Affordable housing – additional thoughts

Last updated on: July 28, 2014 at 11:26 pm by Jane the Actuary

Affordable housing – additional thoughts 2014-07-28T23:26:00-06:00 Jane the Actuary

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So I was thinking about the affordable housing issue some more after my prior post on Detroit.

Mentally, I was dividing “housing affordability” into a couple issues:

1) Supply/demand imbalances, both artificial (restrictions on dense housing construction, minimum home size/lot size) and more “natural” (geographic limitations such as mountains limiting the buildable area, or a sudden boom in an area meaning that there simply hasn’t been time for housing construction)

2) Expectations beyond simply being adequately housed, e.g., families that take on too much debt in order to provide the idealized single-family house in the suburbs or to be in a ‘good school district.”

3) Families for whom the issue isn’t “housing affordability” but simply being unable to afford housing in the same way as food, transit, and other needs are “unaffordable” due to poverty/low-incomeness.

So as far as #3, it’s just silly to speak of “housing affordabiilty” rather than acknowledge that at some point we/”Society”/the government has made the decision to provide welfare-type benefits in the form of vouchers/benefits-in-kind rather than cash to ensure that it’s properly spent.

Of course, in a hypothetical of someone earning federal minimum wage, 40 hours per week, and following the fairly “blind” recommendation that housing take up 1/3 of your gross wage (that is, ignoring taxes, EITC, etc.), that gives a little more than $400 per month for our hypothetical earner — enough for our “baseline” 1 bedroom apartment in Detroit. A single mother who can’t get any more than a part-time job can’t even spend that much. Which means that even in an idealized, dense-housing situation that has brought housing costs down to this hypothetical baseline level, poor people are still going to be poor. If you have no, or little income, you’re still going to need income support in some manner or another, whether in the form of allowances/vouchers/benefits-in-kind for your basic needs (food, housing, clothing, transportation, medical care) or just a chunk of cash.

As to the expectations issue, that’s a bit more difficult — but in a way, to the extent that people make poor decisions, it’s their own business.

Which gets us to the supply/demand imbalances. Would a governmental unit, city or suburban, which professes concern about the cost of housing, be willing to take a step back and make changes in their zoning? Has the damage already been done? Has the mindset that we’ve had for so many years (and to a significant degree continue to have) that we simultaneously worry about “housing affordability” but at the same time cheer the increase in home prices meant that we (or, more precisely, government officials) can’t see the connection between restrictions on the supply of housing units, the cost of housing, and the ability of the poor to afford housing, or of anyone to afford the sort of housing that they expect?

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