Saturday, February 18, 2017

Nice summary of the affordable housing crisis

in the Stanford Law Review:

[the cause of the affordable housing crisis] is uncontroversial among urban economists but not broadly understood by low-income families, advocates for low-income families, housing activists, and their allies in academia, policy, and government—in short, the housing advocacy community. In the face of higher housing costs, the housing advocacy community tends to argue for a “kludgy” set of policies that can actually prevent new development and end up increasing housing prices— campaigns to impose building moratoria, for example, or downzonings, community benefits agreements and other exactions, lengthy approvals procedures that disadvantage developers relative to NIMBYs, various forms of rent control, and a focus on affordable housing to the exclusion of other types of development. …. 
In the suburbs, the politics of exclusionary policies are hopeless: the cartellike interests of suburban “homevoters” are well-served by current exclusionary policies, state and federal courts for the most part won’t intervene, and there is very little interest among state legislators to impose regional or state-wide solutions.11 The picture is less bleak in exclusionary cities: renters, who would directly benefit from lower housing prices, are a majority in many of these cities, and advocates for affordable housing already form a politically influential bloc—but they use their power to ends that are often counterproductive.12 While there are other serious obstacles to expanding housing supply, the housing advocacy community could and should become an important part of the fight against urban land use regimes that systematically privilege a city’s wealthiest and most powerful residents. … 
A city’s ability to remain affordable depends most crucially on its ability to expand housing supply in the face of increased demand. Among the people who care most about high housing costs there is a lack of understanding of the main causes and the policy approaches that can address them. The central message of this Article is that the housing advocacy community—from the shoeleather organizer to the academic theoretician—needs to abandon its reflexively anti-development sentiments and embrace an agenda that accepts and advocates for increased housing development of all types as a way to blunt rising housing costs in the country’s most expensive markets.
HT: Campbell

3 comments:

  1. Communities could greatly improve their own financial and housing situations through the use of housing developments. Many communities disapprove of them though, immediately worried about who they will bring into the neighborhood. There are many different types of developments, some which can work more effectively in suburban communities. It does not have to be public housing, but instead a private developer manufacturing the homes. One way that allowing a development benefits the community is that it is a huge undertaking that requires local people to work towards its completion. This could include local contractors, architects, tradesmen, real estate agents, etc., bringing in a lot of additional work during the construction phase. This creates a “ripple effect” that impacts other local businesses when local workers go out and spend their new wages. Additionally, local governments benefit from the new developments because of property taxes.

    Citizens' Housing and Planning Association, Creating Jobs and Increasing Economic Development: The Economic Benefits of the 1997 Housing Bond Bill (March 1997).

    Paul Emrath, "Local Impact of Home Building," Housing Economics (March 1997), and Housing Policy Department, The Local Impact of Home Building in Average City, USA: A Brief Description of the Model (March 1997).

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  3. I found this post to be close to home. My family and I recently went through 2 years of house searching in the Buffalo, NY area. For what once seemed that a home with a price tag of $150,000 was a “dream home” in the WNY area, has now become your “average” home. We finally found a home we loved, but we had to sacrifice certain aspects or “must have items” that we originally sought out. We compromised on having acreage and a large outdoor building or barn as well as settled for a location a bit further away from work than desirable for commuting. (But a sacrifice my fiancĂ© was willing to make as I work remotely). Desperate to get away from the hustle and bustle of suburb life, and in need for additional space for our newest addition to the family, we in a way settled for what we believed to be the closest thing we could find to our list of “wants” and in our price range. In fact, we fall right into what this Buffalo News Article describes as happening. "Prices are increasing to the point that it is denying buyers an opportunity to buy," said David Weitzel, an agent at RE/Max North in Amherst. I have the same demand as before with buyers but no inventory to sell them. As a result, disappointment is mounting. And some buyers have relaxed their search, or even give up altogether for the time being, preferring to wait until the pickings aren’t so slim.”

    I am astonished at the change in the housing market from just 7 years ago when I purchased my first home. At that time, interest rates were around 5-6% and houses were plentiful. We found this to be very different now and in fact, just this past summer, the Buffalo News reported “The inventory of homes for sale in Western New York in August 2016 was at the lowest it’s been in 16 years. during that month.”

    The market saw a serious shift in demand and supply. While the economy began picking up and saw unemployment decreasing, interest rates began falling. This made it the perfect time to buy for many people that were holding off due to personal financial/economic reasons. What ended up happening was more buyers were available than homes for sale. Bidding wars became prevalent and houses that were on the market for just 1 day were selling and selling for over the asking price, $30,000 over in some instances. Very aggressive bidding was taking place.

    It appears however, that this may be coming to an end as interest rates now seem to be on the rise, and it would be predicted that this will level out the asking prices on homes. Some economist predict these rates to rise to 4.5% in 2017. My family was able to secure a rate of 3.75 last month.

    Epstein, J. 2016. The Buffalo News: “Is Buffalo’s Housing Marketing Slowing Down?” Published 10/25/16. Article retrieved from: http://buffalonews.com/2016/10/25/buffalos-housing-market-slowing/ on 3/22/17

    Viega, A. Mortgage rates, home sales and prices seen rising in 2017. USA Today. Article retrieved from: http://www.usatoday.com/story/money/personalfinance/2017/01/06/mortgage-rates-home-sales-and-prices-seen-rising-2017/96164006/ on 3/22/17

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