The Affordable Housing Purity Test

By Roger Valdez October 1, 2012

Every political ideology has a purity test: Pro-choice or pro-life, gun control or gun rights, government solves problems or government is the problem. Here's another one: Increased housing supply reduces housing prices, or housing prices can only be lowered by active government intervention.

There seemed to be an audible gasp in the city over a recent Seattle Times article that validates the idea that housing supply has something to do with price. The numbers are in, and they decisively show that when land use policies suppress housing supply through over-regulation, they contribute to higher prices; build more, and prices go down.

For some reason this basic economic fact is often perceived as ideologically suspect---too "Republican," as one nonprofit housing developer said in response to my recent post about the city's Multifamily Tax Exemption program, where I made similar arguments about reducing regulations to increase supply. (What better way, in Seattle, to shut down an argument than by calling it “Republican”?)

We still hear a lot of the same protests about increased supply being part of the solution for expensive rents: Housing markets are more complicated, and if we let developers build they will, but they won’t lower prices and then they’ll just laugh all the way to the bank.

Let’s break apart the two ideas that seem inextricably linked in the liberal Democratic brain: a market-based solution is the same thing as limiting government intervention. Nothing could be further from the truth. As I have pointed out before, even classical liberals argue that sometimes government does intervene when it does less.

In this case, the city of Seattle could lower development costs by doing less regulatory intervention in land use. That would help all developers, including non-profit developers who face the same expensive hurdles others do in getting their projects built. Lower costs can mean lower rents and more units.

The market study in the Times confirms what common sense would tell us: if you limit housing supply by being fussy about the way housing looks, how big it is, and the views if blocks, it results in less housing. Less housing with rising demand means higher prices. Doing less, in the case of housing, is an intervention that can help lower prices.

If we're worried about housing price, the data say we should build more. If we’re worried about ideological purity we shouldn’t let that get in the way of good policy. Just because we argue that we need more housing supply to build dense, walkable, and affordable neighborhoods doesn’t mean we’ll all wake up tomorrow eating chicken fried bacon, wearing cowboy hats, driving pick up trucks with gun racks, and listening to Johnny Cash. I may, but you don’t have to.
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