The news media is discovering something that the Antiplanner has been saying for years: so-called affordable housing isn’t affordable. The federal, state, and local governments spend tens of billions of dollars a year subsidizing supposedly affordable housing, yet few people who need such housing get into the projects and many of those who do can’t afford the rents that are charged.
104 of the 116 units of the Alameda View Apartments in Aurora, Colorado are dedicated to people earning up to 60 percent of median income, which in the Denver metro area is $75,300 a year. That means average monthly will be as high as $1,883 a month.
As a recent article in the LAist points out, more than 450,000 households in Los Angeles have incomes low enough to qualify for affordable housing, yet fewer than 50,000 such units have been built. One project that opened in 2022 received 7,500 applications for just 65 apartments.
Moreover, developers that receive subsidies to build affordable housing are only required to provide that housing at affordable rates for 30 to 40 years, depending on the subsidy program. Since these programs began in the 1980s, many of the new housing projects that are built are simply replacing older projects that are now being rented for market rates, thus not increasing the supply.
Having affordable housing programs run by a government bureaucracy doesn’t help. An even more recent article in the LAist reports that hundreds of new affordable apartments are vacant because the city bureaucracy hasn’t gotten around to do all the paperwork needed to make sure that the people who rent them truly meet maximum income criteria.
Once rented, the apartments are not necessarily affordable to those who occupy them. Under Department of Housing and Urban Development criteria, renters should pay no more than 30 percent of their incomes on housing. But that doesn’t apply to each individual renter, just to the income thresholds each housing unit is built for.
To increase their likelihood of getting subsidies, developers typically assign a few units to households earning up to 30 percent of median incomes (which is approximately the poverty threshold) and a few for people earning up to 40 or 50 percent of median incomes. But developers prefer to dedicate most of their units to households earning up to 60 percent of median incomes, because then they can collect rents that are closest to market-rate rents.
For example, according to records submitted to the Colorado Housing and Finance Authority, the Alameda View Apartments in Aurora has 6 units for people earning 30 percent of median income, 6 for people earning 50 percent, and 104 for people earning 60 percent. Anyone earning under 60 percent is eligible to rent one of those 104 apartments, but they will probably have to pay 30 percent of that 60 percent even if their income is well under 60 percent. In short, only people whose incomes are exactly 60 percent of the median will end up paying 30 percent of their incomes for housing.
Note also that the Alameda View Apartments are four stories tall. Do an image search for “affordable housing” and most of the photos or illustrations will be mid-rise apartments, with only a few low rises. Mid rises and high rises cost far more to build than low rises. Single-family homes are the most affordable housing that can be built, yet almost no affordable housing subsidies go to single-family homes.
One possible reason for the bias towards mid-rise developments is that the people handing out the subsidies mistakenly believe that single-family homes cost more. However, that seems unlikely. Portland Metro’s profile for one four-story affordable housing project even admits that there is a cost premium for building height. Instead, the real reason that so many supposedly affordable projects are mid rises is that the people handing out the subsidies (like Portland’s Metro) have bought into urban planners’ belief that mid-rise apartments will lead people to ride transit more and drive less.
The result of this bias for more costly projects is that a significant share of the money spent on affordable housing is wasted. In 2016, the typical affordable housing project in the Denver area cost around $300 a square foot at a time when construction of basic single-family homes was costing about $150 a square foot. This suggests that only half the money spent on affordable housing is effective while the other half is going for the New Urban ideology.
None of these cities — Los Angeles, Portland, Denver, etc. — are willing to even consider the one thing that would truly make housing more affordable for everyone in these regions: abolishing the urban-growth boundaries that limit the ability of developers to build affordable single-family homes. Until that is done, affordable housing programs in these regions are simply a waste of money.
Absurd. I lived in suburban community that had single homes, townhouses and apartments all in same area.
For leftists it is always about visible beneficiaries and invisible victims. The media will highlight the single mom now able to buy clothes and food, and leftists will swoon. But the media won’t much highlight the connection to declining quality, let alone quantity, not without blaming the property owner/developer.
Ours is easily the most educated yet economically illiterate populace in our history. So we get the bad government we vote for. And we deserve it.
The late economist Walter Williams explained, “Short of aerial bombardment, the best way to destroy a city is through rent controls.”
Rent control once destroyed much of my town, New York City. Landlords, who couldn’t raise rents enough to make a profit, stopped making repairs. Then many burned down their own buildings to collect insurance. Between 1970 and 1980, much of the Bronx ended up losing 97% of their buildings to fire and abandonment.
This is also absurd, because the reason. In old days Landlord’s were also sufficiently skilled in repair and maintenance of properties. Modern landlords are parttimers and run housing as a turn key operation. Or either hustlers, slumlords or corrupt.
I’m a part time landlord and am sufficiently skilled in repair and maintenance of properties, although I farm out roof replacement/repair and a few other big ticket repairs/improvements. I know other landlords like me who are part timers. We aren’t hustlers, slumlords or corrupt. In fact, our tenants love us because we bend over backwards for them. We should, considering the fantastic profits we make due to skyrocketing rental prices.
We bough cheap at least a decade ago, put lots of $$$ and sweat equity into our properties, and for the past at least five years it’s been payback time.
It’s a relatively high risk/reward business.