Affordable housing has become the clarion call of progressives to combat the evil results of market capitalism. Almost weekly we see impassioned articles and editorials calling for an aggressive affordable housing plan for the SCV. Rising home and living expenses continue to drive would be residents up the 14 freeway into Palmdale or Lancaster searching for more affordable and comfortable living situations. Many are quick to blame our local leaders for not taking a stand. Some concerned citizens are calling for changes to City Law to mandate everything from price controls on rents and homes to the construction of considerably more low-income housing. But what exactly does more affordable housing mean?
“Affordable housing”, when being discussed and debated in the government world, simply means “subsidized housing.” Common methods of subsidy rent control, rent subsidies, price restrictions, deed restrictions, and senior-only housing. Locally, the city has focused efforts on the Three Oaks project, a 30 unit apartment complex that will be located in Newhall. This development will be open to all ages, with units being available by application and subsequent lottery. Monthly rent prices are income-based (with a limit on both minimum and maximum gross incomes), and there is no city rent control or other traditional rental subsidies offered, however, the city did donate 1.6 acres and $4 million to partially fund construction. While the Santa Clarita will not own the development or be funding any ongoing subsidies, the donation of land and funds constitutes a subsidy in my book.
Recently, this issue has become such a lightning rod that for months, seniors and local government sparred over the city’s Mobile Home Ordinance. Property representatives and renters came to City Hall in an attempt to convince the Council to adjust this legislation in their favor. Researching affordable housing, I came to the same conclusion as with the mobile home ordinance: The market, and not bureaucratic dictation, should be what drives home and rent values up or down. Government intervention has very real unintended consequences.
Let’s look at the Three Oaks project. With land at a premium in town, what is available should be built out to meet market demand. While we can all feel good about helping out 30 randomly selected families who are struggling with housing in the area, we are actually beuacractically discriminating thousands of other residents that do not (or cannot) participate in these programs. By holding units out of the open market, the program artificially keeps the supply of housing for residents at large lower. Other cities mandate that developers build “affordable” units that they must rent at lower rates or homes that they must sell at lower prices. On the surface that may sound great to some, helping lower income folks. Unfortunately, what ends up happening is the developer increases the price on all the other units to make up for the loss they take on the “affordable” ones. So prices are raised for the majority in order to help a small number of people.
Talk to any new home buyer in the SCV, and you quickly realize the massive price spikes don’t come from the shortage of subsidized housing units, but simply the lack of overall supply in a highly desirable area. Within days of hitting the market, median-priced homes receive multiple offers, many of which are over the listing price. With the 2008 housing crash almost a decade behind us, more people are qualifying for home purchases again, but supply has not kept pace with the growing demand. This influx of buyers in a limited market supply is pushing home values near 2008 levels again, and along with it comes higher rents and a higher cost of living.
In the end, “affordable” housing is anything but affordable, as it merely slaps a very small Band-Aid on the problem while distorting the market and preventing self-correction. If we do not allow the market to correct itself the issue will never be solved. It will only get worse and we will continually be pushing more and more money into the programs that are preventing real change, and exacerbating the problem. Market demand must dictate housing development, not feel-good government programs that do more harm than good.