More Affordable Housing Means Less Government Involvement

Affordable housing (i.e. subsidized housing for low-income people) and housing affordability (the ability of people to pay for housing) are big topics in our area and have been for a while.

The cost of putting a roof over your head is obviously personal and impacts your quality of life. But it’s also a community economic issue in that the cost of housing can either help or hinder the ability to attract and retain a workforce.

Obviously, demand is a key driver. The area is popular so as more people want to move here the greater the demand for housing. That, however, is not the full story. When supply of land is restricted by zoning or public purchases for open lands, or living arrangements are restricted by government such as the so-call ‘U+2’ ordinance in Fort Collins, a consequence is a restrained housing supply and the subsequent increase in prices.

To ‘fix’ these non-market disruptions some communities turn to such policies as ‘inclusionary zoning.’ In short, residential developers are required to sell part of their units below market price as affordable housing. But since the costs to actually build something are relatively fixed, to make a project work the other units in the development are priced about the actual market.

There’s a great column by Paul Kupiec and Edward Pinto in today’s Wall Street Journal titled “The High Cost of ‘Affordable Housing’ Mandates” that goes through the math.

The authors’ final paragraph is a great summary: “Rather than promise the impossible—making housing affordable by decree—municipal governments should embrace practical solutions. They should adopt land-use and building code regulations that reduce development costs. They should expedite approval processes, lower impact fees and taxes, and reduce other unnecessary regulations. Only by adopting measures that trim development costs can municipal governments stimulate the production of new housing that is more affordable for everyone.”

This is great advice for the community to keep in mind during ongoing conversations about affordable housing and housing affordability. As Kupiec and Pinto point out, government intervention in the housing market actually makes housing less affordable.