Affordable Housing, Abundant Housing

Some more thought about the affordable housing conference.
It seems to me there are two affordable housing problems, related but distinct.  First, the problem that some people can’t afford the basic costs of rent in Austin.  An apartment has costs: taxes, construction, maintenance, land, etc.  These add up to a breakeven rent that’s higher than some people can afford to pay.  Reducing those costs (e.g. finding cheaper ways to maintain a house) can make the breakeven rent more affordable, but there will always be some people who can’t pay, even without any landlord making a profit.
Second, there’s the abundance problem: when there are more people who want to live here than there is housing, they bid up the rents.  Rent no longer reflects costs, but demand.
The only ways to address the affordability problem are redistributive.  The city doesn’t assess taxes on apartments run by nonprofits (raising taxes slightly on everybody else), who pass the savings on to renters.  Or the city mandates developers lower prices on certain apartments, redistributing potential profits from the developer to the renter.  But trying to fix scarcity problems by redistribution is like trying to fit a carpet too big for a room one corner at atime.  The more market weight you give to the needy just pushes demand up on other units, driving more marginally-able-to-pay residents into unable-to-pay status.  The only way to deal with the scarcity problem is to get more units built.
Austin has major scarcity/abundance issues.  Sky-high downtown rents reflect demand and scarcity, not just construction costs or tax costs.  At the housing + transit conference, I saw a lot of people using the language of redistributive solutions: Tax-incremented financing, density bonus, finding federal and foundation matching funds, etc.  But the only person talking scarcity and abundance was the developer, not the politicians or staffers.
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Affordable Housing, Abundant Housing

3 thoughts on “Affordable Housing, Abundant Housing

  1. Jake says:

    What do you think could be done long term to address abundance without completely changing the character of the city (i.e. making it a giant apartment complex)? I’m not arguing with your point, and affordable/accessible housing is certainly a major concern for me both on personal and societal levels. Do you think there is a fair amount of already developed space that is poorly used, could the scarcity problem be addressed by building up and re-building rather than building out? If so, do you have any particular areas in mind?

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  2. balor123 says:

    Character changes no matter what you do. I just moved from Boston and basically all single family homes have become 2 or 3 family homes now and the price point for new construction just goes up and up so that the new character is a bunch of multi-million dollar homes and old overcrowded poorly maintained single family homes. Personally, I’d rather accept that character will change and move on to discussing what we want the new character to look like. Knowing that we’ve helped poor people while helping ourselves is an added bonus.

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