Friday, March 09, 2007

The Myth of Affordable Housing

Libertarianism in practice (as opposed to theory) demands organizations and collective actions. In the modern American context their views are perceived as as alien and outmoded by the would be ruling classes because they resurrect the founding principals of enumerated powers.

While many critics are off-base I still have problems with the entire premise of "affordable housing." RPPI for instance says in #320;

"The real problem is government restrictions on supply.
Supply has not kept up with demand due to these artificial
restrictions. One recent study found that 90 percent of
the difference between physical construction costs and the
market price of new homes can be attributed to land use

The solution is to allow more construction."

For Akubi; this is the same line repeated in your Carol Lloyd article.

There already exists a market mechanism to address affordable housing. When housing becomes unaffordable, prices fall and time on market increases. What RPPI proposes -instead- is that government not only get out of the business of manipulating the market but that government also get out of their actions regulating for an orderly market abandoning supply and demand in exchange for demand only markets. Demand only "markets" are also often called "Bread & Circuses." This, in my opinion, ignores the reality that zoning and land use regulation needs to exist for the protection of -existing- land uses and land owners. Turning this on its' head to become a tool of potential owners or uses is antithetical to the usual positions of RPPI.

Housing is more affordable than ever since ownership is at all time highs and demand is the highest in two generations. Were housing unaffordable prices would be falling and vacancies high and ownership low.

There is a unique and transitory demographic effect that distorts the picture. Time for another round of "Robert explains it all and then some:" People living longer means taking longer to roll over -used- housing. I say -used- not -older- because the two are recently divorced. Trust me, there are 20 houses in Massachusetts, stretching from Pittsfield to P-town owned by friends and mostly family that have an average owners' age of 65 plus. In the past these would be on their way to the first time buyer market. Sorry, mom still plans on "commuting" twice a year between golf and tomatoes in Longmeadow, MA Memorial Day to Labor Day and golf with sailing the rest of the year in Venice, FL. Aunt Debby is tri-locating, Framingham, Maine, FL. Uncle Jimmy, Framingham, Newport, RI, extensive travel. Aunt Kathy, Worcester, Waterville Valley (NH), Falmouth, whim (I think). Uncle Dick, West Springfield and Venice FL.

Affordable housing initiatives have only one outcome; less, more expensive market housing.

Planners will NEVER understand that people don't want to live and work in the same place. Here are some of the usual pablums:

"The quest for a strong regional authority has been the Holy Grail for planners." Says it all.
" As traffic gets worse, I would venture to say that closer in locations get [more attractive]." Crap.
"The mortgage deduction certainly discourages renting." More crap.
Sometimes it seems to me that people don't want to understand these issues.

The American Dream is a constantly evolving ideal that in practice nearly always requires compromise. The premise of PTAD is that there be no structural impediments to those goals. A pure "free market" does not and should not exist in the public realm of community land use delineation.

"Affordable Housing" has become the bogeyman of the NUTSo and SmUGLers (New Urbanist/Transit Supporters, Smart Urban Growth Lovers) because sprawl has been effectively negated as a threatening term. Sprawl has been defanged in no small part by me. More on the Myth of Srpawl in an upcoming post.

"Affordable Housing" is going to be especially difficult to unmask as nothing more than the latest anti-suburban, high density, Pyonyang Transit scheme. There's a subtle tinge of racism that makes it the third rail of planning. Housing is seen as more of a right than transportation. "Affordable" is not as easily ridiculed as "Smart Growth" for instance. The secret worldwide urban cabal is also getting more sophisticated in their presentations. Every time we beat them back with logic and facts and democracy they try another tactic. They only need to slip one measure past us. Eternal vigilance is the burden of freedom.

There is a NUTSO (New Urbanist Transit Suppoters Only) -theory- that affordable housing reduces the need for poorer people to commute long distances to their jobs. Bull. If that's all that was necessary then mixed income housing would be able to have narrower streets and less parking and less transit service, etc. Lowering the price only causes people to buy as much as they can afford fueling the rise in larger homes. You will notice also that mixed income is never mentioned by the NUTSos. This is because Neo Trad/New Urb is very expensive and even at very expensive the municipal costs are not covered by the higher taxable basis. "Affordable Housing" for the SmUGler crowd means subsidized housing.

