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Category Archives: Housing

Americans Are on the Move

By | | Housing, Policy brief
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When the pandemic hit, I thought it would slow down sales of existing homes. Instead, home sales in 2020 reached their highest level since the peak of the housing bubble in 2006. I also thought that the pandemic would slow new home construction. Instead, by the end of the year, new home starts also reached their highest level since 2006. When people began moving out of Manhattan, San Francisco, and other big cities, I assumed most of them would consider the moves temporary and would be renting at their new locations. Instead, homeownership took its biggest year-over-year leap since at least 1960 and probably in U.S. history, reaching levels not seen since, you guessed it, the 2006 bubble.

Click image to download a three-page PDF of this policy brief.

Information about moving trends isn’t always clear. In September, Bloomberg writer Marie Patino questioned the conventional wisdom that people were moving out of big cities or indeed that more people were moving than in previous years. However, her data were based on how many people were hiring companies like United Van Lines, when in fact most moves don’t use professional movers. We won’t really know the truth until the dust settles a year or two from now, but we can get a glimmer of that truth by digging into what data are available. Continue reading →

Idaho Is Roaring

By | | Housing
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“Had someone asked me in March,” wrote economist Megan McArdle in September, “I would have predicted that after six months of pandemic, the housing market would be full of panicked people frozen in their homes, except for those who were being evicted. Instead, the housing market is roaring.”

It continues to roar today. As the Economist observes, those roars are fed by low interest rates, government cash handouts, and a desire of many to move to homes suitable for telecommuting.

Of course, some housing markets are roaring louder than others. As CNN notes, “home prices are rising faster in the middle of the U.S. as Covid drives people away from coasts.” CNN cites home price index data published by the Federal Housing Finance Administration. Continue reading →

Another Phony Housing Crisis

By | | Housing
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The Wall Street Journal recently published an op-ed piece about “the housing crisis that is plaguing rural America.” Using Orange County in southern Indiana as an example, the writer, Kerry Thompson, frets that “There simply isn’t enough housing for the people who want to live there,” which is “having a devastating effect on rural America’s economy.”

Evidence of a housing crisis? This 2,900-square-foot home in rural Orange County, Indiana is currently for sale for $265,000, or $91 per square foot. A Wall Street Journal op-ed somehow argues that this low price is evidence of a rural housing shortage. Note the Trump banner; I suspect this is really evidence of the divide between urban and rural areas, as the Journal writer doesn’t seem to understand rural areas despite running an organization that is supposedly devoted to rural problems.

This is a problem, Thompson claims, because the pandemic has led to “upticks in interest in rural areas, as more Americans determine to flee the cities for greener pastures.” If there is a rural housing crisis, there may not be any greener pastures for them to move to. Continue reading →

Fixing Federal Affordable Housing Programs

By | | Housing
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The federal government has 160 different housing programs run by at least six separate departments and more than a dozen independent agencies, observes a report released this week by the Senate Budget Committee. These programs often overlap and there is no effort to test how successful any of them are in accomplishing their objectives. The 160 programs were actually identified in a 2012 GAO report (and listed here by agency).

Click image to download this report.

In a Budget Committee hearing on September 16, University of Virginia economist Edgar Olsen testified that “most current recipients” of federal low-income housing assistance “are served by programs whose cost is enormously excessive for the housing provided.” He recommended phasing out the least-cost-effective ones while retaining the ones that were working the best. Continue reading →

Low-Income Housing Tax Credits Database

By | | Follow up, Housing
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Last week’s Antiplanner policy brief reviewed Seattle’s low-income housing program and found that it was mainly aimed at getting people to live in transit-oriented developments and did very little to help low-income families. The natural question to ask is whether this is a national problem or confined to Seattle and a few other cities. My hypothesis is that it is largely an issue in growth-management cities that are trying to get people to live in higher densities and replace cars with transit, cycling, and walking.

To help answer this question, I downloaded the Department of Housing & Urban Development’s LIHTC database, which lists 48,672 projects supported by tax credits since 1987 (click here to download the 18.9-MB data file or click the previous link to download a subset of the database). HUD seems to be behind as the database does not list any projects that were completed in 2019 or 2020.

