The Washington, DC, public housing authority has figured out how to solve the region’s affordability problems: Evict people from public housing, convert the dwellings into luxury homes, sell them at a profit, then use the profits to build more affordable housing. This cycle can be repeated endlessly, especially since it won’t really solve the problem.
The housing authority claims it is only selling homes at “scattered sites,” especially ones in “more desirable neighborhoods,” while it concentrates the subsidized homes in what must be less-desirable neighborhoods. In other words, it is increasing income segregation, exactly the opposite of the Department of Housing and Urban Development’s goal of promoting more integration of both races and incomes. Apparently, DC’s housing authority didn’t get the memo.
In Portland, which has been known to have its own issues with raising rents on so-called affordable housing, the city just passed another rule that will make housing less affordable. After cheering developers for tearing down homes and building apartments or several smaller homes, the backlash against the practice has grown so strong that the city council has decided to charge developers $25,000 for every house they tear down. That’ll make housing more affordable (Not)!
Another practice the city has encouraged is for owners of single-family homes to build “accessory units,” often in the form of “tiny houses.” This has often resulted in huge increases in property taxes. Multnomah County has backed off on a few of the assessments, but in fact the assessments are actually reasonable.
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Over in Britain, Chancellor of the Exchequer George Osborne, who The Economist calls a “liberal idealist,” proposes to have the government spend $3.5 billion subsidizing the construction of 200,000 “starter homes.” A mere $17,500 per home will do little to make housing affordable in a country where nearly all housing markets are either seriously or severely unaffordable.
The Antiplanner’s faithful ally, Wendell Cox, defines “affordable” as having median home prices less than three times median household incomes; “moderately unaffordable” means value-to-income ratios of 3 to 4; “seriously unaffordable” is ratios of 4 to 5; and “severely unaffordable” is ratios of 5 or more. Of 33 British housing markets evaluated by Cox, 3 are moderately; 14 seriously; and 16 severely unaffordable. By comparison, of 242 American housing markets, 88 are affordable; 97 moderately; 32 seriously; and 25 severely unaffordable. Nearly all the unaffordable markets in the U.S. are in coastal states that have adopted some form of growth-management planning.
Britain more or less invented the modern housing affordability problem when it passed the Town & Country Planning Act of 1947, the modern world’s first growth-management planning law. This law effectively put urban-growth boundaries (called greenbelts) around every urban area. Increasing restrictions since then have put virtually all land that is not already urbanized off limits to development, much like California, Hawaii, and Oregon in the United States. Of American urban areas, only the San Francisco Bay Area is less affordable than London, while even depressed regions like Newcastle (the “Detroit of Britain) are unaffordable: despite a declining population, Newcastle’s value-to-income ratio is 4.6.
Chancellor Osborne has given lip service to planning reform, but offered no particulars. “Britain’s Byzantine, murky planning system makes housing supply unresponsive to demand, notes The Economist. “Until that changes, efforts to deflate the housing bubble will not get far.” The same is true for unaffordable markets in the United States including the Bay Area, DC, Seattle, and Portland. Yet politicians and planners here are no more willing to recognize the problem as those in Britain.
People don’t quite comprehend basic economics. If there is 1 house and 2 buyers, guess what bidding occurs. Unless you have 2 house for those 2 people, prices are going to go up. The only way to solve the problem is to reduce the population, but that doesn’t usually go well.
Funny, how the people who most want open borders, least want houses built.
Good article, surely there’s an outlet somewhere that will publish it.
Concur on the irandom’s observation on how few people understand economics. Every time our county mandates a higher minimum wage the retail outlet a family member works in raises their prices. Simple economics, the next step? People that can barely stomach the high prices stop shopping when prices are even higher.
“People don’t quite comprehend basic economics” like supply and demand.
Isn’t this the same blog where commentators along with the author are anti density, even though density increases supply. D.C. has 62 Sq Miles of land, which some of it is park space, so it seems like the most commonsense and only viable approach would be to build up not out if you want to increase supply with demand being constant or going up, which has happened to D.C. over the past number of years.
The origin of development restrictions may be in the building along roads between existing cities, giving the impression that there is no available open space between them. It is possible that this may be solved by keeping some visible open space between them but allowing more development on cities edges rather than along the roads between them.
Having talked with older Britons about planning their understanding of the Town and Country planning act of 1947 was to prevent ribbon development (search “ribbon development” on Wikipedia for better definition). At the time few Britons had cars and most transport was by bus or train. Buses ran between towns on paved roads so developers naturally built their houses along the road where the front of the house was on a paved road with bus service and the back garden faced out into the countryside. Even as these houses became miles from the city center they still had transport by bus. By 1947 Britons were starting to complain that some areas of the country were being built up as between cities all they could see was continuous housing, even though in many places it was only one house deep. This was called “ribbon development”. Apparently the idea of the 1947 act was that ribbon development would cease, but some development would be allowed that was not between cities and towns so that people travelling between them could see the open space.
Talking with San Francisco Bay area residents it appears they have the same perception of the lack of open space. Most of the SF Bay Area is open space, and I personally hike in it regularly, exploring various new areas. These areas have almost no people in them, and most residents simply don’t know they exist. However most residents think there is a lack of space and are against “urban sprawl”. It appears they feel this way as they only travel on freeways in the region which mostly have development along their length between cities, or ribbon development.
This raises the question that if some open space was preserved along freeways between cities, but development allowed on other edges of cities, would residents still feel that the area was built up and just urban sprawl?
All comments on this article before 6:12 am PST. That’s telling.