Urban Planners want to do for housing what they did to transit. Transit was profitable and private until the affordable transit crowd tried to impose unrealistic pricing schemes borne on the back of the private industry and public purse. See the similarity? That's a real way to scare the crowd.

People deserve a place to live BUT people do not have a right to live any place.

We do this a lot. We select based on economics, safety, concern for the environment, and undue burden on other people. We are an empty nation and most of the nation is emptying out even more. The problem we face is that we cannot (yes, cannot) accommodate everyone who want to live in places like SoCal because the people who want to move here will not (yes, will not) pay their share of the costs of their accommodation. There is no affordable housing crisis for instance, there is a surplus of people who are unwilling to pay for the housing they think they deserve. There are similar parallels in transit and roads funding. I think we need to increase gas excise taxes to prepare for the upcomming round of urban highways that we've already filled up with demand before adding capacity.

Some on this list can tell stories about what I think of planning as a "profession." Planners are not familiar with the scientific
process or if they are they reject it as too inconvienient. The word science is tacked on to lots of things like boxing and planning. In Boxing, where the word is appropriate, one can set up a hypothesis and perform experiments and enumerably compare results with known constants and variables and margins of error. Planning cannot do any of these things in a putatively free society so they revert to chicken guts and portents as interpreted by shamans. They have shown themselves
to be resistant to introducing science into the processes so important to us all.

Real science starts with hypotheses and collects data and produces conclusions.
Planning is the Church, professionalism is Gallileo.
Planning is to science what astrology is to astronomy.

Limiting housing can be neither onerous nor coercive. Zoning density restrictions enjoy a long acceptance in this country. Economic hurdles to more residences in a neighborhood than the existing owners are willing to accept are even more respected for both their legitimacy and efficacy.

We are not talking about buying an empty lot in a residential area and building a house. We are talking about public funds buying an empty lot in a residential area and allowing a zoning change and building an apartment building.

We are not talking about buying an empty lot in a residential area and building a house. We are talking about buying an empty lot in a residential area and being allowed a zoning change and building a an affordable house with public subsidies.

I fail to see why residence location should be any different from any other "investment." I use "investment" in quotes to highlight that this means far more than money. When one buys into any system there is a reasonable expectation that the rules that restrict will also protect. In the last 40 years that has changed so that now they only restrict.

I've mentioned before that my neighborhood is massively protected by money and many layers of interlocking laws. The population is most certainly limited and affordable housing is not going to happen here. The difference is that those constraints are neither onerous nor coercive nor arbitrary.

This is a case of swamping the lifeboat. What in the heck is wrong with saying "use the next boat." The answer is obvious and odious. "We don't want that -same- as what you've got, we want what you have. If we cannot have it at the price -we- like then -we- will drag you down." Of course I'm talking about Sec 8 and affordable housing and "fair share", upzoning, etc.

The largest threats to the US historically high homeownership rates are in the following order:

Government intervention.
Bias towards urban solutions.
Using housing to address social justice or social equity issues.
The false assumption that sprawl is an anti-affordable factor.

Govt intervention, with all good intentions doesn't permit affordable and profitable housing anymore than it permits adequate but unencumbered roads or transit sited for apolitical technical reasons. We don't let safe, decent shelters be built. We insist on massive public dedications of land, very high construction standards, etc. There may be good reasons for these things, strict fire codes for instance, make a home cost more but saves the municipality fire dept expenses. Same thing when the front yard is "taken" for wide tertiary streets, greenstrips, sidewalk and now the new taking, underground utility rows that don't lay in the "public" row.

Affordable housing is easy. Lay down some streets and stand back. But like I said affordable housing is only one of many wedge issues urban agendaists are using to force social changes to their liking.


GameOver said...


I feel dirty...

Anonymous said...

Ahh....that's what I love about EN; we only fret about the important things such as who's first or second or third to post a comment.

BTW....I'm second! bunch of loosers (Casey spelling)

R-Boy said...

Umm, Well sine I am an economist, let me just say this

In Urban and Regional Economics, we kind of operate on the "ring" principle. Initially, the rich folks live in the center. Over time, they move out to farther and farther rings as their incomes go up. Poorer folks move into previously vacated areas. This is pretty well established economic science here.

Eventually, the cost of communting vs. the value of living farther out changes the pattern, and the rich move back into the city center, the poor are pushed out, and so on, and so on.

Ebb and Flow, just like a business cycle.

Libertarian Economist
Somewhere in the DOJ

Rob Dawg said...

