Friday, February 24, 2006

Learning To Love Density: The Return Of Affordable Housing

From Otis White's Urban Journal at

If ever there was a lost cause for cities, you’d think it would be affordable housing. After all, the average price of housing in the U.S. has increased by 73 percent in the last seven years, the Economist magazine reported recently. And resistance to affordable-housing projects remains fierce in many places. So it may come as a surprise to learn that some advocates are optimistic these days.

We know that because the Federal Home Loan Bank of Atlanta talked with some of the nation’s leaders in affordable housing recently and reported on what they see ahead. Two changes, they predict: a lessening in the NIMBY reaction against affordable housing and, perhaps as a result, greater success in integrating affordable units into larger market-rate projects.

First, though, the answer to a simple question: Why does housing cost so much? The price of building materials has risen over the years, as has the price of land in most places. But as economists who’ve studied the numbers have found, a big reason for escalating housing costs is land-use regulation. That is, governments make it so difficult and expensive to build housing, they almost demand that successful projects be only for the well-to-do.

Think about it: Local governments, the very institutions that wring their hands about the lack of housing for police officers and school teachers, are often the cause of the problem. Why would they make it so hard to build affordable housing? Because it’s what homeowners and neighborhood activists demand as a way of keeping their home values up. Their fear: If a few $200,000 homes are built in a neighborhood of $400,000 homes, it will bring down home values. Hence, the NIMBY reaction.

There’s another reason: To build cheaper, you usually have to build denser. Makes sense: The less land that’s used (by placing houses closer together or stacking them on top of one another in a mid-rise building), the cheaper the final product. But here, too, you run into the buzz saw of neighborhood politics: Homeowners furiously protesting any effort to change neighborhood scale.

Given this, what could possibly break the stalemate over affordable housing? Three things, the experts said: the aging of the population, a greater appreciation of density’s benefits, and better approaches by government to encouraging affordable housing.

First, the aging population: As the average age advances, there will be great demand for new modestly sized, modestly priced housing in cities and suburbs, experts say, and local governments will respond. To put it bluntly, the elderly will make affordable housing respectable — and less risky politically.

Second, density will become less of an epithet and more of an aspiration as politicians learn to appreciate the value to street life of having lofts atop stores and offices. (There’s a major opportunity for affordable housing, one advocate said, in downtowns, lifestyle centers and “pedestrian-scale communities.”) Another factor lessening NIMBYism, the report said: “Affordability is affecting a greater number of people with higher incomes.” Translation: More and more middle-class families are learning they can’t afford traditional, spread-out housing unless they’re willing to accept a brutal commute to work. As they clamor for housing closer to work, that too will lend respectability to affordable housing.

Footnote: One tactic that has helped greatly, affordable-housing activists say, is “inclusionary zoning,” which requires developers to set aside a portion of their major market-rate projects for low- and middle-income housing. This kind of zoning is now used in 107 communities in California, up from 64 a decade ago.

1 comment:

mike said...

"Local governments... are often the cause of the problem....

One tactic that has helped greatly, affordable-housing activists say, is 'inclusionary zoning...'”

Soooo... the solution to government interference is more government interference?