Still, it includes a lot of information, including the address of each project, the number of units and how many are dedicated to low-income households, the tax credits allocated to each project, and whether other federal subsidies also went to the project (but not how much those subsidies were). Continue reading →

Home Sales Reveal Demographic Shift

By | | Housing, News commentary
1 Comment

Last week, the Census Bureau reported a huge surge in July and August new home sales while the National Association of Realtors reported a parallel growth of existing home sales. Total homes sold is the greatest since the 2006 housing bubble while the year-on-year growth in sales was the greatest since 1983, when the economy was recovering from a recession.

The growth in sales in 2020, however, isn’t due to a bubble or an economic recovery. Instead, it represents a major demographic shift. Financial blogger Wolf Richter argues that it is more evidence of a movement “taking place from some densely populated cities, and especially city centers, and especially from rental apartments, to houses a little further out, or in more distant suburbs.”

The Census Bureau and Realtor data don’t indicate whether the sales are in cities or suburbs, but both agree that the greatest increases are in the South and Midwest, while increases in the Northeast and West are much smaller. This would fit Richter’s guess that people are leaving expensive apartments in New York City and San Francisco and buying homes in more affordable places in Florida, Georgia, Indiana, Minnesota, North Carolina, and Ohio, states that already had some of the fastest-growing urban areas before the pandemic. Continue reading →

Will the Cities Come Back?

By | | Housing, News commentary
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“The Twilight of Great American Cities Is Here,” screams the headline of an article by my friend, Joel Kotkin. He argues that, between the pandemic and the riots following the George Floyd death, people are not going to return to the cities.

Certainly, rents are down and vacancy rates are up in New York City and San Francisco. But does that mean that the cities won’t bounce back after the pandemic is over?

A major pandemic does not “introduce something novel,” observes a historian named Stephen Davies. Instead, “it accelerates and magnifies trends and processes that were already under way.” It can also bring “a final stop to processes that were already exhausted.” Continue reading →

Trump Promises to Kill AFFH

By | | Housing
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On Monday, President Trump announced that he plans to kill the Obama-era Affirmatively Furthering Fair Housing (AFFH) rule, which could have required suburbs to change single-family zoning to allow multifamily housing. This rule had been written by housing activists to make housing more affordable even though there was no evidence that single-family zoning made housing less affordable or that abolishing it would fix the problem.

“Far-left Washington bureaucrats,” Trump said, “are absolutely determined to eliminate single-family zoning, destroy the value of houses and communities already built, just as they have in Minneapolis and other locations. , , , Not going to happen, not while I’m here.”

The truth is that supporters of the rule have a hidden agenda: to stop urban sprawl, even though measures to stop sprawl are the real cause of housing affordability issues. This can be seen in the housing plank of Biden’s campaign platform, which calls for “eliminat[ing] exclusionary zoning policies and other local regulations that contribute to sprawl.” In fact, it is sprawl that keeps housing affordable, and it is only in urban areas that have tried to stop sprawl that housing has become unaffordable. Continue reading →

Shaking Down Local Taxpayers for Mixed-Use

By | | Housing
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Steven Malanga works for the fiscally conservative Manhattan Institute and is the author of Shakedown, a book about how bureaucrats and left-wing interest groups seek to make government bigger and bigger. So why does he support the shakedown of local taxpayers for redevelopment projects?

Malanga’s recent article in the Manhattan Institute’s City Journal describes how developers are turning old shopping malls into housing projects. He writes as though this were a brilliantly innovative solution to both the housing shortage and the decline of brick-and-mortar retailing.

It’s not. It’s central planning, pure and simple, and almost every case he cites required a shakedown of local taxpayers to subsidize the residential portions of the developments. Continue reading →

Is Density Worth the Price?

By | | Housing
18 Comments

Should cities build more dense housing or sprawl out at the urban fringe? Scott Beyer, the Market Urbanist, wants to see more density while I want to allow more sprawl. Surprisingly, in a debate yesterday over which was the best way to make housing affordable again, Beyer conceded that low-density development was more affordable than high-density. Instead, he argued for high-density development for other reasons.

High-density development, he said, was more environmentally sound, fiscally sustainable, and led to greater worker productivity (which economists call “agglomerative economies”). He claimed that people would live a lot denser if they could but such density is outlawed. Continue reading →