When are you guys going to learn that I am ALWAYS first?

Anyway r-boy, good to see you outing yourself as an economist. I get the emails all the time from regulars telling me that they are engineers, scientists, economists, land use planners and such. The readers don't get a good feel for the depth of expertise behind the campfire comments we leave here.

The concentric ebb and flow you mention isn't really that simplistic as I'm sure you know. When the rich reinhabit the urban core they aren't leaving behind their predialian manses but adding to them. The last 50 years has also seen some big shifts that IMO are related to mobility. When you can travel easily "the world is your oyster." This leaves the urban cores with increasingly marginal utility and has hampered (I think broken) your return to the cores cycle.

Anonymous said...

First beyotches.

Stanley said...


Your "first" does not count as first. We are always first, which makes your first; actually second. Even when you think you are first, you are third or fifth; depending on which day it is.

GameOver said...

@ Rob Dawg,
Hence the "I feel dirty..."

R-Boy said...


I won't pretend to be an Urban Economist. It's not my field of expertise, but I have a few classes under my belt.

As with most economic story-speak, you're entirely right that I summarized a full semester's worth of URDE in "ring theory" And I'm pretty sure ring theory is out now and there's something called "bubble theory", now in place. It doesn't work the same way that it does before.

But Gentrification is occuring (this core change). We see it in the U Street Corridor here in DC, and I saw it with the TechWood Housing Projects in Atlanta pre/post Olympics. What do notice as different this time is that the poorer folks don't really have a play to move to post-gentrification, and I blame the over-inflated housing prices for that.

I *do* think traffic, congestion, and time spent commuting plays a major role in people's decisions on where to live. They have played an enormous role in mine, but that could be due to the fact that I have an economist's viewpoint on time.

However, to get back OT on affordable housing. Yes, it seems silly for the government to intervene with price ceilings. We have seen what kind of disaster that creates in New York City (until government regulators had to regulate even more, thusly adding more costs, and well, that's a mess).

In the end, people do sort themselves out, if left to their own devices, and given a very small amount of oversight, this sorting will be beneficial, even if some folks don't agree with the outcome.

*I* choose to live in a mixed wealth community because of its amenties and culture, and fight very hard to keep planning official from ruining / changing what makes the community very vibrant. I probably pay a little more in taxes for it, but that's okay, because I am conscious of that cost, and I am free to make it.

R-Boy said...


As for being an economist, I am influenced by the economics of rhetoric (Ziliak, McCloskey, Klamer), and the Chicago School.

Consider me a public servant, who one day very soon will be talking to FBI-Sac, but as a concerned citizen.

Anonymous said...

Update over at looser's site.

RacistAnonymous said...

Casey won't answer the questions. I'm more interested in obtaining a statement from the authorities on why he hasn't been arrested. Even if the authorities tell me they won't go after him, I want to understand why.

The reason I'm curious about this is because you really don't need to use liar loans to get cash back, and the legal 3% is more than enough cash back at the high end of the spectrum to make money. If I were to set up a legitimate corporation with investors with no regard to credit score and purchased a 2 million dollar house, but then used 3% cash back under the table, I'd get $120,000 for nothing. Casey was pushing 9-10% cash back. He made no payments and then let all the properties fall.

He suffers no penalties. The real tragedy, from the criminal perspective, is why he even bothered to make payments for renovations. This is where I start to really wonder. The real fraud could be that the people he sent the cash back proceeds to weren't even legitimate businesses had the intention of fixing his properties. They could have been shill corporations operated by him or his family. They could have extorted $200,000 from nothing and could claim innocence, even though they were part of his scam.

Dumbfounded said...

Must be new math...Last I knew 3% of $2M was 60K

Ogg the Caveman said...

Rob, I'm finding your articles related to urban planning and all things non-Casey to be more and more incomprehensible. Here are a few things I didn't understand:

While many critics are off-base I still have problems with the entire premise of "affordable housing." RPPI for instance says in #320;

What critics? What does RPPI stand for? What does #320 refer to?

The American Dream is a constantly evolving ideal that in practice nearly always requires compromise. The premise of PTAD is that there be no structural impediments to those goals.

What's PTAD? What goals? I could go on, but you get the point.

Beyond that, I get the vague impression that you're taking as given a lot of points that could and probably should be argued, setting up and knocking down strawmen left and right, and assuming things that aren't universally true (i.e., that there is always available land to "lay down some streets"). I can't really be sure though, because I don't think I understood more than about 10% of what you just said.

