Myers Housing/Homelessness Q2
The public conversation has been framing the affordability problem the wrong way. As usually stated, the implied need is for subsidized housing so that people can pay no more than 30% of income on rent. Yet 60% of SoCal renters are paying more than 30% of their income on rent, and even 48% nationwide have this excessive rent burden, so truly massive subsidies would be required to address all these people. Those tax dollars do not exist, and what little we do have must be allocated to deep subsidies targeted to worst case needs. The only mass solution that will be affordable to government and in the eyes of the voters is to increase the supply of newly built housing to the more-normal levels that pertained before the recession and in earlier decades. That infusion of new supply will stem further increases in rents and may even produce small decreases within a year or two.
Over the longer term a larger supply of high quality new units will press downward on asking rents in middle and lower price brackets. After a decade, even the newly built units themselves will decline in rent. Market-rate new construction will filter down in larger quantity than the number of named “affordable” units that we provide through direct subsidies. More subsidized units will still be needed for households with worst case needs, but a mass quantity of new housing is needed to address the widespread affordability problem. To stimulate this production, the federal tax code needs to offer incentives to developers to build non-luxury housing. In addition, the state government needs to offer incentives and penalties to municipalities to expedite building permit approvals for a fair share of the housing needed in each metro region.