These controls are aimed at building a better city, but what they really lead to is a more expensive one. “Growth, not height restrictions and a fixed building stock, keeps space affordable and ensures that poorer people and less profitable firms can stay and help a thriving city remain successful and diverse,” Glaeser writes. “Building enough homes eases the impact of rising demand and makes cities more affordable.”
Another factor in affordability is rent control. Some cities and localities (see New York and San Francisco) limit what certain owners are allowed to charge in rent. This creates a false scarcity and drives prices up. Way up.
“In uncontrolled markets the question of who gets an apartment is settled quickly by the question of who is able and willing to pay the most,” economist Paul Krugman (no conservative observer) wrote in the New York Times in 2000. “Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand.”
This explains why many cities are booming, while others are becoming prohibitively expensive. “[L]ow cost explains why Atlanta and Dallas and Houston are able to supply so much new housing at low prices, and why so many Americans have ended up buying affordable homes in those places,” Glaeser writes.
There’s an irony here. Governments, at all levels, like to tout the value of “green” living. Yet it’s massive apartment buildings that tend to be friendlier to the environment. “When you count the carbon emissions associated with high-density living, it’s substantially lower than living in exurban areas in the U.S. because people aren’t driving as much, and they’re living in substantially smaller units,” Glaeser says. “One of the problems is that if you don’t build up, you build out.”
It won’t be easy to get government out of our lunchboxes, our smoke shops and our very homes. “None of this says that ending rent control is an easy decision,” Krugman wrote more than a decade ago. “Still, surely it is worth knowing that the pathologies of San Francisco's housing market are right out of the textbook, that they are exactly what supply-and-demand analysis predicts.”
People shouldn’t be forced to live in apartments, of course. However, we should make it easier for landowners to build apartments, or any type of structure they prefer, on their property. That means boiling today’s building codes down to simple, sensible restrictions.
After that, let’s allow people to live where and how they choose to.