“Rental prices in some of the country’s largest cities are falling—some by almost 45 percent, according to new data from Five Star Cash Offer, a real estate investment firm that operates as a direct cash homebuyer. The dataset, which includes the top 65 metropolitan areas in the United States, reveals that cities that have recently enacted pro-housing policies have experienced the most significant year-over-year decline in rental prices nationwide.”
“The Out of Reach report similarly says that “more than half of all wage earners cannot afford a modest one-bedroom rental home at Fair Market Rent while working full-time. At least 60% cannot afford a modest two-bedroom rental home while working full-time.”
Yet the vast majority of those wage earners are not currently homeless. Clearly they’re meeting their housing needs somehow, despite not earning a so-called housing wage. Most likely, they too are making some tradeoffs between unit price, location, quality, and size.
The fact is that individuals and families are always going to have to make those tradeoffs at any price and wage level.
Lowering housing costs through deregulation—so that more housing, and more types of housing, can be built in more places—would certainly lessen the tradeoffs between housing costs and other desirable features.
Yet by ignoring that people do (and always will) make tradeoffs when finding housing, the Out of Reach report downplays what land-use deregulation can accomplish.
While calling it an essential part of an overall affordability strategy, the report says that “zoning reform alone cannot solve the affordable housing crisis, particularly for the lowest-income renters.”
That’s probably true if the goal is having every minimum wage worker spending no more than 30 percent of his income to live by himself in a midpriced, two-bedroom unit while working no more than 40 hours a week.
It’s probably not true if the goal is to give that minimum wage earner more housing options, so that he and his partner can afford to live in a larger unit, or he individually can rent a room closer to work or school.
Free markets give people what they want at a price they’re willing to pay. What they might be willing to pay for might be something different than what the Out of Reach report imagines they should have.”
A woman’s rented housing burned down. The landlord wouldn’t let her out of her lease even though the home burned down. No apartments would lease to her because the landlord said she owed them money. She and her children became homeless. Our system allows private equity firms to push people into homelessness in the pursuit of profit.
Existing economic theories are based on scarcity, but a lot of scarcity of key needs are imposed by powerful actors and are not an inherent part of the world. There’s enough food for everyone. There’s enough healthcare resources and home-builders to provide for everyone. But, these goods are based on profits and profits are best maximized not by providing for everyone, but by tailoring services to those with money.
“In an ideal world, I control my property—but don’t get to tell other people what they can do with theirs provided they don’t intrude on my actual rights (as opposed to bogus ones that protect, say, my property values). As the late legal scholar Bernard Siegan explained, “There are very serious restrictions upon private property involved in zoning—where people, your neighbors, are telling you how you can use your land.””
“The bill would prevent larger cities in larger counties from requiring that homes sit on lots larger than 3,000 square feet in new subdivisions of at least five acres.”
“According to a 2023 paper from the International Center for Law and Economics, as of 2020, despite sky-high property values and well-known wildfire risks, Californians “paid an annual average of $1,285 in homeowners insurance premiums across all policy types—less than the national average of $1,319.” When insurers need to raise rates to reflect risks and costs, they can only do so after extended hearings and a government review process designed to please voters, not to reflect economic reality. Unsurprisingly, well before the Los Angeles fires, insurers were limiting coverage and leaving the state.
Even Insurance Commissioner Ricardo Lara admits insurers “don’t have to be here, and when we try to overregulate, we’ll see what happened after the Northridge earthquake, when the legislature came in and tried to overregulate, and they no longer write earthquake insurance in California.””