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.
The authors write, “At the heart of the nation’s affordability crisis is the fact that the cost to build and operate housing simply exceeds what low-income renters can afford.” This statement is true, but the authors offer no explanation as to why this is the case or what might be done to reduce the costs to build and operate rental housing. They fail to consider the full context and accept the high cost to build and provide housing as an immutable fact.
A growing number of politicians and pundits are realizing that a major factor in the unaffordability of housing is single-family zoning (SFZ) and similar land-use regulations. Studies have found that regulations can add 40 percent or more to the cost of housing. Regulations make it impossible to build housing for low-income households.
A less obvious consequence of SFZ is the cost of land. A parcel of land zoned for single-family can provide housing for only one family. In many cities, the cost of a lot in high demand areas can easily be more than $250,000. The entire cost of the land is reflected in a single housing unit and raises housing prices far beyond what is affordable to very low-income households.
However, if that lot held 6 housing units, the land cost per unit plummets to $42,500. While this may still price the resulting housing beyond the means of very low-income families, it illustrates one pernicious result of SFZ. In arbitrarily limiting land uses, SFZ drives up the cost of the land that is available.
Eliminating the costs associated with SFZ, as well as the delays imposed by the permitting process, would significantly reduce the cost of building and operating rental housing. Jurisdictions across the nation are realizing this and relaxing or eliminating SFZ. Abolishing SFZ won’t immediately provide more affordable housing, but it will set housing innovators free to find and implement solutions.
The affordable housing problem is one of insufficient supply. The solution to a supply shortage is an increase in production. If we truly want to solve the affordability problem, then we must let those who can produce and operate housing do so without arbitrary restrictions.
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