A reader pointed me to this Urban Institute forum on housing finance policy. It is a topic that leads me to be bitter and uncharitable. I take the view that America’s housing policy in practice is to subsidize demand and restrict supply. There is no economic model that would argue for this, but it makes perfect sense from the standpoint of public choice theory (i.e., policy driven by interest groups)
Since, as usual, nobody asked me for my opinion, I will give it on this blog. My contribution will be to list what I think are the most harmful ideas and hope that they are not implemented. These are:
1. Restrict supply as much as possible by encouraging rent controls, the strongest tenant rights possible, Nimbyism, making environmental regulations difficult to comply with, encouraging additional environmental challenges by private groups, loading builders with expensive requirements (such as setting aside a percentage of their developments for “affordable” housing), etc.
2. Encourage as much housing speculation as possible by subsidizing mortgages with low down payments and by giving the same subsidies to investors as to owner-occupants.
3. Instead of going back to the “originate to hold” model or the Freddie-Fannie model, invent a whole new complicated approach to mortgage finance that mixes government support and private sector activity. This will ensure privatized profits and socialized risks. Above all, creating a new system will ensure that no one has enough experience to be able to manage risk or even to observe where it is being concentrated.
1) In terms of issues with point 1, most of these decisions on made on the local government level and many of the ‘right’ economic decisions hurts the current homeowners. They might not like the increase of population and the decrease in local supply increases the prices for current homeowners.
Points 2 and 3 are spot on, but point 1 is on the states, cities and towns that do that stuff. Whether there is pressure from the housing finance sector or not, the incentives for these levels of government line up with most of these behaviors.
Most cities and towns are under rapidly increasing financial pressures. The incentive for the existing voters and local governments is to naturally seek higher margins on any new housing, i.e.- more real estate taxes per citizen.
Let’s go down this list and talk about stakeholders:
1) Encouraging Rent Controls:
I doubt current home owners support rent controls, so this isn’t really a NIMBY thing. I would expect current commercial property owners to hate it even more. This is a renter vs renter problem, not a NIMBY problem.
2) The strongest tenant rights possible:
Not really a NIMBY issue, is it. I think most property owners wouldn’t be in favor of this.
3) Nimby-ism:
Well, this is self defining.
4) Making environmental regulations difficult to comply with, encouraging additional environmental challenges by private groups:
I doubt many property owners are encouraging environmental regulations. Most seem really annoyed by them, especially when they prevent them from doing things with their property. This isn’t really a NIMBY issue, its a bureaucracy/environmentalist group problem.
5) Loading builders with expensive requirements (such as setting aside a percentage of their developments for “affordable” housing)
Homeowners aren’t in favor of this. In fact this is an issue where NIMBY-ism would probably help. Most people don’t want the kind of tenant “affordable” housing brings in ruining their neighborhood. This is once again a problem with government/political interest groups. Regular NIMBY people are on the side of eliminating these interventions.
So on your list, other then the actual title of NIMBY-ism itself, the stakeholders and interests for these various programs seem muddled.
Second, looking at Summer’s bridge story, does it have anything to do with NIMBY-ism?
The wide variety of laws on the books seem to be in the interests of the regulators, I doubt homeowners in the area are that into them. Do you think any of them had an opinion on those bridge regulations?
asdf – I believe you are right about 1 and 2, but at least partially wrong about 3 and 4. While commercial property owners may not like environmental and other regulatory controls, residential property owners love them. It enables the homeowners to keep down density, to keep up the value of their homes, to keep the wrong sort out of their subdivision, and to prevent unwelcome commercial and industrial development too close to their homes.
The bridge regulations are just the same restrictions, permits, licenses etc. that were adopted to foil development. Once the bureaucrats and environmentalists are given these weapons by the residents, they can then use them against targets of opportunity like the bridge.
It’s possible that environmental regulations can be a backdoor to regular NIMBY-ism, though this seems more like an upscale slightly rural thing then something pursued by the vast majority of middle class homeowners.
There is also the case of laws on the books from a long time ago being manipulated by regulators, but that owes more to middle class people not being involved in government then active NIMBY-ism.
I’m firmly in favor of helping keep “the wrong type of people out of their subdivision”. If you’ve ever seen the effects of section 8 up close, you would be too. It’s not even capitalism, its state subsidized invasion. A lot of our real estate problems could be solved by admitting all we are doing is indirectly redistributing undesirables because freedom of association got outlawed.
If you could promise people development didn’t mean bringing the wrong sorts of people in, you’ll get a lot less NIMBY-ism. People pursue indirect methods to prevent that and then those vague law can be used by regulators for all sorts of nefarious purposes.
Please tell us more about these “wrong types of people”. Are they just people with a lot less money than you, or do you factor in other stuff you’d like to tell us about.
I dunno Tom. Based on every map I’ve seen every single person in America seems to have the exact same view of what’s undesirable as I do, and they all magically sort that way on their own:
http://demographics.coopercenter.org/DotMap/
I guess we could use crime or some other indicator to make the maps, but I have a feeling the color coding is going to look roughly the same as this one.
Did you take a course in map reading at Donald Trump University?
Missed interest only loans.