Miami is one of many places where housing prices have reached crisis levels, and the Miami Herald editorial board blames the problem on the free market. Only government intervention in the form of subsidized low-income housing will fix it, says an August 3 editorial.
Wrong. Government caused the problem in the first place. No matter what the cause, subsidized housing for a few low-income people will not solve it, except for those lucky few.
Despite being one of the fastest-growing states in the nation, Florida housing remained affordable up through 2000. Miami was generally the state’s least-affordable housing market, probably because an influx of immigrants kept median incomes down. But from 1959 through 1999, median home prices remained between two and three times median family incomes.
That changed because of Florida’s 1985 Growth Management Act. Unlike Oregon’s law, this one relied less on urban-growth boundaries than on concurrency, that is, a requirement that new developments be approved only if the infrastructure is available to serve that development. While this sounds logical, it becomes an excuse for cities to reject or delay developments or to demand extortionate fees from developers.
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In 2011, the Florida legislature changed concurrency from a mandate to an option. As far as I can tell, every city in Florida has chosen to retain that option, so this failed to make any difference.
The result is that housing prices have jumped up again. Remember, restricting housing supply not only makes housing expensive, it makes housing prices more volatile, and that is exactly what we’ve seen in Florida. According to Zillow, median home prices in the city of Miami peaked at $374,000 in 2007, then crashed by more than 55 percent to $164,000 in 2011 and now are back up 78 percent to $292,000.
According to census data, in the Miami urban area, the median home price was $109,300, or 2.3 times median family incomes, in 1999. By 2005, it had grown to $308,100, or 5.7 times median family incomes. The crash brought prices down to $171,000 or 3.2 times incomes in 2009, but by 2013 they had climbed up to $210,000 or 3.6 times incomes. While I don’t have more recent data, it is likely that they have climbed to around 4 times incomes today.
Thus, Miami’s housing problem is not due to the free market but to government restrictions on housing supply. As the Antiplanner has noted before, affordable housing measures such as subsidized housing are band-aid solutions that don’t address the real problem. The real solution for Florida is to end concurrency requirements in city planning.
“According to census data, in the Miami urban area, the median home price was $109,300, or 2.3 times median family incomes, in 1999. By 2005, it had grown to $308,100, or 5.7 times median family incomes. The crash brought prices down to $171,000 or 3.2 times incomes in 2009, but by 2013 they had climbed up to $210,000 or 3.6 times incomes. . . .Thus, Miami’s housing problem is not due to the free market but to government restrictions on housing supply.”
Did housing regulations magically disappear and housing supply magically increase in 2009, thereby causing housing prices to crash?
Or are housing prices affected more by monetary policy?
Occam’s razor at play here.
“That changed because of Florida’s 1985 Growth Management Act. Unlike Oregon’s law, this one relied less on urban-growth boundaries than on concurrency, that is, a requirement that new developments be approved only if the infrastructure is available to serve that development. While this sounds logical, it becomes an excuse for cities to reject or delay developments or to demand extortionate fees from developers.”
Does this mean the only way we can have affordable housing is for a city to spend what could be millions of dollars extending the urban footprint by adding streets, utiliity lines, etc.? Since it would be, in the Antiplanner’s words, extortionate to recover this cost from the developer, this is subsidized housing as well. If the housing is going to be subsidized anyway, shouldn’t it be the city’s choice where to spend their money, in a greenfield development or a decaying downtown?
Local governments is only one way to fund infrastructure. Others are the developer themselves and in Florida a Community Development District (CDD) so funding isn’t the only obstacle to development. Can we say NIMBY?
transitboy wrote:
Does this mean the only way we can have affordable housing is for a city to spend what could be millions of dollars extending the urban footprint by adding streets, utiliity lines, etc.? Since it would be, in the Antiplanner’s words, extortionate to recover this cost from the developer, this is subsidized housing as well. If the housing is going to be subsidized anyway, shouldn’t it be the city’s choice where to spend their money, in a greenfield development or a decaying downtown?
I cannot and will not speak about the entire nation, but in areas that I have some knowledge of, developers build the local streets, sidewalks, trails, stormwater management facilities and in some cases other utility lines. The streets and walkways and stormwater management systems are turned-over to a county or municipal government, or in some cases a homeowners association.
I am also familiar with parts of my state where purchasers of a new homes that are hooked to water and sewer lines must pay for the cost of extending those systems (and in some cases the cost of adding related water and sewer infrastructure) in the form of 23 annual payments, which are collected as part of property taxes.
transitboy wrote:
Does this mean the only way we can have affordable housing is for a city to spend what could be millions of dollars extending the urban footprint by adding streets, utility lines, etc
In the Portland Metro area we don’t sprawl or extend Urban Growth Boundaries, but we spend hundreds of millions or billions subsidizing downtown developers and transit.
>In the Portland Metro area we don’t sprawl or extend Urban Growth Boundaries, but we spend hundreds of millions or billions subsidizing downtown developers and transit.
http://www.kgw.com/news/local/washington-county/hillsboro-housing-development-will-be-largest-in-oregon-history/292366429
How is this not sprawl?
In Oregon we live on less than 3% of the state. We have a stack and pack or density mandate problem, not a sprawl problem. It is getting harder and harder to live in a low density area is that is your preference.
“Free Market” is a myth!