"Affordable" Housing Report

Report on "Affordable" Housing:

Affordable housing production in New York is failing to meet demand, according to a report [released by] the city's public advocate, Betsy Gotbaum. The study blames the reduction in city and state funding and a restructuring of programs to address very specific objectives, localities, and demograaphics. Without current revenue to create new affordable housing, the report recommends low-interest loans and tax breaks to jump-start construction.

Sadly, we live in New York City, a regulated town, which does not help with the construction of "affordable" housing. At one time, government used to create public housing for low-income families, but now government has expanded to middle-income families. The artificial price fixing for housing is expanding the need for government involvement. Regulations and high taxes inflate the market for middle-income renters and creates a difficult task for many young professionals to find housing at an affordable range.

The State and City needs to step aside for a moment, remove the barriers for creating new housing, while lowering the taxes for builders and owners, so the market can deflate to an affordable level. Government can then go back to focusing on temporary housing for low-income familes that need help.

***UPDATE***
[Oct 24, 2005]
Today's New York Post makes the same point I make in their editorial pages.

New York City Public Advocate Betsy Gotbaum, after a year and a half of study, has determined that "affordable housing" in the city is "not meeting demand."

Thanks, ma'am. We never would have guessed.

So, how to fix things? Maybe encourage development by rescinding Mayor Mike's record property-tax increase? Reduce regulation?

At the presser, Gotbaum said: "Now more than ever, it is crucial that lawmakers, developers, advocates and academics have a common reference point, an objective resource for understanding the cause-and-effect relationship between government policy and affordable housing development."

Yes, yes and yes!

So . . . what're the nuts and bolts? Unfortunately, here's where Gotbaum's report falls short.

One proposal is to increase the Real Property Transfer Tax to subsidize another 80,000 housing units annually. Currently, this tax is "only" 1.5 percent max. Never mind that homeowners have paid taxes on their properties from the get-go — increasing the costs of selling real estate will only reduce housing-market mobility (buying and selling).

Another idea is to increase the fee for building permits to finance the rehabilitation of the city's deteriorated housing stock. Of course, these incremental-cost increases are inevitably shouldered by consumers.

While, yes, those who win the lottery for newly minted "affordable housing" units will be sitting pretty, what about the rest of New York?

One way Gotbaum could help is by brushing up on the basics of supply and demand.

To reduce housing costs, you need to increase supply. To boost supply, you need to reduce taxes, regulation and other barriers that make building expensive.

As long as the city has artificially inexpensive housing, it's going to be in short supply. This latest proposal is really just another lame attempt to fix a problem that the city created in the first place.

Will they ever learn?
Probably not.