Economics: Why "Affordable Housing" is Always a Failure

[DBTrek]

"Affordable Housing" or rent control is a scheme cooked up by politicians with limited foresight to "fix" housing shortages. It actually achieves the opposite effect (creating housing shortages) for a number of obvious reasons. First, consider what happens when a government tells landlords in a highly competitive region that they may only charge 'X' for rent, rather than the rates that their property would command in a free market.

• 1) The property value, and therefore the property taxes, continue to rise - but the building owners have no way to offset these costs because they can only charge 'X' for rent. As the building requires upgrades or repairs, again, the owners have no way to raise that additional revenue because they can only charge 'X'. Result? The building falls into disrepair over time because maintaining it further is a financial loss for the owner. This leads to many rent control buildings being scummy, dangerous, roach-infested havens.
  
  2) People with low income move in, and never move out. Fairly obvious. You take an apartment on Manhattan Island, or downtown Seattle, or Saulsalito CA, and fix the rent where a highschool graduate working their first job can afford it. The highschool graduate moves in, and never leaves. Now, a 1 bedroom apartment that might be rented by a professional married couple is instead occupied by a single worker. Apply this same rule to 2br and 3br "rent controlled" housing. By random luck-of-the-draw individuals are able to obtain more space than they need in really hot real estate markets through rent control. What's the consequence? Others who actually need that same space to accommodate more people (families) can't find housing. Behold, the housing shortage just got worse.
  
  3) Buildings stop being built. When a city starts implementing rent control, investors stop paying to have buildings created in rent controlled zones. They know they're going to lose money on them. The one exception, of course, is "Luxury" housing which is usually exempt from rent control laws. So in their effort to fix the housing shortage politicians actually discourage more housing from being built, except for rich folks.

This has happened again and again in areas that have implemented rent control, but it's such a popular and "obvious" answer to low-info voters that the abysmal policy continues to be popular. Politicians win elections by being popular, so even though they know that rent control only exacerbates a housing crisis they're more than happy to pander to the voter's misguided whims.

Rent control/Affordable housing in the news right now:
Affordable housing projects in Poughkeepsie, Beacon receive $10M from state

Go Out to Eat in Alexandria, Help Finance Affordable Housing

Can good design help NYC’s affordable housing crisis?

Amazon to Affordable Housing: Screw You

$5.1 million awarded for Lansing affordable housing

ETC.

Affordable housing only aggravates a housing crisis and often leads to landlords abandoning buildings that fall into disrepair, or burning them down for insurance money. Now that you know what's up, I hope you will oppose rent control policies whenever and wherever you meet them.

[Speaker to Animals]

Rent control and affordable housing are two different things. Rent control is a really bad idea. Cities sometimes need to engage in some kind of affordable housing initiative to keep workers in the city limits. Affordable housing just means you take valuable land and build less valuable homes or high-density apartments on it. Around here they do couple that high-density appropriation with rent control, which is a really bad idea, but that's a separate issue.

[DBTrek]

Ok ... in Seattle they call rent control “affordable housing”, so my points are aimed specifically at rent control. If other areas have affordable housing that isn’t synonymous with rent control then all the above points may not apply.

[Speaker to Animals]

Yeah, they do that here too.

One problem with urban areas is that, as you pull in high-tech industries, the value of land goes up. Housing becomes more expensive because all of the engineers and so forth have very high earning power. But you still need housing for the many working class people in order for the city to function. No workers means nobody is driving the buses, maintaining the streets, filling the latte cups, etc. Balancing out the desire for more high-earning jobs with the need for affordable housing is a pain.

Rent control is one of those easy go-to solutions for the democrats that usually backfires big time.

There really are no easy answers to this.

You can zone some otherwise valuable land for high-density apartments. But the apartment rent will just keep climbing. The problem has less to do with real estate and more to do with demographics. For a city to be sustainable, you most likely don't want to have more than a certain threshold of highly-paid workers. If you exceed that threshold, then housing becomes unaffordable for everybody else. You start losing workers who migrate to cheaper cities. Things start to break down as businesses have to compete for fewer and fewer everyday working class employees. You also will get a lot of homeless camps of people who for whatever reasons don't want to leave even though the city is completely unworkable for them. They are working at Starbucks and living in a fucking tent because rent is about 3-4k per month.

Cities suck, dude. I have been saying it for a while. The Internet made them obsolete, but we still cling to them because the devil you know..

[MilSpecs]

NJ’s builder’s remedy is a form of affordable housing that’s drowning towns in giant developments without the infrastructure to support them. Basically, a developer agrees to include affordable housing units in a development. The towns have no choice or they’d be bankrupted by lawsuits. Those units pay much lower property taxes and the other homeowners in the town pick up the slack. This guarantees that most of the town will be rich or poor, and cuts out the middle class.

[Speaker to Animals]

Yep.

[doc_loliday]

Rent control and the prevention of construction are the twin pillars of liberal housing policy. Its really insane how heated people get when you point out how it causes poor people to spend more for less housing. I guess its one of those fuck you got mine things.

[MilSpecs]

Rent control and the prevention of construction are the twin pillars of liberal housing policy. Its really insane how heated people get when you point out how it causes poor people to spend more for less housing. I guess its one of those fuck you got mine things.

The builders remedy was supposed to deal with that. In reality, it just forces overconstruction in areas without the infrastructure to carry an increased population. And the middle class pays for it,

[SuburbanFarmer]

Rent control and the prevention of construction are the twin pillars of liberal housing policy. Its really insane how heated people get when you point out how it causes poor people to spend more for less housing. I guess its one of those fuck you got mine things.

Its more of a low-info pandering move, with the benefits of payoffs, revenue, and short-term statistical boosts.

Not a vast conspiracy of “the left”, just politicians doing what politicians do.

[doc_loliday]

Rent control and the prevention of construction are the twin pillars of liberal housing policy. Its really insane how heated people get when you point out how it causes poor people to spend more for less housing. I guess its one of those fuck you got mine things.

Its more of a low-info pandering move, with the benefits of payoffs, revenue, and short-term statistical boosts.

Not a vast conspiracy of “the left”, just politicians doing what politicians do.

I didn't say it was a conspiracy, let alone a vast one. Just expressing how proponents of rent control react when you bring it up.