, say opponents, displace low-income families from neighborhoods with high rental rates in favor of high-income whites who can afford to pay for high-rise housing.

The opponents aren’t wrong. On one hand, increasing housing supply would seem to make housing more affordable. But affordable for whom? With housing prices in some California cities averaging more than $1,000 per square foot, building high-density housing that costs $400 to $500 a square foot would allow people who can afford that to find a place to live. But hardly anyone can afford that.

The problem is that high-density housing–that is, mid-rise and high-rise housing–costs 50 to 68 percent more, per square foot, to build than low-density housing. If California really wants to build housing that is affordable to low-income people, it needs to build more low-density housing. To build that, it needs to open up land that has been off-limits to development because it is outside of urban-growth boundaries.

Denver is making the same mistake. The region has had an urban-growth boundary that has made Denver housing twice as expensive as housing in peer cities such as Albuquerque, Dallas, and Phoenix. Rather than abolish the boundary, Denver is allowing developers to build higher provided they set aside a few units for “affordable housing” — which means charging more for the remaining units to make up for the losses on the affordable ones. That will raise, not lower, overall housing prices because other sellers will see that new units are selling for higher prices.

Speaking of housing prices, the Federal Housing Finance Agency has released housing indices by state and metropolitan area through the third quarter of 2017. The Antiplanner has enhanced the files for metropolitan areas and states by adjusting the numbers for inflation and making it easy to make charts like the one above for any six regions or states.

If you haven’t used one of these files before, go to cell AQ72 in the metropolitan areas file and cell BO210 in the states file for instructions on how to change the metropolitan areas or states shown in the charts. In the metro areas file, the inflation-adjusted chart appears around cell AQ40 while the non-inflation-adjusted chart appears around cell AQ3. The states file only has a chart for inflation-adjusted data and it appears around BO180.


12 thoughts on “Will Density Make Housing Affordable?

  1. C. P. Zilliacus

    The Antiplanner wrote:

    The problem is that high-density housing–that is, mid-rise and high-rise housing–costs 50 to 68 percent more, per square foot, to build than low-density housing. If California really wants to build housing that is affordable to low-income people, it needs to build more low-density housing.

    No reason to dispute you on the above.

    Beyond that, there’s the matter of most of the urbanized area of California being earthquake country (as are most places along the U.S. and Canadian Pacific Coast). Vancouver, British Columbia, a place that has done plenty of densification, is at risk from a Cascadia Subduction Zone mega-thrust quake, according to the city’s Web site.

    Doesn’t greater risk from earthquake imply that higher buildings mean more cost to seismically harden them?

    See recent examples of the failure of unhardened buildings in this article (English-language, site apparently run by the Voice of America) about high-rise buildings severely damaged (to the point that they need to be demolished as soon as everyone has been removed) by a recent quake in Taiwan.

  2. Frank

    “Who wants to have their own home where they can make their own life? Turns out a lot of people, even if the setting doesn’t meet Frank’s approval.”

    Where exactly in my comment did you get that I approve or disapprove of where people live? No where. That’s where. All you got is a straw man.

    The fact remains that housing demand in Seattle and Portland is higher close in.

    The fact remains that most prefer not to drive 45 minutes to an hour through heavy traffic to get to their job locations. This is evidenced by the average commute being about 20 minutes.

    So I’m talking facts here. Please respond with facts of your own or don’t bother responding at all.

  3. Builder

    Frank, I can’t say how you feel about Boring Oregon or Snoqualmie Washington but the tone of your post made me think you don’t approve of the places.

    Speaking of straw men, you seem to be advocating the position that if people can freely choose where they live the only choices they have will be in an urban center or an exurb. This is not true. If you wish to castigate me for this statement, feel free. I won’t be answering this has already gotten tiresome.

  4. LazyReader

    difference in locale… California vs Arizona
    Cali got beaches, Arizona got……….desert
    But $500,000 in arizona will get you a McMansion with a pool and backyard, 2000 a month..
    California, 800 a month, you livin in the projects.

  5. metrosucks

    Of course it will not, and the planners know it, too. The Antiplanner may not be familiar with this particular paper I ran across, but it will make for an enlightening reading, despite being from 2003:


    Of particular interest:

    “Another positive result is that development that began in the late 1980s is far less consumptive of land than prior to the adoption of functional planning. Partly that’s a result of land prices going up because we’ve constrained land supply with the urban growth boundary. But part of it is directly attributable to our land use regulations that require higher densities.”

    This piece was written by then Metro council president David Bragdon.

  6. CardGame

    Using density as a predictor of higher costs of living makes sense to me if you restrict yourself to comparing cities that are not supply constrained. For example, Chicago as denser Milwaukee and also more expensive. In turn, Milwaukee is denser than Shebogan, WI and also more expensive. Perhaps building costs are indeed the reason.

    But Chicago is also cheaper than Portland, Maine. http://www.bestplaces.net/cost-of-living/portland-me/chicago-il/50000 That’s the case despite the Portland metropolitan area having only 500,000 spread out over three counties, using wikipedia numbers. Supply constraints look more important to me than building costs, even though both matter.

  7. transitboy

    Affordable low-density housing exists in California, in places like San Bernardino and Riverside. Assuming you can’t get Donald Trump to dissolve the Santa Monica Mountains National Recreation Area or the Angeles National Forest, where is undeveloped land near Hollywood/Santa Monica, etc. that can be developed as affordable low-density housing? There isn’t any.

    The only way to get more housing in areas like this is to build up. Or, I suppose you could lower housing costs by forcing Hollywood or Silicon Valley, etc. to cheaper areas like Wichita. But then all the influx of new high paying jobs will cause housing prices to go up in Wichita. But then you could commute in from your cheap low-density housing in Topeka.

  8. CapitalistRoader

    But Chicago is also cheaper than Portland, Maine.

    Chicago is an outlier. Property prices there are just now recovering from the mortgage meltdown whereas every other large metro area climbed out years ago. One reason is very high property taxes. Expect to pay in extra $100/month in taxes on a $250K house in Chicago vs. Portland, which of course makes the slightly lower P&I in Chicago’s PITI climb over Portland’s PITI.

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