I feel like this implies causality that’s not necessarily true? There’s two ways to interpret the data here:
1. Expensive new housing results in expensive old housing, so it’s most important that new housing is affordable in order to bring housing prices down
2. Housing overall is expensive because the overall supply is too low, so it’s most important to build as much new housing as possible to bring housing prices down across the board
The policy question here then is in questions such as, does it make sense to require affordable housing for new developments, if that means fewer new developments? Or should increasing density and # of units be the sole guiding star instead?
Excellent point. In terms of causality, my thinking is that prices reflect scarcity: when new market housing is scarce and therefore expensive, older housing will also be scarce and expensive, just like used cars are expensive when there's a shortage of new cars.
In the city of Vancouver, it's common to require new rental buildings to include 20% non-market rentals, cross-subsidized by the other 80%. This kind of affordability requirement ("inclusionary zoning") is a form of in-kind tax on new housing. Like any other cost, this tax pushes up the floor on prices and rents for the 80% market side. The danger here is that you end up creating housing need faster than you can fill it. You're basically taxing newcomers to pay for the 20% non-market rentals.
A better alternative is to fund affordable housing through property-tax waivers, so that the cost is borne by the entire tax base rather than just newcomers. https://morehousing.ca/inclusionary-zoning
That said, I can understand the 20% requirement in the Broadway Plan area, because the risk of large-scale displacement is so high. And I wouldn't want to see the existing renter protection policy reopened. Like any compromise, there's people who are unhappy with it, and if you open it up for renegotiation, you're immediately going to be inundated with competing demands. It's like opening a giant can of worms.
I’d also argue that the non-market requirements placed on new housing don’t exist as part of some coherent plan to solve the crisis at all. They are more like a political compromise, bolted on the side, that serves to solve some political problems without regard to whether the actual housing problem gets solved.
My sense is that this kind of policy mix reflects multiple competing diagnoses about why housing here is so expensive. Urban economists argue that restrictions on supply (red tape, taxes) and the resulting scarcity are driving up prices and rents, so there's policies to encourage supply. A lot of people think that prices and rents are decoupled from local incomes because of foreign investors, or Wall Street ("financialization"); so there's policies to restrict foreign buyers, and there's proposals to regulate REITs. Other people think that the problem is greed; so there's policies to push for non-market housing.
I feel like this implies causality that’s not necessarily true? There’s two ways to interpret the data here:
1. Expensive new housing results in expensive old housing, so it’s most important that new housing is affordable in order to bring housing prices down
2. Housing overall is expensive because the overall supply is too low, so it’s most important to build as much new housing as possible to bring housing prices down across the board
The policy question here then is in questions such as, does it make sense to require affordable housing for new developments, if that means fewer new developments? Or should increasing density and # of units be the sole guiding star instead?
Excellent point. In terms of causality, my thinking is that prices reflect scarcity: when new market housing is scarce and therefore expensive, older housing will also be scarce and expensive, just like used cars are expensive when there's a shortage of new cars.
In the city of Vancouver, it's common to require new rental buildings to include 20% non-market rentals, cross-subsidized by the other 80%. This kind of affordability requirement ("inclusionary zoning") is a form of in-kind tax on new housing. Like any other cost, this tax pushes up the floor on prices and rents for the 80% market side. The danger here is that you end up creating housing need faster than you can fill it. You're basically taxing newcomers to pay for the 20% non-market rentals.
A better alternative is to fund affordable housing through property-tax waivers, so that the cost is borne by the entire tax base rather than just newcomers. https://morehousing.ca/inclusionary-zoning
That said, I can understand the 20% requirement in the Broadway Plan area, because the risk of large-scale displacement is so high. And I wouldn't want to see the existing renter protection policy reopened. Like any compromise, there's people who are unhappy with it, and if you open it up for renegotiation, you're immediately going to be inundated with competing demands. It's like opening a giant can of worms.
I’d also argue that the non-market requirements placed on new housing don’t exist as part of some coherent plan to solve the crisis at all. They are more like a political compromise, bolted on the side, that serves to solve some political problems without regard to whether the actual housing problem gets solved.
My sense is that this kind of policy mix reflects multiple competing diagnoses about why housing here is so expensive. Urban economists argue that restrictions on supply (red tape, taxes) and the resulting scarcity are driving up prices and rents, so there's policies to encourage supply. A lot of people think that prices and rents are decoupled from local incomes because of foreign investors, or Wall Street ("financialization"); so there's policies to restrict foreign buyers, and there's proposals to regulate REITs. Other people think that the problem is greed; so there's policies to push for non-market housing.