In Defence Of Affordable Housing

Contributed by Robert Lyman © 2020

In major cities across North America, there is a convergence of political forces that supports the increased densification of cities, largely through land use planning, zoning and taxation measures. Usually, advocates claim that this is needed in order to achieve more “livable” cities and to reduce greenhouse gas emissions in support of a global mission to address allegedly catastrophic climate change. If fact, the main effects of these policies are to reduce the availability of new housing within urban boundaries, sharply increasing housing costs and placing home ownership further and further beyond the reach of people with lower incomes.

Much of the inspiration for the densification policies comes from experience on the United States west coast, and especially California. In the post-war period up to 1990, the land available for residential development there increased steadily at rates that aligned with the state’s growing population. Over the past three decades, but especially after the introduction of restrictive climate policies, stringent land use regulations have driven up land prices so much that middle-income, single-family housing is now virtually impossible to build.

Median house prices in the major coastal cities are far above the U.S. national average. According to Demographia’s International Housing Affordability Survey, average home costs in San Jose are 10.3 times the area’s median income, 9.4 times in Los Angeles, 9.1 in San Francisco and 8.4 times in San Diego, far above the 5.7 ratio in New York. Median gross rents, which tend to follow house prices, are more than 75% higher than the national average.

“Homeless in san francisco mission district California” by shanestar is licensed under CC BY 2.0

This is not due to a shortage of land. Urban areas cover just 5% of the state but house 95% of the population. The lands near the cities are not being developed because the majority of California cities and counties have adopted one or more growth control measures. These measures make it impossible to build more than one house at a time on rural lands, and make even building that one house difficult. California counties charge developers fees so high that developments often are not feasible, as the resulting house prices would be unaffordable. Furthermore, pressured by environmental groups, the courts have interpreted the California Environmental Quality Act to prevent counties from developing rural land without an environmental impact report that costs around $20 million to complete.

Social justice advocates maintain that, as single-family neighbourhoods have historically been white, their perpetuation is racist. Density activists claim that living close together fosters greater community spirit and positive social results, a claim seemingly not borne out by experience in American ghettos. The editor of the environmental magazine Grist recently commented that “a lot of green good comes from bringing fewer beings into a polluted and crowded planet” – the logic presumably being that living in single-family homes encourages people to have children and thus increase emissions. The politically powerful transit lobby supports densification along transit routes; after all, the average light rail line in the United States costs up to $80 million per route-mile (and up to $200 million per route mile in major Canadian cities).

The reality is that California’s determination to undo the primarily suburban, single-family development model in order to “save the planet” has raised housing prices well above national average levels and created a supply shortfall estimated to be 3 million homes. By 2016, the homeownership rate in the state was just 54%, compared with 64% in the rest of the U.S. The largest declines in home ownership have been among minorities. In 2016, for example, only 31% of African-Americans in the San Francisco Bay area owned homes, well below the 41% in the rest of the country. Today, 8 million Californians live in poverty, by far the most of any state. Yet, the cost of building affordable housing in urban areas can exceed $700,000 per unit. Due to high construction costs, rents for mid-rise and high-rise rental units near transit stations in most cities are at least $3,000 per month, and are affordable only to those with family incomes exceeding $100,000 per year.

The situation in Canadian cities is not yet as dire as that in California, although the same climate policy and densification policy views are moving cities like Toronto and Vancouver in that direction.

A strong land-owning middle class has been a key feature of western democracies, especially in North America, for many generations. Today, through deliberate policy, some jurisdictions are undermining the aspirations of that class, and in the process damaging the economic prospects of all sectors of society.

About the Author: Robert Lyman is an economist with 27 years’ experience as an analyst, policy advisor and manager in the Canadian federal government, primarily in the areas of energy, transportation, and environmental policy. He was also a diplomat for 10 years. Subsequently he has worked as a private consultant conducting policy research and analysis on energy and transportation issues as a principal for Entrans Policy Research Group. He is a frequent contributor of articles and reports for Friends of Science, a Calgary-based independent organization concerned about climate change-related issues. He resides in Ottawa, Canada. Full bio.

1 Comment

  1. Andrew Roman

    “Affordable housing” is usually code for housing extensively subsidized by government to reduce its purchase or rental price well below its land and construction cost. What makes such housing necessary is the policy mix you have described.

    What makes it “affordable” is that the people who live in it pay only a fraction of its cost. Essentially this is a transfer of income for specific housing, rather than to the income of social assistance recipients to purchase whatever basket of goods and services they need.

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