A recent article on The Conversation asserts that “building more homes won’t solve the affordable housing problem for the millions of people who need it most.” While the authors acknowledge that we need more housing, they don’t believe that this is a sufficient solution. The authors present numerous facts to bolster their argument, but these facts are considered out of context. In this three-part series, I examine their key points and how these are considered out of context. In Part 1, I examine the role of personal choice in the affordability of housing. In Part 2, I examine the costs associated with producing and providing housing.
The authors conclude that,
Covering the difference between what these renters [extremely low-income households] can afford and the actual cost of the housing, then, is the only solution for the nearly 9 million low-income households that pay at least half their income on rent.
They propose expanding the Housing Choice Voucher program. Under the program, recipients pay 30 percent of their income for housing and the government pays the remainder of the rent. Currently, about 2.5 million households receive vouchers at a cost of $26 billion per year. The spending bill being considered by Congress would spend another $24 billion to cover an additional 300,000 households. However, even this unprecedented expansion of the program would leave about seven million eligible households without assistance.
The expansion being considered would spend about $80,000 per year per household. At that rate, it would cost about $800 billion per year to provide vouchers for the 9.7 million eligible households. Even with the profligate spending spree currently taking place in Washington, it is unlikely that Congress would authorize expanding the program by a multiple of thirty.
While claiming that vouchers are the only solution, the authors conveniently ignore the cost of their proposal. They fail to consider the full context. Consequently, they offer a “solution” that is impractical and won’t be implemented. However, if we consider the full context, there are other solutions.
Fundamentally, the affordable housing problem is one of supply. The demand for low-income housing far exceeds the supply. The solution is to increase the supply. And that requires restoring freedom to housing producers.
Most housing advocates claim that the free market cannot provide a sufficient supply of low-income housing. This claim evades the fact that America hasn’t had a free market in housing for more that a century. Land-use regulations (such as single-family zoning), building codes, and environmental protections restrict the production of new housing and drive up the cost of that which is produced. Removing those restrictions would enable developers and builders to produce low-cost housing.
We don’t have an affordability crisis for automobiles, smart phones, or televisions. Manufacturers of these values produce a wide range of products, and this enables even very low-income households to afford them. Housing producers can do the same, but they must be free to do so.