Yes, You Can Build Your Way to Affordability

There are many possible ways to increase affordability. Unfortuanately, one of the most important strategies – increasing total housing supply – is often dismissed as useless. “You can’t build your way to affordability” is repeated so often that many people assume it is true. They are wrong.

In fact, building more housing, including middle-priced units that become more affordable over time, is an effective way to drive down prices and increase affordable housing supply, as discussed in a recent column, Yes, You Can Build Your Way to Affordable Housing. Lessons From Unexpected Places, by Alan Durning of the Sightline Institute. He cites evidence from cities around the world, including Chicago, Houston, Montreal, Tokyo and Vienna, which demonstrate that increasing housing supply increases affordability.

Of course, lower-income households cannot afford new market-priced units, but increasing supply tends to drive down prices through filtering, as some middle-income households move from their existing lower-priced units, making them available, and because new houses tend to depreciate, becoming more affordable over time. If you want more affordable housing in the future, support more development now.

Many affordable housing policy reforms, such as allowing multifamily housing and reduced parking supply in residential neighborhoods, increase both market and non-market (subsidized) housing supply. For example, in areas with high land prices like Victoria, a half-million dollars could typically finance construction of one single-family houses with a two-car garage, two townhouses with one parking space each, or four small apartments with unbundled parking; allowing more townhouses and apartments with unbundled parking increases affordable housing regardless of whether the money is paid by subsidies or occupants.

When it comes to housing, build more, pay less!

Comments

  1. Citing Houston as an example of affordable house is problematic when seen in the full context of that city’s sprawl and other auto-centric orientation due to having plenty of cheap land on flat ground and absolutely no zoning regulations – you can build anything anywhere as long as you hold title and want to pay to put shovels in the ground. Houston is beginning to have to deal with the same pressures of affordability as many other cities, where shifts in work and personal lifestyle preferences alter housing choices even for inhabitants for a city that covers more than 600 square miles.

  2. […] however. Rent price increases are highly correlated with scarcity of available rental units. Building more housing is absolutely necessary, but boosted supply must also include ample below-market units. The United States is short around 7 […]

  3. Hello Todd,
    You fully supported 1201 Fort development, that densified the property from one owner, the church, to eighty three units.
    Prices for those units are from around $1000 to $2000 per square foot, plus strata fee.
    I live nearby, but If i sell my house, I’ll not be able to retire in 1201 Fort. I do not think many of young people of average income will be able to afford it either.
    What was your reason?
    Trickle down in 50 years?
    Thank you

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