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Homelessness and Affordable Housing

/ 4 min read

Everybody wants everyone to have a safe, comfortable place to live. The problem, of course, is that it is hard to agree on how to make that happen. No one likes people to be homeless, but there seems to be strong disagreement about what to do about it. I have some thoughts.

  • First, “Affordable Housing” is even a challenging term to define. For me, it means “Everyone can find housing at their personal price point”. Some folks can afford a huge mansion, and they can find those. Some folks can afford a nice four bedroom home in a suburban development, and those are readily available. Some folks can afford various levels of apartments, and those space are generally available. But of course, there comes a point where folks’ price points get so low that it is hard to fine places for them to purchase housing.
  • The problem of affordable housing is actually quite simple to solve. Housing, like any scarce resource, is subject to the iron-clad law of supply and demand. So the solution to hard-to-find housing at a given price point is to create more housing at all price points. Increase supply and prices will drop.
  • The problem happens when zoning laws and housing rules make it basically impossible to provide affordable housing at low price points. Most locations have minimum requirements for what housing must be, and those requirements, while certainly well-meaning, often create an expensive minimum solution.
  • And example would be a requirement that all apartments have at least a bedroom, a bathroom, and a kitchen, and be of a certain minimum square footage. Those things are well intentioned — “People need decent places to live!” — but they also cost money. Creating “minimum” apartments has certain costs, and those costs need to be recouped. Rent cannot be set at a price so that landlords lose money, and thus high minimum requirements mean higher rents.
  • Thus, I think a major cause of homelessness is the “high minimum rent” that many cities require. If a landlord can only profitably provide the minimum apartment at $1000 a month, then that will price many people out of the market. Or put another way: There is frequently a large gap between “the cost of a minimum apartment” and the cost of a “tent on the street”. If you can’t afford the minimum apartment, there is often no solution for you other than the tent on the street.
  • There are solutions available in that gap — your local listing on CraigsList often advertise them — but the supply (see above) of these solutions is quite small.
  • So a simple solution here would be to allow Single Room Occupancy. This is commonly implemented as a small room with a bed, a desk, and simple storage. Bathrooms are commonly shared, as are kitchen facilities. The rent on such facilities will usually fit into that gap discussed above.
  • The problem here is that SRO facilities are frequently not allowed. (You can read about that in the Wikipedia article linked above.) I don’t think it is a coincidence that the banning of SRO facilities in cities corresponds to the rise of the homeless problem.
  • This solution, of course, for this “housing gap” is to increase the supply of SRO, allow folks whose housing price point is above a tent on the street but below the cost of a minimum apartment to have a place to live. There is strong demand for this kind of housing, however misguided but well-meaning laws often prevent the marketplace from meeting this demand.

So, I think the way to bring about affordable housing for everyone is to increase the supply of housing at all price points and not pass laws creating a gap between tent cities and a one-bedroom, one-bath, full-kitchen apartment. That’s a simple solution. Sadly, city politics often prevents it from being easy to implement.