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HOW TO CREATE AFFORDABLE HOUSING
Bruce Burleson – April 12, 2017
 

Several years ago I lived in Boston’s Dorchester neighborhood.  I would attend meetings at the local civic association to keep abreast as to what was going on in the community.

Often, real estate companies would present at these meetings proposals to build housing in the area.  They would set up scale-models of the buildings they wanted to construct, and the association and its members would then comment on the proposals.

More often than not, members of the association would complain because a proposed building was too tall, or two wide, or didn’t include enough parking.  Often they would oppose projects on the grounds that they would present traffic problems for the neighborhood.

So months would go by, and the developers would return again and again with revised proposals and updated scale-models, designed to placate the civic association.  It struck me that it must cost an awful lot of money to have to keep paying architects to revise building designs, so that their proposals would meet the criteria required by the civic association.  In Boston, civic associations have an awful lot of influence on the city government.  Often the city would grant, or refuse to grant, ordinance variations for building projects based on recommendations by the neighborhood associations.

Meanwhile, the same associations would often complain of a lack of affordable housing in the city.  Why, they would ask, does it cost so much to rent an apartment in Dorchester or Roxbury?  A frequent answer: Well, because racism.

  "Triple decker" apartment building in Dorchester, Massachusetts.
   Often apartments in these buildings cost more than $2,200 per month.

But it has nothing to do with race.  The economist Thomas Sowell has written extensively about why cities lack affordable housing.  His main argument—which I believe is correct—is that it gets back to the basic principle of supply and demand.  Cities like Boston are very popular in which to live and work, and also tend to attract thousands of college students who end up occupying a significant percentage of the housing stock.  So the demand for housing in Boston is enormous.

In a number of articles and books, Sowell has compared housing costs in cities such as San Francisco with cities such as Houston.  He pointed out that in cities where there are a lot of housing regulations, rent control laws, and layer upon layer of building ordinances, the cost of owning or renting a home tends to skyrocket.  Sowell has compared the cost of buying a house in San Francisco with the cost of buying a similar property in Houston—and it is a lot cheaper in Houston.  The reason?  Houston has few if any restrictions on building.

Based on the laws of supply and demand, in cities that do not shy away from building housing on available lots, one can buy a house with a reasonable degree of affordability.  In contrast, three-bedroom apartments in Boston’s inner city are now renting at well over $2,200 per month.  In Houston, one can rent a similar apartment in the city’s Westbury neighborhood for as low as $1,500 per month.  Single family homes in the same neighborhood are listed on Craigslist for about $1,800 per month.

For ordinary working-class people looking to share apartments, that means one can expect to pay at least $750 per month to share a 3-bedroom apartment in certain parts of Boston, as opposed to about $500 in Houston’s working class neighborhoods.  The difference from the perspective of “affordable housing” is therefore quite significant.

Ultimately if we want affordable housing, city governments need to get out of the way, get rid of rent control laws and other regulations, and allow developers to build.  Until local governments allow market forces to work their magic, there will be no end to skyrocketing housing costs.
 

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