Regulations Created the Affordable Housing ‘Crisis' | National Review
I have seen the enemy, and he is we! We, homeowners, want our properties to substitute for our failure to invest in our long-term needs like retirement and old age. So, housing inflation of 10% is great for homeowners but not so much for anyone who does not own a home. Here in Portlandia, we found the elixir vitae of housing, the urban growth boundary. We limit the supply of housing first; then we limit the housing which can be built to housing which people don't want, mostly row houses, townhouses, apartments and the like. What we do not do is allow people to buy property they like and build the home they want on that property. The result in Portlandia is home prices shooting to the moon. Homeowners love this but get crotchety when they realize that their children cannot afford to live within 50 miles of ol' mom and dad! You can already see the likely outcome forming in the San Francisco Bay Area. Old people cannot afford to sell their homes because they cannot afford to buy a new home. Simply put, there is no money to be made selling a $1.4 million home if one has to go out and buy a step down $1.1 million home. They thought they could buy a $250,000 home, but nope, those are long gone. The enjoyable plus is when property values go to the Moon, one of the first results is for existing homeowners to lock in their current property tax rates, usually by limiting how much property taxes can rise in any single year. So, now that older homeowner in his 3,800 sq ft home who is paying $6,000 in property tax faces paying $18,000 in property tax if he sells and downsizes to a 1,500 sq ft retirement home. There is no reason for retirees to step down in home size, so, they don't. They hang on to the home till they die. The problem is the homeowner/voter who myopically sees home price inflation as a panacea but cannot see the potential conclusion. The conclusion is a malign Detroit-like effect. The young, the less than wealthy will move out. Tech businesses have lived high on the hog for decades but nothing continues forever, and when they become commodity businesses they will not be able to pay interstellar wages. Then the old who believe their homes worth the $1.4 million will not sell for less, they will hunker down, hold on and let the home slowly decompose as they follow suit.
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