Despite the fanfare of a televised speech at the National Press Club in Washington, a very old and hackneyed set of proposals was unveiled as a "new vision" for the creation of "affordable housing." The speech was by Richard Ravitch, co-chairman with former Congresswoman Susan Molinari of what is called the Millennial Housing Commission, a group making recommendations to Congress on housing policy.
These two members of the New York political establishment produced the kinds of proposals that such people have been turning out for years. "Affordable housing" for them means government-subsidized housing, and their report essentially spells out innumerable schemes by which the taxpayers can pick up part or all of the tab for tenants or home buyers.
Contrary to this political report, a recent economic and statistical analysis by Professors Edward L. Glaeser of Harvard and Joseph E. Gyourko of the Wharton School of Business of the University of Pennsylvania concludes: "America is not facing a nationwide affordable housing crisis." There are astronomical housing prices in particular places for reasons peculiar to those places. The principal reason is the price of land.
"In large areas of the country," they find, "housing costs are quite close to the cost of new construction." These areas "represent the bulk of American housing" and they are areas where "land is quite cheap."
In high-price areas, "housing is expensive because of artificial limits on construction created by the regulation of new housing." In other words, the government -- which is depicted by Molinari and Ravitch as the savior of those seeking "affordable housing" -- is in fact the very reason why housing is so unaffordable in some places, according to scholars who have actually analyzed the hard data.
What kinds of differences in housing prices are we talking about? The average home price nationwide is about $150,000 but it is $500,000 in the area extending from San Francisco to Silicon Valley, about 30 miles south of the city. Nor is this price difference due to grander homes in California. Very ordinary homes just have grand prices.
You can in fact buy magnificent homes in some parts of the country for less than rather nondescript houses in pricier California communities. A recent issue of the Wall Street Journal had an advertisement for a 4 bedroom, 6 baths home, with 4,370 square feet of space and "a screen-enclosed pool/spa," located adjacent to a golf club and country club, for $550,000. It was in Leesburg, Fla.
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