Affordable Housing Institute : US

Last week I was reminded, via a tiny Boston Globe squib, that some of the most fundamental principles of economic gravity are surprisingly invisible:

 

I stand before you with my principles plain to see!

 

Brookline housing officials are finding that trying to convert affordable-rate condos into affordable housing is more expensive than they had hoped.  As condo units come up for sale, housing officials are starting to assess whether to help low- and moderate-income families by subsidizing their purchase of them, and putting deed restrictions requiring the properties to remain affordable. 

 

In principle, this is a terrific idea; take advantage of a price slip caused by a brief glut and buy low. 

 

Officials are discussing whether to subsidize the purchase of four units at 1600 Beacon Street for which the town would essentially act as a conduit in the deals, a first for the town.  However —

 

 

However?

 

Some months ago, I led a great group of British housing experts on a two-day study tour of US affordable housing policy, including site visits to several properties. 

 

“Is it really true that the natives here live in affordable housing?”

 

I thought they would take away from the trip the enormous complexity of the US housing finance ecosystem, the importance of Low Income Housing Tax Credits as soft equity, the value of soft debt instruments, the challenges of urban redevelopment, or the utility and relationships among multiple levels of government.  It was, therefore, with keen anticipation that I asked them, “what did you learn?”

 

“Things cost money!” they merrily chorused. 

 

“But you gotta have bucks, lots and lots and lots o’ bucks!”

 

They were and are, of course, right.  Affordable housing always costs public money.

 

Everything my guests had seen, every bit of affordability, had come through one or more forms of public financial resources.  In fact, I have become convinced that affordable housing is the most expensive domestic intervention there is, measured in dollars of outlay per household served. 

 

— ”We’re finding that if we really were to do it this way, we’d run out of money pretty quickly,” said Jeff Levine, the town’s planning director. 

 

“What?  No condos?”

 

That high cost-to-benefit ratio is one principal reason why elected officials, when faced with a housing-affordability crunch, instinctively reach to ask their government to manufacture a legal remedy (ban unaffordability) rather than a financing program (spend money).

 

“It’s surprising how expensive it is.”

 

I’m unsurprised, and I’m unimpressed

 

While I entirely sympathize with Mr. Levine, the only thing surprising is that anyone in public office would think this could be done on the cheap.

 

Sherlock Holmes might call it “The Curious Case of the Sticker Shock.”

 

 

 

Send post as PDF to