The Skyrocketing Housing Prices: What Went Wrong and Can It Be Fixed?
How did housing prices become so unaffordable, whether it’s for single-family homes, apartments, or condominiums? The fact is that any measure of home prices today is much higher than it was before. This puts homeownership out of reach for many average and middle-class people, and even some apartments are unaffordable. So, how did we get here?
Fortunately, a great article from Cambridge Day describes this long-term train wreck, which they call a hundred-year class war. This is a big deal and has been happening for the last 100 years. It’s a tapestry, a combination of political, social, and legal efforts that have created a mechanism for residents that put us in this place where the price of homes is not in line with the average income for a typical person.
Single-family home construction was incentivized by the tax code and building codes in zoning, where you had single-family-only areas. More importantly, it was also incentivized by the permitting process, where many jurisdictions have setbacks on the property. That may seem like a small thing, but it doesn’t allow for a density of houses, and some people want to have more room. They want to buy a house with two acres and a lot of room in the yard. Even if you don’t care to have that much space, building that type of housing in some areas may not be possible.
Some parts of Florida have what’s called zero lot lines, where there is no setback on both sides, and there is only a staggered setback of five feet on one side. This puts houses closest together, but density may also not be the solution. Regardless, this 100-year combination of rules has put us in this place.
It wasn’t an organized conspiracy, and it wasn’t a bunch of people who said, “Let’s make housing prices as high as possible.” It was just people who wanted to live in certain areas, wanting to defend their comfort in life. They wanted to have a suburban neighborhood with big yards to raise their kids and let their dogs run around. They won’t vote for changes to zoning that would allow for a 50-unit apartment right next to their house because that’s not what they want. They want a different character.
All of these different things put together, such as the tax codes, zoning, setbacks, and permit fees, have put us in this position where we are today. So, how do we undo it?
It won’t go away overnight if it took a hundred years to get here. Undoing the damage may take a long time, and it might be impossible to completely undo it. Instead, we can evolve and create something new that complements what’s already there. This approach is often missed by planning projects that focus on undoing or erasing what’s already there, which may create more problems than it solves.
One way to create something new is to build a big city out of nothing in a place with open space and the desired density. For example, Dubai built one of the highest-density cities in the middle of a desert. This approach could be replicated in other areas with open land. Building a carefully constructed urban environment from scratch may be easier than reconstructing an existing one due to pushback and other challenges.
However, building more dense housing may not be the solution in all cases, as density may lead to other problems, such as increased traffic congestion. Instead, we need to find ways to decrease the number of cars on the road and improve public transportation.
The situation with housing has been developing for over a hundred years, and it won’t disappear overnight. The article from Cambridge Day provides a detailed account of the events that led to the current state of housing and the financial incentives for builders, governments, residents, and investors that perpetuate this conflict between the price of a home and the financial wherewithal of the people who want to live there.