Housing Solutions Series: Getting Started

Sometimes when I am speaking to a group about housing I’ll ask, “When did the housing crisis start?” The answers that I get vary, but it is never a date or time or quantitative threshold crossed. My point in asking the question is to be provocative; how can you fix or overcome something that has no quantitative measure. A “crisis” has no value except that assigned by the person using the word or hearing it. In the truest sense of the term, when people expound on “the housing crisis” it is usually a shaggy dog story, a yarn spun using anecdotes with the same punchline: “We need to spend more money on affordable housing!” This series is another effort to point out that if we’re talking about housing prices, then the solution begins with more production.

No some people might just think I’m plain mean for asking “what housing crisis?” While I have never been much of a Dale Carnegie guy, I understand that I am challenging conventional wisdom, or more accurately public opinion. We need to change the narrative about housing in the United States. This will take time and money, first to figure out why people think what they do and then to change their minds. Today, even smart people, of all ideological bents, reflexively think that the path to ending everything from their son paying too much for his first apartment out of college to ending homelessness starts with “more affordable housing,” another way of saying spending public money to build subsidized housing. Instead, we need to build more housing so that it is affordable.

Even if the public stops seeing housing as an entitlement – even a right – and starts seeing it as a commodity subject to supply and demand just like every other commodity, government must be far more transparent about how its rules and regulations are impacting housing. I’ve spent much of my time this year trying to look at the correlation between permits, population, and price, and I have found that the local governments that permit and regulate housing don’t clearly and uniformly report permitting data. Ask GoogleGOOG
about “cost burden” or “eviction rates” and you’ll get acres of conflicting and often bogus data. But figuring out how long it takes from permit application to final permit for an apartment building, good luck!

Those two big jobs, changing public opinion and getting government to regularly and accurately track and report permitting and housing production, the next task is enormous: Eliminate the rewards for politicians that squash new housing with more rules that limit supply and push up prices. Today, groups of elected officials with the disposition of the Harper Valley PTA, make life altering regulations that throttle the flow of an essential product for consumers, blame greedy developers and housing providers, then watch millions of federal and state subsidies flow into their communities. It will take time, but if public opinion can be changed and a real dashboard created, then approval seeking politicians will have to boost production, reducing rules to only those that protect basic health and safety.

This five-part series will have three propositions. First, free the housing market from regulatory overgrowth. Housing should be as easy and affordable to get as a cell phone. Yes, there are constraints on building housing unlike any other commodity in the market, but those can be overcome; that’s what markets do. Second, when the market fails, generally at the point when what some people can pay for housing is less than the cost to produce and maintain it, give those people direct cash subsidies. Additionally, using tax abatement to create set aside units with restricted units can sustainably add subsidies to the economy with minimal inflation. Finally, subsidies for construction of housing should mostly be reserved for people with complex issues that conspire to keep them sick, addicted, and unhoused. We have a long way to go, but now is the time to get started.