Why Is the Rent Too Damn High?
Because We Ignore the Real Problem

The Antiplanner’s recent coverage of housing affordability has focused on single-family homes. But a recent article by Andrew Jakabovics points out that rents are also rising, both in dollars and in the percent of people’s incomes that it consumes. “About half of all renters live in housing considered unaffordable,” meaning they spend more than 30 percent of their income on rent, Jakabovics says. Since 2000, the share of renters spending more than 30 percent of their incomes on rent has grown by more than 40 percent.

Unfortunately, Jacabovics never discusses the real cause of this problem or the great geographic disparities in rents. A close look at the data (American Community Survey table B25071) reveals that renters are hardest hit in Florida, Hawai’i, California, and Oregon, all states with strong growth-management laws. (Florida weakened its law in 2011, but few if any regions have weakened their growth-management plans since then.) Meanwhile, rental housing is still very affordable in states such as Texas, Utah, and Wisconsin.

Hawai’i and California aren’t surprising, but it is a bit surprising to see Oregon near the top of the list. Oregon’s “smart-growth” policies were supposed to avoid this problem by building a lot of multifamily housing in place of the single-family housing that has been made unaffordable by the urban-growth boundaries around every city in the state. But this clearly hasn’t worked.

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Rents Too High?

When the 2008 financial crisis hit, many writers piously suggested that homeownership was not for everyone. Most recently, New York Times blogger Josh Barro argues against homeownership, saying that “a 20 percent decline in home prices may wipe out the equity interest entirely, making it a riskier bet than buying stocks.” But housing prices rarely decline by more than 10 percent in regions with little land-use regulation; by restricting supply, it’s the regulation that makes prices volatile. (Meagan McArdle responds to some of Barro’s other points.)

Adding to this, now people are discovering that the same things that put homeownership out many people’s reach can make rents unaffordable as well. Unfortunately, many of the writers and analysts have failed to connect high rents with land-use restrictions.

A Houston writer named Aboubacar Ndiaye is one who gets it, blaming high rents on several factors but leading off with government regulation. In this, he includes “housing-choice vouchers, affordable housing mandates, rent control, height regulations, historic designations, and protective zoning laws.” Though some of these seem to be intended to make housing more affordable, he observes, they actually make it less so.

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