NCFCA #3: Federal Housing Reform
The cost of a home in Texas is drastically cheaper than owning a home in California. The average cost of a home in the U.S. is $231,000. A home costs 60% more in California compared to Texas. In Texas, the median home price is only $195,000, which is lower than the national average.
The Cost of Living in California vs Texas (HOMEIA, March 5, 2021)
NCFCA Proposed Policy Resolution #3
The United States Federal Government should substantially reform its policies regarding affordable housing.
Why are homes on average 60% more expensive in California than in Texas? Much less expensive “on average” homes not surprisingly means much more “affordable housing”* is available in Texas.
* The federal Department of Housing and Urban Development (HUD) defines an “affordable dwelling” as one that a household can obtain for 30 percent or less of its income. … So, by this definition, a dwelling is considered “affordable” for low-income families if it costs less than 24 percent of the area median income.May 11, 2015
Everything you need to know about the affordable housing debate (Vox, May 11, 2015
Housing is less expensive in Texas because Texas has lower fees and less restrictive regulations on housing construction. But it wasn’t always that way. In the late 1980s I lived in West Los Angeles in a three-story apartment building surrounded by parking spaces for residents. Up and down my street were other similar apartment buildings built I think in the 1960s. But one by one they were being knocked down and replaced by nicer four to six story apartment buildings with underground parking. New restaurants were opening nearby as there were more people within walking distance.
The new apartments charged higher rents, so one could say they were less affordable. But most who moved in had moved out of other, usually not as nice apartments. And people who moved into those apartments had in turn moved out of other apartments. Each newly constructed home leads to on average four moves as families move into the homes that other families move out of.
New construction makes homes more affordable—even for those who can’t afford the new units (Upjohn Institute) gives overview of working paper: The Effect of New Market-Rate Housing Construction on the Low-Income Housing Market (July 1, 2019):
New research shows that just building new housing—even expensive housing—can quickly drive down housing costs across metro areas, including in low-income neighborhoods.
Building housing sets off a process called a migration chain, as people leave their homes to move into new units. When people vacate a given type of unit, it loosens the market for that type of unit, which lowers prices. Other people move into the newly vacant homes, leaving their previous units vacant, and the process repeats itself again and again.
California job growth boosted demand for housing, and the housing industry responded by building more housing. Just as it has for decades in Texas. But in California, local and state regulation clamped down on housing construction. Op-Ed: One reason for the high cost of housing in California may surprise you — overregulation (LA Times, July 3, 2019) explains:
California is a leader in regulating just about everything — including insurance carriers, public utilities and housing construction. If California’s regulatory code underwent some serious spring cleaning, it could help the state at least make a dent in its housing affordability crisis.
The California Code of Regulations — the compilation of the state’s administrative rules — contains more than 21 million words. If reading it was a 40-hour-a-week job, it would take more than six months to get through it, and understanding all that legalese is another matter entirely.
Included in the code are more than 395,000 restrictive terms such as “shall,” “must” and “required,” a good gauge of how many actual requirements exist. This is by far the most regulation of any state in the country, according to a new database maintained by the Mercatus Center, a research institute at George Mason University. The average state has about 137,000 restrictive terms in its code, or roughly one-third as many as California. Alaska and Montana are among the states with as few as 60,000.
Op-Ed: One reason for the high cost of housing in California may surprise you — overregulation (LA Times, July 3, 2019).
So for the NCFCA affordable housing topic, debaters on the negative side can make the case that state, county, and city regulations are the major obstacles to affordable housing. In Seattle, for example, Anatomy of a Swindle: How a Rogue Non-profit Captured the Emerald City (The Blog Quixotic, September 13, 2016) explains how a housing nonprofit, SHARE, profits from lobbying against the construction of affordable housing.
There are thousands of affordable housing NGOs (Non Government Organizations) across American cities, suburbs, and rural communities:
Through a network of more than 1,100 nonprofit, community-based organizations in more than 400 locations, Enterprise is helping build a national movement to promote housing and community development in low-income neighborhoods.
