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Creating Affordable Housing Oregonians Can’t Afford
“If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” — Milton Friedman
Not too long ago, it was mentioned that Oregon had passed legislation to implement statewide Rent Control. This was in response to a crisis in affordable housing. The state government, presently run by a Democrat governor and supermajority in legislature, saw this as a move to curb the rising costs of housing, mostly in the Portland metro area. As far as I can tell, no one has reported a housing shortage over in Baker City, but the state government clearly knows better. It has run full tilt in spite of common sense warnings from anyone remotely familiar with economics. Once again, facts don’t matter if you are “morally right,” or something like that.
This has already had consequences. The daughter of a family friend has MS and has lived in the same rental home for over a decade. She was recently served an eviction notice despite never having any trouble in her home prior. Why? Well, it’s left unsaid, but the landlord has a limited time to make any renovations or repairs and raise the rent price higher before the state rent control limits kick in. Anecdotal? Certainly, but it fits in precisely with what was predicted. I suspect we’ll be hearing more of these stories.
But worry not, citizens of Oregon! The officials in the Portland area have also been hard at work to solve the crisis of affordable housing. But rather than limit what a landlord can do, they instead decided to build their own affordable housing! Voters were persuaded to vote for bonds so the metro area could design affordable homes; the first proposed is the Mary Ann. Pause for a moment to bask in these numbers: Units average about 730 square feet at an average cost of $530/sq. ft. Note again in the article that the average housing cost for a family in the area ranges at about $230/sq. ft. This is an affordable housing project in the Portland metro area. Shortage of sand indeed.
The problem is, of course, that Oregon’s government is not attempting to remedy the problem but rather one of the symptoms. A few decades back, Portland was swept up in the “Urban Sprawl” hysteria: the idea that cities and suburbs were growing at a breakneck pace which was overtaking and destroying nature around us. So the Oregon government believed something had to be done and found something to do! They created the Urban Growth Boundary.
Let’s ignore that Oregon is the ninth largest state in the union (at 98,930 sq. miles) and only 27th in population size (at 4,142,776 as of Sept. 2018). This is a pretty generous amount of land per person compared to many states — ignoring that the Federal and State governments own 60.4% of Oregon. (Notably the Feds own over 55% of the state.) Still, Oregon doesn’t suffer from insufficient land to hold its people and still have nature and farmland.
The Oregon government, however, can’t admit that their own policies are causing the so-called affordable housing shortage. Expansion is so restricted that when it’s announced that property will become available, there are bids to develop it before anything on that land has even gotten close to being ready for development. Oregon’s policy artificially chokes off supply, and of course, people who live there or want to move there will want homes and businesses. Demand doesn’t disappear. Again, anyone remotely familiar with basic economics will tell you this will be an inevitable result. But Oregon can’t admit to itself that a lack of affordable housing is a direct result of their own meddling.
Instead, they will continue to treat the symptoms and mandate affordable housing that no one can afford while patting themselves on the back for a job well done.
Published in Economics“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.” — C. S. Lewis
Many years ago I was renting a duplex at an affordable price. I improved his property by painting the interior, installing blinds, putting a redwood roof over the patio, trellises on each side, landscaped both the front yard and back, repaired the fences. Each year he increased my rent, and always about $5 more than my yearly pay raises. Talking to him did no good, and eventually after 9 years, he priced me out of the duplex. I gave notice I was moving and why, he didn’t care. When I left I took my curtains and blinds and trellises, and all the plant containers. It was a nice neighborhood, everybody took care of their properties, quite a bit of it due to the way I kept my yard.After prop 13 went through, he promised the rent would be stable. That was in the 1980s.
When I was last in Sacramento I went to visit my old neighborhood, and what a mess. Off Hilsdale Blv, in North Highlands, an absolutely depressed area, lawns dried and dead, fences down, torn curtains at windows, just a slum area. I blame it on the landlords because of price gouging, as their property taxes were not being raised. Having good tenants who took care of the properties, wasn’t as important as getting more money from the rents. So in effect they became slumlords.
Fear not, as the problems created by the state government become too obvious to be ignored, our betters will appoint a committee (of their peers) to study the problem and make recommendations. After an extended period for study, travel for meetings and to discuss how other states have “attacked” the problem, the committee will recommend that a commission (of their peers) be formed to formulate alternatives and recommend solutions. The commission’s report will inevitably recommend that a new department in the state government be created (headed by their peers) to implement the recommended solutions. This proposed department will be approved by (their peers) in the legislature, and will begin writing and enforcing new state regulations to tackle the new problems created by the (old) new Affordable Housing Law.
Simple, isn’t it? That’s how it happens that your friend’s daughter is losing her home.
Next problem. Our betters in government are standing by ready to help; whatever your problem.
