The market can’t solve housing by itself
Construction crews work on a new housing development along 300 West in Salt Lake City on Wednesday, Jan. 3, 2024. The city recently completed a four-year “reconstruction” of the busy road, adding a two-way separated bike path and new crosswalks. (Photo by Spenser Heaps for Utah News Dispatch)
From the White House to almost every city, the housing crisis has come to the forefront of political discussions. It is a clear fact that we simply lack enough housing for our entire population. And, as with many issues in our society, the lack of housing disproportionately affects the poor and minorities. With that in mind, many different political factions have offered their proposed solutions. Yet, the building of dedicated affordable housing remains a necessity to solving the crisis.
One movement seeing increasing support and success is the YIMBYs (Yes-In-My-Backyard). The YIMBY movement rose in response to the NIMBY (Not-In-My-Backyard) movement, which opposes affordable housing and apartments in traditionally single-family neighborhoods. YIMBYs promote what is often called Zoning Reform, which would remove the barriers cities put into place to keep single-family neighborhoods that way. The theory goes that by allowing duplexes, triplexes, and apartment buildings in a greater amount of area, it will allow for developers to build enough new units to meet the existing demand and solve the housing crisis. It is basic supply and demand.
Critics of the YIMBYs, especially on the political left, point out that most of the units that developers now build are expensive luxury apartments, which do nothing for poorer residents. YIMBYs respond that affordability is addressed both by filtering, by which these new units will age and become more affordable over time, and by diversion, where the new renters of those luxury apartments have moved out of other units, that should have been priced cheaper. Now, someone else can buy them at a more affordable price.
While zoning reform is necessary and the logic is sound, it will not address the needs of the poorest who need housing. Everyone deserves a quality home to live in, and quality is the issue for the poor if only the free market is responsible for providing them with housing.
When the Industrial Revolution caused large migrations of people to cities, there was a housing crisis. The private market met the demand with supply, but in doing so the builders, to maximize profit, prioritized cramming as many people into each building as possible while offering few services. This led to slums. Alex Schwartz details in “Housing Policy in the United States” how, around the turn of the century, these slums were deemed unsafe and demolished. To prevent situations like this in the future, building codes began to be adopted.
Building codes cost money to comply with, which developers compensate for by raising the price of the new unit, preventing low-income prospective home buyers from purchasing it. There are also other options outside the sale or rental to full-time occupants open to developers, such as short-term rentals or second homes. Even if supply and demand are perfectly matched in the current crisis, if demand ever outstrips supply again, low-income renters are at risk of eviction when their leases are up.
There is the obvious problem, then, of how we can provide quality and quantity of low-income housing if it isn’t financially profitable. The answer is the same as whenever the market fails, the government must step in. There is a long history of government intervention to provide affordable housing, an effort that still continues to this day. President Joe Biden has announced an ambitious housing proposal, including additional funds to subsidize rent for home buyers. But we can’t count on policies getting through Congress.
The State of Utah has also acted this session, passing around $300 Million in funds to help address affordable housing. The issue, though, is that the State focuses on housing more for the middle class and not lower income levels. During this year’s session, the Legislature passed HB572, which earmarked that $300 Million for loans to developers but for “attainable,” not affordable, housing. And when the state prioritizes something, local governments also often must follow suit to access funding and accomplish mandates.
Yet the need for affordable housing must be addressed, and it falls on us, the voters of Utah, to see these accomplished. During the Legislature next year, supporters of affordable housing need to contact their legislators to emphasize how important it is that they prioritize the issue. The Legislature must act to do more than just encourage starter homes. Utahns can also contact their municipal governments and push them to pass what measures they can take, for example, tying additional density incentives for developers to affordable housing, or waiving fees for projects that help with the shortage. This issue can’t be ignored.
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