HAC Information: Nonprofit Organizations
And many of these are funded in part by federal affordable housing programs operated by HUD (Housing and Urban Development):
The ability to serve low income people in need depends on federal appropriations. NLIHC monitors the federal budget process and advocates for the highest possible allocation of resources at HUD and the USDA Rural Housing Service to support affordable housing and community development.
NLIHC Federal Budget & Spending
One major federal avenue for funding more affordable housing is Section 8 housing vouchers, which unfortunately have a long history of politicization and corruption. It’s Time to Reform Section 8: Housing Vouchers are Better than Government Housing Projects. But Federal Regulations have Limited Their Effectiveness (The Catalyst, March 19 2020), explains:
It seems like a better alternative than having the government build and manage units, which has created disastrous public housing projects; or subsidizing private developers through tax credit programs, which have been riddled with misappropriation and fraud. Vouchers give people consumer choice (since they’re not being tied to specific projects); prevent ghettoization of the poor; cut out the government middleman; and incentivize landlords to provide good housing.
At least that’s what Section 8 is supposed to do. But it hasn’t always worked that way.
The common complaint is that Section 8 doesn’t let people rent good housing in good neighborhoods, because many landlords don’t accept them. Instead tenants are steered back to remote, crime-ridden areas, or can’t find housing at all. An Urban Institute study found that landlords in one U.S. city rejected voucher-holding applicants at a 78% rate. …
Section 8 thus mirrors other government policies – especially those coming from federal level. Even if it seems theoretically sound, it proves inefficient in practice. Landlords spend extra time and money to navigate the policy, often giving up because the economics don’t work. Tenants – unaware of who will and won’t accept vouchers – waste time searching. And taxpayers fund the very administrative complexities that keep it from working.
It’s Time to Reform Section 8:Housing Vouchers are Better than Government Housing Projects. But Federal Regulations have Limited Their Effectiveness (The Catalyst, March 19 2020).
While, attending the University of Washington, I lived in a boarding house a few blocks from campus. My small room was one of seven in this older home. We shared a kitchen and two bathrooms and an entire family with three children (the owners) lived in the same house, separated from the boarder’s rooms. Converting larger homes to boarding housing hasn’t been legal for decades in Seattle or other American cities. But conversions done long ago were grandfathered in. So now only college students (mostly children of the well-to-do and those who can look forward to higher incomes after college) can live in low-cost high-density boarding houses, college dorms, fraternities and sororities. Does that seem just to anyone?
The Manhattan Institute is a valuable resource on housing policy. (See Urban Policy; Housing for various housing articles and studies.)
Zoning, Land‐Use Planning, and Housing Affordability (Cato Institute, October 18, 2017) notes:
The federal government spent almost $200 billion to subsidize renting and buying homes in 2015. These subsidies treat a symptom of the underlying problem. But the results of this study indicate that state and local governments can tackle housing affordability problems directly by overhauling their development rules. …
Housing affordability has become a high-profile issue in recent years as sustained economic growth has pushed up housing prices in cities across the nation. One often-overlooked factor affecting affordability is the reduction in housing supply growth relative to housing demand growth that stems from restrictive zoning and land-use regulations. The extra costs and delays created by these rules have stifled the development of single and multifamily housing in many cities, which have combined with rising demands to raise prices substantially.
Zoning, Land‐Use Planning, and Housing Affordability (Cato Institute, October 18, 2017)
Could federal government policies be reformed to incentivize cities, states, and counties to reduce regulations that restrict new housing and affordable housing? Should people be allowed to build higher density housing on their own property? When is it a takings* to block best use development of private property?
* Referring to the Takings Clause in the Fifth Amendment of the Bill of Rights: “This amendment restricts the government’s ability to take property and ensures that when it does take property, it must pay for it…”
Searching the Institute for Justice website for affordable housing, students will find articles like Living Legally in a Tiny Home, Camille Harris Shares Her Legacy, Seattle ‘Housing Affordability’ Law Forces Hard-working Homeowners to Pay Ransom for Building Permit—Now Two Residents Are Fighting Back, and others.
Also recommended is the Market Urbanism Report.