Defending the Castle
When it comes to affordable housing, government makes things worse -- and better.
When you start looking at the array of federal, state and local programs intended to expand the pool of "affordable" housing, you come to a few unsettling conclusions:
? The issue of affordable housing has migrated from "low-income" people to non-career workers in the "service economy" and now to the professionals and craftsmen long thought of as the ballast of our society -- firefighters, police officers, teachers, construction workers and others who have good jobs.
? Houses are "unaffordable" because people aren't paid enough to buy them. Employers are skimping on pay raises year after year despite growing productivity, then they're complaining they can't hire or retain people. Income and wealth disparity is growing dramatically. Companies are waiting for government to "do something," instead of creating company-provided housing or other targeted benefits.
? The dramatic rise in "median" home prices reflects not just price inflation in real estate but also rising expectations. The median new single-family home today is a third larger than in 1978, according to national U.S. Census Bureau figures, and more than twice as many new homes (61% in 2005) have 2.5 bathrooms or more. Construction standards and amenities have burgeoned, from hurricane-proofing and wiring for our electronic gadgetry to the comforts like air conditioning (42% of new homes built in 1978 didn't have it vs. 11% in 2005) and fancier kitchens and bathrooms.
? Affordability analysis is usually based on using 30% of income for housing, a typical lending standard, but maybe we should ask for more belt-tightening in other categories to get a government subsidy.
? Governments add to the problem, then try to subsidize solutions. They promote economic development like crazy, with tax breaks and subsidies for businesses, and governments are rolling in dough from rising property values, yet they say they lack money to subsidize people who can't afford housing-bubble prices. The federal mortgage deduction actually pumps up demand, and prices. As for housing for the poor, attorney David Midgett of Ocala, whose clients include the local housing authority, notes that the federal Section 8 program allows the same rent for three bedrooms in both "600-square-foot shotgun shacks and 2,200-square-foot beautiful homes."
? We want to stop sprawl into the exurbs, but we lack the will to do it by regulation and planning. So now we are subsidizing downtown "infill." In Tallahassee, former mayor and Realtor Penny Herman recently complained that the city is subsidizing 10 new downtown condos at $100,000 apiece to get the price down to $160,000, yet she found 50 existing homes for sale under $160,000 within two miles of downtown.
? We can't decide between controlling growth and building lower-priced housing. "The permitting process for affordable housing remains very, very slow," says Richard Gentry, longtime lobbyist for the Florida Home Builders Association who now is in a private lobbying practice in Tallahassee. Drawn-out processes that wear everyone down seem to be politicians' substitute for telling people no. "No phrase is more true than time is money. There's somebody out there holding a mortgage, and a clock is ticking," Gentry says. With thinner margins on lower-cost housing, delays and extra costs drive builders out of town.
? Higher densities would allow for more affordable units, but both nearby residents and growth-management advocates have resisted higher densities because of their impact on neighborhood character as well as on infrastructure and environment. Floridians want what city dwellers elsewhere long ago gave up: Yards. "It's very difficult to have a lot of people in affordable housing if you don't have adequate densities," says Wellington Meffert, general counsel of the Florida Housing Finance Authority.