Government Housing Policy: Restricting Supply and Subsidizing Demand
I am always amazed that folks, say those in government in places like San Francisco, consistently support restricting the supply of new housing while subsidizing home buyers and then are surprised when prices and rents keeps rising. From the Market Urbanism Report via Walter Olson.
But a look at the numbers shows that, on the contrary, housing construction (or lack thereof) seems to be the driving factor behind whether or not large U.S. metros remain affordable.
This would be the conclusion from 7 years of data from the Census Bureau, which publishes annual lists on the number of new privately-owned housing units authorized in each metro area. Between 2010 and 2016, when overall national housing permits ticked up each year following the recession, most major metros have issued housing permit numbers in the high 4- or low 5-figures annually. But three metros have stood far above the rest.
The Dallas-Fort Worth-Arlington MSA issued 273,853 housing permits over this 7-year period; New York-Newark-Jersey City issued 283,814; and Houston-The Woodlands-Sugar Land topped every metro with 316,639 permits. Combined, the 3 metros accounted for 13.5% of the nation’s approved housing units.
Other metros weren’t even close to these three....
These statistics are glaring, and show that the urban housing affordability crisis, and its solution, is far simpler than many pundits suspect. In their ongoing quest to satisfy their anti-growth biases, they’ve settled on demand-side responses (read: government subsidies) that ignore or worsen the fundamental problem of under-supply; while they continue to blame various third party boogeymen, including developers, landlords, Airbnb hosts, techies, hipsters, Asian families buying second homes, and migrants in general.
But, again, the Census data sheds light on the actual nature of the issue: some metros in America are building a LOT of housing. Other metros may think they are, but actually are not. And housing prices within given metros are either stabilizing or skyrocketing based on this decision.
irandom419:
Thanks, been looking for that kind of data for some time.
April 16, 2018, 2:30 pmrandian:
Relative to population, New York/Newark's total is tiny.
April 16, 2018, 7:43 pmMax:
I have a question. Given that our western populations are stagnating or declining, why is this a problem? Aggregation? Immigration? More singles? Laws and regulations?
April 17, 2018, 12:13 amShouldn't we by now not have leveled the pop size?
Joe - the non economist:
Rent control always creates a greater supply of affordable housing
(sarc - at least it creates a greater supply of progressive votes)
April 17, 2018, 6:09 amborepatch:
"Restricting supply and subsidizing demand" = picking winners and losers.
April 17, 2018, 7:38 amElam Bend:
Populations move around, even if otherwise static. Take Chicago. The City over all is losing population, while the metro is stagnant in growth (approx 1%). But, few people want to move to the neighborhoods that have lost (some up to 25%) of population, while at the same time, suddenly people want to live downtown again. Also, some neighborhoods have become less dense as 2 and 3 flats are either demo'd or redone into single family homes. People who used to live their more to other neighborhoods, causing spikes in rents. Also, the premium on public transportation has spike, so places near train stations become new growth nodes. In general, all the action in development in the US (save a few select places) are due to population transfers.
April 17, 2018, 7:39 amMike Powers:
"a lot of housing" means A WHOLE GOD DAMN LOT of housing, though, if your intent is to move prices to the point where the people who've lived under rent control their whole lives can stay.
Like, knocking over the entirety of the SF downtown area and building 500 120-floor condo buildings, is the scale of activity we're talking about here.
Fkn' San Jose is seeing rents for one-bedroom apartments pass $3000 a month. And that's in the brand-new rat nests they're building on the outskirts of town (with seven-foot ceilings so they can fit an extra floor into the height they're permitted for.) "Building More Houses To Lower Prices" works but at this point you'd need to go back to 1994 and start building *then*.
April 17, 2018, 9:19 amGoneWithTheWind:
I guess I'm anti-growth. I think that every city should be allowed to create the city they want. What they should do is buy up the land for miles in all directions and create a green belt that cannot be built on. Along with laws restricting building to two stories and you could have a nice community. The entire world does nt have to look like Los Angeles. If this means that housing costs go up so be it.
April 17, 2018, 12:54 pmjoshv:
I suspect most of the answer is in the dramatic decrease in the number of people per household, leading to a dramatic increase in the number of households, even as the population stays mostly static. We used to live 6-10 per house, these days we live 3-5 per house.
April 18, 2018, 9:40 amNot Sure:
"What they should do is buy up the land for miles in all directions and create a green belt that cannot be built on."
Fine. If you want a green belt that cannot be built on, get your residents to pony up the cash to buy the land. But they don't do that. Instead, they pass regulations that prohibit the people who own the land from building on it.
April 20, 2018, 5:58 pm