This is one of the best explanations I have seen on this complex subject. Thanks for writing it, it's a great reference. Especially about the impossibility of adding a 50% affordability component to new developments. I do this math all the time in real life situations and clearly Mr. Condon and many of his other colleagues in academia do not know the math. You can't even build affordable housing in Vancouver today with FREE land. Maybe 5% BMR might just work, but it still creates a tax on renters (those unlucky renters who are paying full market rent are effectively subsidizing affordable rentals in new buildings). Getting off topic, but surely affordable rentals should be in older buildings (eg. the rental protection fund, which buys older rental buildings to preserve affordable rentals, seems like a better idea, and more fair to renters).
Regarding affordable rentals, Portland (Oregon) subsidizes below-market rentals using a property-tax waiver, spreading the cost across the entire property tax base. Of course the problem with our current system of having the market rentals cross-subsidize the below-market rentals is that it pushes market rent out of reach for more and more people, running the risk of creating housing need faster than you can fill it. I think it's justifiable in the Broadway Plan area, where there's a lot of old low-rise rental stock and where demand is very high (resulting in high market rents), but we should be extremely wary about imposing this requirement across the entire city. https://www.sightline.org/2024/02/23/now-fully-funded-portlands-affordability-mandate-should-be-a-model/
This is one of the best explanations I have seen on this complex subject. Thanks for writing it, it's a great reference. Especially about the impossibility of adding a 50% affordability component to new developments. I do this math all the time in real life situations and clearly Mr. Condon and many of his other colleagues in academia do not know the math. You can't even build affordable housing in Vancouver today with FREE land. Maybe 5% BMR might just work, but it still creates a tax on renters (those unlucky renters who are paying full market rent are effectively subsidizing affordable rentals in new buildings). Getting off topic, but surely affordable rentals should be in older buildings (eg. the rental protection fund, which buys older rental buildings to preserve affordable rentals, seems like a better idea, and more fair to renters).
Thanks, David. On Twitter, Michael Mortensen often points out that Condon's calculations are unrealistic or wrong. https://x.com/LcpVan/status/1791143040251576379
Regarding affordable rentals, Portland (Oregon) subsidizes below-market rentals using a property-tax waiver, spreading the cost across the entire property tax base. Of course the problem with our current system of having the market rentals cross-subsidize the below-market rentals is that it pushes market rent out of reach for more and more people, running the risk of creating housing need faster than you can fill it. I think it's justifiable in the Broadway Plan area, where there's a lot of old low-rise rental stock and where demand is very high (resulting in high market rents), but we should be extremely wary about imposing this requirement across the entire city. https://www.sightline.org/2024/02/23/now-fully-funded-portlands-affordability-mandate-should-be-a-model/
Thanks for putting in all that work, but, really, you had me at the first mention of supply and demand. Honestly, it feels like a trick question!
Gotta rethink the "supply-demand dogma" https://cityhallwatch.wordpress.com/2024/05/12/rethinking-housing-supply-demand-dogma-ny-city-club/