If you're just ranting for your own benefit, fine. I'll leave it alone. If on the other hand you want to be understood or to persuade people to your point of view, you should try to write for your audience rather than yourself. In this case I'd say that your audience is by and large intelligent, educated, and at least somewhat interested but has no particular background in urban planning and doesn't understand a lot of the shorthand you use.

sitemeter said...

Why isn't your sitemeter working, rob? Hasn't logged a visit in two days.

GameOver said...

OT but still...

I vote we pick up one of these for our road trip.

Jip said...

>>Sometimes it seems to me that people don't want to understand these issues.<<<

BINGO!!! Understanding the REAL issues means that they have to cosign their Sacred Cow to the BBQ.

Peripheral Visionary said...

Rob, your comments on affordable housing and urban renovation are interesting, although I share the comment above that much of it is beyond the reach of those who don't have a background in urban planning.

My primary concern is over the state of zoning in this country. I'm not sure if we're on the same page or not, but my feeling is that many of the ills we face are due to serious problems in zoning, much of it due to "close ties" between zoning boards and developers (there are more derogatory terms for that "relationship", but I'll refrain.)

My personal feeling is that the long-term solution is to put down iron-clad zoning that takes into account future growth for an area, but severely limits changes to zoning that are outside the plan. The problem that zoning needs to address is, first, that the way one property is developed affects other properties (as you've pointed out), but, second, zoning is VERY difficult to reverse. Once farmland is zoned residential, it is GONE, and it does not come back, no matter if that residential development becomes a slum and the prices of commodities go through the roof. It is a one-way decision, and as such, should be made very carefully, far in advance, by people who have nothing to profit from it.

Right now we're facing a destructive cycle, where farmland is purchased (or inherited) by speculators, who succeed in re-zoning it as residential, then clean up on the vastly increased land value by selling it to developers, who make more money off it by building on it and selling it to residents, who then don't take care of it and it falls into dilapidation, where it is then purchased by urban renewal projects (at taxpayer expense), to be transferred to builders, who then make another round of profits off it re-building it as high-density urban housing. It is not just terrible planning but outright corruption, profiting everyone but residents, taxpayers, and agriculture, the three constituents who should be first, not last.

Rob Dawg said...

Ogg, your points are well taken. It is loaded with jargon and abbreviations.

The RPPI is the Reason Public Policy Institute and the numbers #320 is a position paper.

PTAD is an abbreviation of Preserving The American Dream for whom those excerpts were first written.

The points being set up and knocked down are not so much strawmen as the point that affordable housing advocates promote as not to be questioned.

I will endeavor to expand in bite sized pieces what I am trying to say. Thanks.

Anonymous said...


Do you think Galina sports a Brazilian?

Or is there a better chance that Casey does?

Rob Dawg said...

anon 12:57,
There's a new post at IAFF and a really cute picture of vultures in the post immediately following this one. Try your question there.

Anonymous said...

Sorry Rob. I just found the most recent post hard to follow. I'm guessing most of the folks that came over hear from Casey land would agree.

I'll go ask Casey that. I'm sure he'll answer that right after he answers what he was really doing in Utah. :)

Rob Dawg said...

I understand. Dense pack rant with jargon. One of the places I haunt is Calculated Risk where someone asked me about my anti-transit, anti-urban opinions. I promised some talking points. Honest, this stuff is the worst circle of wonkish hell and takes an expedition and translator just to visit and return alive.

A lot of the people that visit here aren't interested in all Dandelion all the time. My stupid cats or scary smart kids would be boring. Nobody would trust me if I dwelled upon my mundane business adventures so I talk about land use, transportation, and investments related to the housing bubble. I'll switch to talking about the housing boom in about two years if you have the patience.

Anonymous said...

Rob. I would guess that almost 100% of your audience is interested in some form of real estate. Most of us came over from Caseyland because we liked what you said on your comments over there. And most of us probably found our way to his site by reading about him in something real estate related (I was USA Today).

Actually, that would be interesting to know? Where most of your posters originated from.

So really, I find most of your topics and posters great. And I do like the mix. Hell, I come here 10:1 vs. Casey's site. But I never would have found my way here if it wasn't for that looser.

And it's your blog so you can pick whatever you want to talk about.

Eth Real said...

