Tuesday, November 30, 2010

Affordable housing

New York City has over one million apartments which fall under some sort of rent control law as part of a government-led effort to assure a supply of affordable housing. Predictably, the result is a shortage of the very thing such laws are ostensibly meant to promote. Tacitly recognizing this failure, the city government has resorted to mandating that certain percentages of new construction are set aside as housing for tenants who meet certain income parameters. Here is one such example:
Planned for more than four years, the [Hunters Point South] development has been positioned as something of a Stuyvesant Town of the 21st century. City officials want to restrict at least 60% of the apartments to middle-income tenants making between $63,000 and $130,000 for a family of four. 

With a city subsidy of as much as $90,000 being offered to the developer for each restricted-income apartment built, the project attracted considerable interest from the development world.
This is all so utterly ridiculous. First government creates the housing shortage both through rent control laws which serve as a disincentive to the construction of new units and zoning regulations, then it mandates that new projects include housing for those priced out of the resulting tight market, and lastly lavishes subsidies -- a wealth transfer from one group of citizens to another -- so that developers are willing to abide by such schemes. New measures are enacted to remedy the follies generated by earlier misguided forays.

Hey, kind of like health care.

1 comment:

Anonymous said...

If you offer a subside for building apartments but restrict the profit to be had from renting such apartments, that would appear to be a formula for building from the cheapest materials possible since the profit would mainly be up front and not from long-term return on investment. So the government contributes to creating another slum.