Supply and Demand

Here's an article from TFN about a somewhat successful effort to reduce homelessness among veterans. Well, okay, that's good. Here's how it works:

As concerns about returning service members grew during wars in Afghanistan and Iraq, Congress in 2008 revived a pilot program, called HUD-VASH, that pairs vouchers from the housing department with case management from the veterans department. Voucher holders pay 30 percent of their income for rent, while the federal government covers the rest up to a local ceiling.

After expanding the program every year, Congress has created about 110,000 vouchers, meaning veterans have much shorter waits for rental aid than other homeless groups. The vouchers cost more than $900 million a year.

 

Can you spot the problem? And no, I'm not talking to those of you who don't think tax money should be used to solve social problems, or think it's just tough luck for people who suffered physical and/or psychological injury while you were serving your country as a Keyboard Kommando. I'll give you a few seconds to think about it.

Okay. The problem is that this is putting veterans into whatever housing is available, which means said housing is not available for other people, who, ipso facto, a fortiori, as the article states in passing without seeming to notice, have much longer waits for subsidized housing -- which in fact are usually forever. We cannot solve the housing shortage by subsidizing rents because the reason housing costs are high is because there isn't enough housing. Get it?

I think this is probably the most important reason many people perceive the economy as bad even though in fact the U.S. economy is envy of the world. So why is it so difficult to expand the supply of housing enough to make it affordable for more people? (Some people with disabilities or other misfortunes will no doubt need subsidies no matter what, but right now housing is not affordable for people who work full time at low wage jobs.) Here's Alex Horowitz, the director of Pew's Housing Policy Initiative:

 

We're short on all homes. Full stop. There just aren't enough of them. And that means that existing homes are getting bid up because we see high income households competing with low income households for the same residences since just not enough are getting built.

 So restrictive zoning is the primary culprit. It's made it hard to build homes in the areas where there are jobs. And so that has created an immense housing shortage. And each home is getting bid up, whether it's a rental or whether it's a home to buy.

Now, it's a bit more complicated than that. There are other short-term factors that have exacerbated the problem recently. However, long-term, that's the basic issue. People who already own homes don't want to see more housing built, especially relatively affordable housing near them, because they want their own properties to be more valuable. And those are people with more political power than the people who can't afford to buy homes at the moment. So this is just one more way that privileged people in the U.S. lock in inequality.