Disclaimer - another economist, though also a realtor in urban DC.

In DC, the affordable housing issue is extreme. Inner city DC has seen prices more than double in four years. For owners, it's been a nice bonus for families who never exp[ected to have a few hundred thou extra. For renters, it's a disaster if they lose their place (DC has strong tenant protection laws, so they can't be kicked out jsut to raise rents). The inital urban renewal took a lot of vacant proerpties and put them back into use, so that's been good. Now, however, almost all urban renewal is displacing minimum or low wage workers who have to move way out to PG county which has lousy public transportation and involves much mroe of a commute comapred to DC.

A bit of reading you might enjoy:

Comeback Cities By Grogan & Proscio

House by House, Block by Block (can't remember author)

Eth Real said...

Sounds as if you are a neighbor. I live near 16th & U - bought my first place here in 1998 and the place next door to me was grafitti covered and dilapidated. Now, a 1br bsmt unit there rents for $1500+!

BTW, my current home is part of the problem. I have a 1907 rowhouse that I bought from the original owner's daughter in 2004 for $350,000 (very below market price). Renovated, easily worth $900,000 now. The family needed the $$ for medical costs as the original owner's daughter was in her mid 80s and had a brain tumor and not enough insurance. They got more than they ever expected, but now the family can't afford to buy back in to the market and they rent in subsidized housing. Sad to see a family devcline from owners to renters, but they said they couldn't afford the extensive renovations this palce needed, so it was going to happen anyway. Meanwhile, there is only one original family left in the street and her 84 year old sister who lived with her died last year, so soon there will be a row of wealthy urbanites.

FlyingMonkeyWarrior said...

I have known Robert Cote' (is that it? I have known you?) for a long time from HousingPanic, which is a snail these days, more readable than postable.
I have not really followed KC that much, BC I just get sooooo aggravated, (over inflated self image plus not too smart plus no education) but this blog is like the HP old days.
Really MuFu Funny and it really moves.

Nice Sight Rob Dog AKA Mr. Cote'

And here is my little amusing post for today.

What We Are.

A you tube short.

FlyingMonkeyWarrior said...

sorry I posted and spelled Dawg wrong.
I forgot to wear my TF hat...

Rob Dawg said...

sorry I posted and spelled Dawg wrong.
I forgot to wear my TF hat...

Homey da Clown be all over your azz fer that faus paux. Ooo be dat Faux paus? Dunno...

FlyingMonkeyWarrior said...

Formerly, Infidel Woman, an HP Alumni

Brooklynite said...

I'm to blame for the rant, as that was me at CR.

I've lived in the boonies, the suburbs, inner suburbs, and now in brownstone Brooklyn.

I'm not an "affordable housing" advocate as much as a responsible planning advocate myself.

I grew up in NJ, which has now been half paved over, thanks to the well-intentioned but misguided Mount Laurel ruling and subsequent law. (Short explanation, provides a builders remedy for developers that want to build in towns that zone out any affordable housing).

The NJ law was a disatser in its implementation. Now half the state has been paved over, literally in 20 years. It was a fucking travesty.

My argument is, spend the money on urban transit infrastructure: transit, parks, schools, etc. because it's better than turning the entire country into one endless, soulless eyesore of strip malls and culdesacs.

I do believe that our dependence on the auto will be the downfall of the country if we don't do something about it. Traffic, smog, obesity, and all those roads, paid for with tax dollars. Over and over again, since they have to repave so often.

Must stop - can't exceed length of original post. Thanks, Cote, for indulging me.

R-Boy said...

Eth Real,

you can email me at

Id be more than happy to talk to someone about dc housing that seems, well ethical.!

T said...

I first "met" Rob on Ben's blog.


Anonymous said...

I first found Robert Cote on Ben's blog, too, I liked that name a lot better than Rob Dawg. Anyway, I thought he was the most intelligent poster, although I admit some of what he says goes over my head.

Rob Dawg said...

Thanks for the kind/understanding words. I only picked up "Rob Dawg" so that I could make my admin of a blog seperate from the person. I've grown fond of Robert Coté as well and a google can find it going back quite a ways on transprtation and planning sites.

I'll post more on the substantive issues after some food and drink. Replacing sewer piping makes me cranky. Sure I can model an anisotropic aircraft structure or install granite counters but plumbing confounds me.

Brooklynite said...

Ditto what T and 5:16 said.