Planning Dogmata: Affordable Housing

It occurred to me recently that “affordable housing” qualifies as dogma, since I have yet to meet a planner who does not accept it unquestioningly. I am assuming this has a lot to do with how well we are paid, and possibly living conditions in grad school when we are being indoctrinated. This came up because the one question that non-planners tend to ask me that really sticks with me the most is “Why do we need affordable housing?” As a result, I spent a lot of time thinking about how to answer this question and have a sort of stock answer (see end of post), but I wanted to see what others say about it.

There are many ways to read between the lines of this question. For instance, a common NIMBY translation might be, “I don’t want poor people living near me, why can’t they go find homes somewhere else?” or a Libertarian might really be saying “Why is the government regulating minimum wage and paying for people’s homes?”

However, I tend to interpret the question to be coming from capitalists: “Why doesn’t the real estate market naturally provide affordable homes for everyone?” [I have become suddenly concerned with what this interpretation says about me.]

It seemed that the easiest thing to do was to look up the question online and see how various websites respond to the question. And I was a bit surprised at how many groups/municipalities interpreted and answered it.

HUD doesn’t have that exact question on their website, but they do say that affordable housing is at the very core of their mission and respond to this one:

Who Needs Affordable Housing?

More people than you might realize. The economic expansion of the 1990s obscured certain trends and statistics that point to an increased, not decreased, need for affordable housing. The generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing. Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. An estimated 12 million renter and homeowner households now pay more then 50 percent of their annual incomes for housing, and a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States. The lack of affordable housing is a significant hardship for low-income households preventing them from meeting their other basic needs, such as nutrition and healthcare, or saving for their future and that of their families.

Poking around a bit more, it became quickly apparent that this was one of the more robust responses and set a trend for tending to answer why it is needed by describing the hardship for individuals as well as communities.

New York City has it’s New Market Housing Plan [pdf], which provides the most numerical answer [if you look at the plan they do address the more human and humane reasoning as well]…

Despite these gains, there is evidence that demand continues to outstrip supply. In 2008, the net rental vacancy rate was only 2.81%. This is well below the 5% threshold that defines a state of housing emergency. Moreover, the vacancy rate is lowest where housing is needed most—at the bottom of the housing market where units are affordable to most New Yorkers. The net rental vacancy rate was 7.2% among units renting for $2,500 or more, but only 1.5% among units renting between $500 and $799.

Other organizations and municipalities tended to speak to wages, workers, jobs, diversity, needed public servants and even vibrancy:

City of Mission Viejo, CA [pdf]

House and rental prices have skyrocketed across Southern California. Wages have not. This gap between prices and wages creates a huge demand for affordable housing. But as the chart shows, the market isn’t producing enough housing to meet our population growth, nor is it producing affordable housing.

Sommerville Community Corporation [Massachusetts]

Despite the recent downturn in the housing market, housing costs in Somerville remain high and out of the reach of many people – newcomers and long term residents alike. Without affordable options, these families are forced to leave Somerville and with that loss, the City becomes less vibrant and diverse.

Upper Valley [New Hampshire] Housing Coalition

Our region’s employers have repeatedly cited housing as the largest limiting factor to their ability to compete in the marketplace. The rapidly rising cost of housing over the past decade, coupled with the shrinking supply of housing in the job centers, has made the costs of recruitment and retention escalate at a very high rate. The Upper Valley Housing Needs Analysis (Applied Economic Research, August 2002) released in August 2002 (copies are available though the Housing Coalition) calculated that even in the absence of job growth and household growth, the Upper Valley needs 3,100 units just to normalize its housing and job markets.

City of Fort Collins, CO

Everyone deserves affordable housing. However, as the cost of housing rises, many of us are forced to pay more than we can really afford. Not only are people who are caught in or have slipped through the social safety net hurt but so are many others. People you rely on all the time – teachers, bank tellers, police officers, waiters and fast food clerks, dry cleaner employees, secretaries, nurses, firefighters and even many young professionals – may need assistance with housing. Someone we know or people just like us – a relative or friend – may be impacted by the scarcity or cost of housing.

Town of Davidson, NC

Everyone deserves affordable housing. However, as the cost of housing rises, many of us are forced to pay more than we can afford. The average cost of a new 2400 square foot home in Davidson is $350,000 and existing home sales have skyrocketed to over $400,000, making owning a home in Davidson impossible for many families.

At the core of the question though, people still seem to want an explanation of why the free market doesn’t work to provide housing for the poor, and at worst people believe that affordable housing distorts the market making it harder for everyone to get appropriately priced housing. So my response tends to be a bit different when people ask. It is written below, and if anyone disagrees, please feel free to say so – I base this on my hobby-based understanding of economics and am very much open to learning more…

We as a society have agreed that it is best to have certain standards for buildings, these may vary from place to place, but building codes and fire codes are generally agreed to be necessary to protect people’s health and safety. However, by requiring buildings to have these safety measures, we are increasing the costs of construction sometimes beyond what is affordable by the people the housing is intended for. In addition to these initial costs and the costs associated with maintaining a habitable building, taxes on land also can be cost prohibitive to the poor. All of these expenses can be burdensome to the middle class as well in some places.

This distorts the natural housing market. In a pure market driven economy the poor would be homeless or living in tents or shacks of varying degrees of quality depending on the occupants income. These shacks would be located where ever they could find space, no matter if it is publicly or privately owned land, “habitable” or contaminated land, or on the side of slope prone to landslides. So affordable housing is not a distortion of a natural market, it is a correction for other distortions and essentially the price we pay for ensuring that people are being housed in structurally sound, safe, and sanitary buildings.

Tags:

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: