Warren Bolton’s last editorial for The State, which ran Sunday, sounded a familiar theme that he has steadfastly promoted for years:
But for there to be real progress, the public must embrace the notion of affordable housing, and one or more city leaders must step forward to champion it.
If the city fails, the poor could be pushed out to make room for the affluent, further segregating our capital city by income and turning the city center into a ghetto of sorts for the wealthy. That kind of progress would be hard to accept….
I always agreed with Warren that ensuring affordable housing to prevent the creation of ghettos by income was a laudable goal, but — and this will surprise my libertarian friends — I always had my doubts about the extent to which we could bring that about.
My question was, just how long would we want to mandate conditions that ran counter to market forces? And would that really work?
If you build affordable housing in a highly desirable place, then you’ve accomplished your goal for the moment. But unless you have a strict rent or purchase-price control in place permanently, then that property is going to appreciate, and people are going to be willing to pay higher prices for it.
How long do you maintain an artificial, government-mandated (and here, “government” could be anything from the Feds down to your subdivision or apartment-house covenant) set of conditions that defy market forces?
This is the approach discussed in the editorial:
Brian Huskey, director of the Midlands Housing Trust Fund, which works to create affordable housing opportunities, has suggested that one answer is to adopt inclusionary zoning. Such zoning would require developers to include a certain proportion of units that are affordable to people who aren’t among the highest wage earners. Incentives could encourage developers, and an opt-out fee could help finance affordable housing elsewhere.
But would that really work in the long run? I don’t know.
I want the same thing that Warren wants on this, and always have. I’ve just been a little unsure about how practical a goal it is…
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There’s a ton of research that shows that scattered site low and mod income housing works. It is a tipping point thing: the lower income folks benefit from proximity to higher income people without harming their property values.
Market forces never work for social justice. That’s not what they are designed for. They maximize wealth creation (in a perfect market, haha). Distributional inequities inevitably occur. That’s one of the best things government can do: redress the distributional inequities to provide a floor.
If you price poorer people, who rely on public transit, out of the areas that are reasonably well-served thereby….
I think the time for inclusionary zoning as an effective tool may be past, and the data as to whether it works is not slam dunk compelling. As usual, it depends on where (location, location, location), and how. It would be a tough sell in business friendly South Carolina.
The most successful method of building affordable housing is the Low-Income Housing Tax Credit, or LIHTC, which provides incentives for developers to build, buy and refurbish housing for low-income taxpayers. LIHTC also provides a non-refundable credit for those who invest in low-income housing projects as a means of stimulating the flow of capital into this sector.
However, LIHTC is not being used in Columbia, except for a couple of private developers that are focusing on Senior Affordable Housing. The quasi-governmental development corporations in the Midlands and the Columbia Housing Authority either do not have the skill or the desire to utilize LIHTCs.
“redress the distributional inequities ”
I love this phrase. It’s a more palatable way of saying “take from those who earned it and give to those who can’t or won’t”. The best way to afford better housing is to educate oneself to get a job to afford better housing.
How is affordable housing working out in the most liberal cities in the U.S.? San Francisco just saw a tiny studio condo go for $400K.
I’d like to see the definition of affordable housing in Columbia. Is it an actual house on a lot or high rises? Does affordable mean paid for solely with one’s own income or is the payment subsidized as well?
Currently you can buy a little house in several areas around the Midlands for $120K. With $6K down and a 30 year mortgage, that’s $539 a month plus probably another 60-75 for insurance. Let’s round it to $600 a month. $150 a week for a house. Two incomes making minimum wage = about $3000 a month, probably $2000+ take home. Seems like a married couple could afford a home and a used car on that. Oh, you mean they also want cable TV, iPhones, the latest clothes, eating out at restaurants, etc. not just an affordable home that builds equity?
How much more affordable are you looking for? Affordable to single, jobless people with no education?
Affordable housing, by definition, means paying no more than 30% of household income on housing. Your calculations are correct, but please don’t assume low-income working families (most families are working poor, not living on the government poor) have the debt to income ratio necessary (in this tight lending market) to qualify for a mortgage loan.
Columbia has plenty of affordable housing, but not much quality affordable housing. Research shows that to give children a chance to leave poverty (and the research is clear, there is indeed a cycle of poverty), housing and education need to be more than “minimally adequate.”
My son bought a very nice, brand new house in Lexington for under $120K. Nice, safe neighborhood within walking distance of elementary school. There were other models for closer to $105K. These are 1100-1300 square foot homes on small lots with a tiny fenced backyard. Isn’t that good enough?
What price point are we shooting for?
Using your assumptions (two minimum wage earners, 40 hours per week, 4.33 weeks per month), the household income is about $2500 per month, so 30% is about $750. Gosh, why DON’T these people buy houses!? Read my comment about working families not having access to credit nor the ability to save enough for a down payment. This would be the perfect family for a Habitat for Humanity Home. I wish there were 100 more non-profits like Habitat …
“or the ability to save enough for a down payment. ”
As long as they don’t have iPhones, cable TV, eat out at restaurants, then I’ll agree that the ability to save might be an issue. But if they do any or all those three, we’re talking about enough to save for a downpayment in 36 months. Too painful to sacrifice that long? Ok. So we’re not talking about affordable housing, it’s affordable lifestyle.
Yes, it is that simple. You win …
Zillow shows approximately 400 homes for sale in Richland and Lexington County for under $120K, 300 under $105K.
Plenty of affordable homes available now. Instead of trying to rig the system for developers, let the market work.