talking about this more.
It's a given fact, in a free world, that when more money chases the same amount of 'goods', the price goes up.
Subsidizing housing will, for the most part, just cause the price of housing to rise more. There is that brief respite, but because of increased demand, rents will rise, actually worsening the condition for anyone not on a permanent subsidy.
I've noticed a distinct correllation between the amount of housing available, and the cost of that housing. Let's explore this...
Let's take a good sized town... Since I live in the state (but nowhere near) Portland Oregon will serve. Portland, like all towns, has a "metro" core - a business district, with little to no homes. Then, there are the surrounding areas - each with its own name, town, and business district, etc. A few decades back, when I was still in school, my mom and dad were interested in moving there. Dad needed some better job opportunities. Just a few miles from city center, the price of homes fell to close to average. Even if you were a common laborer or just a skilled laborer, you could afford a modest home of your own.
Today, the average price in the Portland Metro area is a quarter million dollars -
http://www.movingtoportland.net/house_price.htmThe average household income in Oregon is a bit over 42,000.
http://www.census.gov/hhes/income/histinc/h08a.htmlAs you can see, not even households with AVERAGE income can afford the average home in the Portland Metro area. This trend is not new, and of course, as you can imagine, the middle class has been fleeing the Portland Metro area - or should I say, they have not been replacing those leaving - many have capitalized on thier "appreciated" real estate values and left, for ever more distant areas.
Now, you're going to come to the obvious conclusion that if you're new to the world of living on your own - such as a young married without college degrees - buying a home is not in the cards for you. In fact, since the rent market is really a function of ownership + a little profit, rent is going to be outside the ability of people to pay.
So, what to do? One could relocate - go to where the competition for housing is low enough that rent is moderate. These outlying areas often had the service jobs or employers, the light manufacturing, etc, that employed those on the lower income scale. Today, there's nowhere to run to in Oregon. Land use laws have been in place for quite some time now - designed to prevent "sprawl". In order to build ANY kind of housing, you must now be a land developer, and have good financial resources to wrangle a development through the adversarial process - buy the inflated and limited availability land, build something on it and sell it for a profit. NOt even the cheapest of apartment buildings can be built for low enough cost to make renting them affordable to low-income people. If we subsidize it, then we're just adding to the demand, making those prices spiral some more.
Some suggestions:
1. Fundamentally alter land-use laws or zoning, so as to ensure that there always remains some low-demand residential area available.
2. Encourage the preservation of older homes - these are often where lower-income people get thier "start" in life.
3. Allow tax write-offs so that neighborhoods where trends lower the cost of formerly epxensive homes will encourage the owners to leave - but yet make those same areas attractive to individuals who also wish to own.
4. Prevent the massing of "subsidized" or otherwise non-owner-occupied in any one place - Urban blight follows. Ownership encourages responsibility.
5. Encourage more risk-taking by lenders when it comes to owner-occupied residences - even if it's condominiums or duplexes, etc.
6. Not tax the gains of those who move from home to home - lower the bar to move, or, in other terms, make home ownershipo more "liquid". Make it easier to move up - or down.
Now, you're going to, if you haven't already, start to realize that these target middle to lower income, stable demographics. The idea is for these people to enter the ownership category, reducing the competition for rental or low-income non-owned housing. Of course, this will have some effect at conversion of some presently avaailable rent or leasable property to owned, but raising home ownership isn't bad.
The goal here, is to reduce the percentage of people who find themselves severely constrained financially, by the cost of even the most basic housing. Often rents for small apartments exceed $1000 / mo in larger cities. You can't do that if you're on a single income, earning hourly wages in a non-professional environment. It will be well more than half of what you take home each month.
While there are some people who simply have no means of affording housing, and must be supported (the reasons are so many and varied as to not bother listing ), these people are the exception, not the rule. The rules we should structure our policies to are the "norm". Home ownership should be the "norm". We should do our best to push people toward that "norm". If we do that, then direct rental assistance to those who have to have it will have little or no negative impact on the housing market for the "norm".
But building subsidy for housing into the "norm" for 5 or 10 or 15% of the population will have a huge negative impact - as subsidy is rarely or never for ownership, but just for renting from someone else.
There has been some success locally, where community efforts to build new homes for those who would not otherwise afford them has gone on. This where people of the community donate time, labor, even a few dollars, replacing the costs of the contractors and paid labor in construction of a home, bringing the cost of that home into the "affordable" range for those who would never otherwise have that chance. These are a great idea. I'd like to see more support for this in regulation, tax code, etc. Perhaps even some underwriting by home lending agencies like Fannie Mae... Or HUD. Or better, by state or local.