@jimmcconnell I recall a line from Gilbert & Sullivan’s “Pirates of Penzance” –
All true. And the rent control will just make the supply worse. A lot of rentals are owned by investors who own only one or a few units. I was one. Who will want to get into that business now? And there are a growing number of laws which restrict the ability to landlords to chose their tenants which compound the problem.
And now that the state has solved the problem of the housing shortage, it will turn to the problem of gun violence by making our gun laws more like California’s, and changing our juvenile sentencing laws to release from custody Kip Kinkle, Oregon’s most notorious school shooter. Then solve global warming by passing cap and trade. And on and on. And all of this will cost money, of course, so more taxes.
Governments react to solve problems of the past. While they are building over-priced apartments, the hipsters are choosing to living as nomads in pods rented by the hour.
Read about it here.
The proper name for that is flophouse.
The trick to finding low-income tenants to occupy “affordable” housing at 2x the cost of average housing, is to understand that the “low-income” tenants you need simply have low income right now. If you can find college students, or recent college grads, or students in graduate or professional schools (especially with the backing of wealthy parents) to fill the units, it works nicely. None of these affordable housing schemes require buyers to take a vow of poverty, at most, they only require that a prospective buyer’s income in the previous year was within the guidelines. The not-for-“profit” entities (sometimes spun out of large corporations) get the government subsidy for providing “affordable” housing and sell new units to “low income” buyers with very little risk.
I recall when a town in Southern California imposed strict rent controls about 30 years ago the result was that landlords chose from among the many applicants for each rental unit. The landlord would choose one of the highest income prospective tenants who had (as part of the application process) promised to make the most capital improvements to the property (which improvements the landlord required be left in place at the end of the lease). Landlords were choosing the high income prospective tenants because those tenants were most likely to want to keep up the property. In other words, rent control enabled landlords to get tenants to maintain and improve the landlord’s property, and priced lower income people out of the housing market.
To quote the famous robot, “Danger, Will Robinson!”
I didn’t ask his permission, and he didn’t require me to make improvements. I had an aversion to living in a dumpy duplex. I gave him a scare or two though. He asked what color I used to repaint, told him green. He shrieked! However, it was pale, so pale that you couldn’t see any green unless you have green curtains or a picture on the wall with a lot of green. But I did take everything that was detachable, including the trellises and the sunroof. Just left the studs so he could put up his own if he wanted. I wasn’t about to leave all that redwood behind. That was darn expensive, even then.
Reading this reminds me of Yes Minister (or Yes, Prime Minister) – tho I can’t lay my hands on the books at present. Some very funny variations on this theme.
Governments everywhere are in the business of ensuring the preservation – and growth – of the bureaucracy!!
For every great political idea there are a hundred ruined lives. Maybe more.
Ah – a squat! I haven’t seen one of these since my punk rocker days! Brings back memories.
These two series are a “must watch” for anyone who wants to see how a bureaucracy functions – and a deep state. Even though it involves the British system of government instead of ours, the backscratching and backstabbing are easily recognizable.
This will be a philosophical post, sorry. I hope it is still of some use to someone.
As the term is used by those who are ideologically pro-American, the statement
can only be true or false for a given individual and concerning a specific neighborhood. The idea of collective affordability of any arbitrary classification of goods, like “housing”, or “food”, or Manhattan penthouse apartments, is meaningless. Collective affordability of housing is only an intelligible term to a person who accepts the ideology of interventionism.*
Therefore, to engage in debate about affordable housing policy, which requires that one accept that there is a meaningful idea of collective affordability, is to implicitly accept collectivistism. By defining the terms of the debate, the interventionist pre-determines the outcome. This is the case with all public policy debates by interventionists.**
* I won’t take time now to explain what the underlying assumptions of collectivism (all interventionism is collectivism) are that allow meaning to be given to this term, nor how collectivists propose to measure it and identify situations where it is lacking and the general form of their solution to those defects.
**[EDIT 2019-04-27]: An interventionist can only win a debate on a specific new proposal by pre-determining its outcome with implicit premises, and persuading his opponents (us) not to examine those premises. If the interventionist’s premises are exposed to debate he will always lose, for three reasons. They have already been proven to be fallacious. History gives either proof or ample evidence that they are false, for those who reject the applicability of logic to reality. Finally the moral premises that interventionism are based on, which assign the majority of human beings to an inferior class, are rejected by that same majority.]
I see what you’re saying. Essentially my post demonstrates the practical aspects of your philosophical reply. That is, the Portland Metro Area and the State of Oregon have made the market what it is, and are now spending energy trying to correct that market without touching their original meddling actions that created it in the first place.
I think it was Thomas Sowell who noted that to many in power, the invisible hand that guides the economy makes it look so easy that politicians and executives think that they can do a better job with their deliberate actions, but it never works out as they plan.
The state says they are worried about “affordable housing” but never asks: “Affordable for whom?”