Government Created Scarcity: California's "Affordable" Housing Problem
by Thomas Sowell
(December 4, 2003)
One of the staples of liberal hand-wringing is a need for "affordable housing." Last year, the standard liberal solution -- more government spending -- was proposed in a televised speech at the National Press Club in Washington, in a report billed as a "new vision."
This year, supply and demand made front-page news in the New York Times of November 29th: "Apartment Glut Forces Owners to Cut Rents in Much of U.S." As apartment vacancy rates reached an all-time high of 10 percent nationwide, landlords have been cutting rents, both directly and by such gimmicks as giving gift certificates and allowing so many rent-free months for new tenants.
Buried deep inside the second section of the newspaper are facts that completely undermine the liberal notion that high housing costs are a "national crisis" calling for a "national solution" by the federal government.
Far from being a national crisis of affordable housing, outrageous rents and astronomical home prices are largely confined to a relatively few places along the east and west coasts. Rent per square foot of apartment space in San Francisco is more than double what it is in Denver, Dallas, or Kansas City, and nearly three times as high as in Memphis. Home prices show even greater disparities.
The Times story notes that the difference between apartment rents in coastal California and those in the rest of the country is widening. It also refers to cities "where land is abundant but building regulations are not," where "housing costs were already among the least expensive of the country's urban areas."
Wait a minute. Vacant land is at least as abundant in coastal California as in places with far lower rents and home prices. More than half the land in huge San Mateo County, adjacent to San Francisco, is vacant and is kept that way by law.
The difference is not in the land but in the politics. The long-time dominance of liberal Democrats from San Francisco to Silicon Valley has meant that restrictions on land use have proliferated and the costs of building anything have skyrocketed as a result of environmental red tape, bureaucratic delays, and legal harassment by activists of various sorts.
The New York Times story refers gingerly to "many cities on the coasts, where new construction is more difficult" than in the rest of the country. To put it more bluntly, liberals have driven housing prices sky high by forbidding, restricting, and harassing the building of housing.
In turn, this has meant driving people of modest incomes out of the communities where they work. Nurses, teachers and policemen, for example, typically live far away from places like San Francisco or Silicon Valley, and have to commute long distances to and from work.
All the while, liberals wring their hands about a lack of affordable housing, about urban sprawl, and about congested highways. In their puzzlement about the causes of all these things, they never think to look in the mirror.
While the Times story noted in passing "the growing gap between the cost of living in the Northeast and parts of California and the cost of living almost anywhere else," it does not take the next fatal step of connecting the dots.
It is precisely in the places that have been most dominated by liberals for the longest times that housing costs and other costs of living have been driven up to levels that force many people out of town and even out of state. New York and California are losing more of their native-born populations than any other states and only influxes of immigrants help conceal that fact in gross statistics.
It was not always like this. Prior to the 1970s, home prices in California were comparable to those in the rest of the country. Today they are more than three times as high.
What happened during the 1970s was the beginning of the drastic restrictions on building pushed by liberal Democrats in general and environmental extremists in particular. On the 6 o'clock news, it is common to say, "Details at eleven." Here let me say: Details in chapter 3 of my new book, "Applied Economics."
Thomas Sowell has published a large volume of writing. His dozen books, as well as numerous articles and essays, cover a wide range of topics, from classic economic theory to judicial activism, from civil rights to choosing the right college.
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