DESPITE THE fanfare of a televised speech at the National Press Club, 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 veterans of the New York politicial establishment produced the kinds of proposals that such people have been turning out for years. "Affordable housing" means subsidized housing, and their report essentially spells out 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 -- is in fact the reason why housing is so unaffordable in some places.
