Blame Big Gummint for the high cost of affordable housing

It’s called ‘distorting the market’ 

If you think housing is expensive now, wait until the City makes it “affordable.”

Remember Madison’s “inclusionary zoning” fiasco of a few years ago? Ald. Brenda Konkel concocted a city ordinance mandating that developers set rents on a portion of their new construction at below-market rates. Yes, even on lakefront high rises. A gullible council of social justice warriors fell for a scheme more complex than Rubik’s Cube.

Having produced a mere handful of affordable units, inclusionary zoning collapsed of its own weight nine years ago but, to this day, the Venezuela wing of the liberal-progressive-socialist project blames the actors, not the Act.

Given that hard lesson, it is difficult to believe that 886 communities in these United States have these affordable housing ordinances on the books until, thanks to the Wall Street Journal, one learns that nine of every 10 are located in Bernie-blue California, Massachusetts, and New Jersey. Three liberal states that lead the nation in unaffordable housing.

“Like many progressive promises, this is a fool’s errand,” concludes the authors of “The high cost of ‘affordable housing’ mandates.”

These laws will reduce the cost of housing for targeted political groups if they increase the cost of housing for everyone else. … While the intent of these laws is to increase the supply of affordable housing, history shows they increase the cost of housing and limit the supply of new affordable units.

The law doesn’t change the cost of building. It merely changes the price the developer can legally charge for some of its new housing units. 

22-alec_guiness_theredlist“Do the math”

Those housing costs are passed on to everyone else. As usual, consumers who find themselves just above the government’s threshold for eligibility are the ones who take it in the shorts.

Housing costs are also bid up by Madison’s pecksniffian neighborhood associations. (They resemble the noisesome soviets portrayed in Doctor Zhivago, squatters who expropriated Tonya and Alexander’s house to determine who got what no matter how unearned.

How many times have neighborhood nannies (Madame Brenda included) caviled that this or that housing proposal “destroys the character of the neighborhood” because the structure would stand three stories tall instead of two. (Looking at you, Dudgeon-Monroe Street Neighbors.) That, my friends, is called “in-fill.” In-fill reduces something called “sprawl.” It’s a basic law of economics called “Economy of Scale.”

An insightful piece by Capital Times reporter Lisa Speckhard Pasque quotes my developer friend Terence Wall. “Do the math,” T Wall dares.

If plans call for 100 units over four floors, losing one floor means the developer is down to 75 units. Fixed costs like land, foundation and landscape architecture services are spread out across 75 units, instead of 100.

One hand washes another

Thus are housing costs made more expensive, not less. But what alder dare vote against his/her own neighborhood? And what council member dare vote against his/her colleague lest the tables be turned tomorrow?

Madison city government has fallen back on direct taxpayer subsidies. Spreads the pain throughout the city, buried deep within multi-million dollar budgets. Business as usual.

The WI State Journal reported in October that the City committed $7.8 million to help create 109 affordable units in a new venture and recommit to an additional 177 low-cost units in the others as part of a city initiative aimed at creating 1,000 affordable units over five years. Do the math: at that rate, that’s $27.2 million worth of affordability.

For Further Study:Yep, rent control does more harm than good.” Which introduces us to still more basic economics: Supply and Demand.

According to the basic theory of supply and demand, rent control causes housing shortages that reduce the number of low-income people who can live in a city. Even worse, rent control will tend to raise demand for housing — and therefore, rents — in other areas.

Blaska’s Bottom Line: One sure way to control housing costs: keep property taxes low.

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About David Blaska

Madison WI
This entry was posted in Madison city government, Progressives and tagged , . Bookmark the permalink.

10 Responses to Blame Big Gummint for the high cost of affordable housing

  1. Balboa says:

    David, but but what about the children? Do not disregard the Dane County board Regressive’s that want build some ridiculous number of low income homes. I thought I read 28,000 units if that is real and these are average home value of say $200,000 that equates to 5.6 billion dollars taxpayers will be on the hook?

    Like

  2. old baldy says:

    “One sure way to control housing costs: keep property taxes low.”

    You will have to explain that one. Housing costs depend on a lot of things, but property taxes may not make the top 10. Demand and interest rates probably lead the list.

    Like

  3. madisonexpat says:

    If you pay taxes to remain in your house that is a cost . A housing cost. See?

    Like

  4. Patrick M O'Loughlin says:

    Economists debate which can more effectively destroy a city, carpet bombing or rent control?

    Like

  5. Balboa says:

    Also the government can control other factors of housing costs, home builders have hundreds of regulations to follow which can drive up the cost from start to finish. I am not an expert in home building or the regulations they have to follow but if they were removed home costs would go down.
    I am not advocating blanket removal of regulations because most are there for good reason. If you go to low regulation states where regulations are lax, home are not built with the same quality and it shows.

    Liked by 1 person

  6. richard lesiak says:

    Stop carving out tax exemptions for all those “donors”. Or; create the Church of the Stately Manor and you can pay ziltch.

    Like

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