There’s a serious affordable-housing problem in the U.S., the country’s top housing official and several economists said Thursday. But the problems may lie on the supply side, as shown in two of the country’s largest markets, San Francisco and Houston.
According to Stan Humphries, chief economist of Zillow, local regulations are at the root of the supply problem. “Zoning, parking minimums — these inadvertently drive up the fixed cost,” Humphries said at the Atlantic’s summit on the economy.
And when fixed costs go up, builders have an incentive to create more expensive housing, he said.
“That’s why places like Houston don’t have the same housing crisis that San Francisco does,” he said. San Francisco is known for its strict building rules, while Houston doesn’t have a zoning code at all.
He added dryly: “You may not want to live in Houston, though.”
What was agreed by several experts who appeared at the forum was that affordable housing is a problem at a time when rents are growing much more quickly than incomes.
Julian Castro, secretary of the Department of Housing and Urban Development, said the fact that 88,000 people recently applied for 55 affordable-housing units in a New York City high-rise demonstrates “the tremendous amount of demand for affordable housing.” Castro pointed out that the demand was strong even though the units were in a “poor door” building — a project that relegates occupants of lower-cost units to a separate entrance from the one for those residing in market-rate apartments.
“That has been met with justifiable disapproval, but, under the law, you can do that,” Castro said.
Sarah Rosen Wartell, president of the Urban Institute, said the affordable-housing problem will be exacerbated by two population trends. One is the growth of the millennial-generation market, whose members are moving into home ownership later in life. The other is the aging of the population generally, as the available housing is often not in the transit-rich locations that older buyers need. “We don’t have the financing to adapt them,” she said.
Another problem discussed was that housing is almost the only savings vehicle available to lower- and middle-income families. “We need savings vehicles outside of home ownership,” said Wartell. With renting, there’s very little ability to save, because of both the rising cost of renting and the “lack of a nudge,” she said.
Source: Market Watch