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!