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Today’s column may have seemed like red meat for free-market capitalists who argue government inevitably stumbles when it tries to solve social and economic problems like a lack of affordable housing.
Maybe it was. But, in my mind, it was a more of an exploration of a specific problem: an awkward government attempt to help that may be just plain wasteful.
I’ve gotten a lot of great feedback today. Here was an e-mail from Murtaza Baxamusa, the director of policy and research at the Center for Policy Initiatives. You may not agree with Murtaza at times, but you can’t deny the guy is smart.
Here was his thought:
If I may summarize your analysis, there are instances where the market price of homes has approached the market-restricted price of homes, so it is meaningless for taxpayer dollars to be subsidizing the market-restricted homes. Since the restricted units are priced absolutely (based on the median household incomes in the region), rather than relatively (based on the variable sale price of market units), there will be peaks and troughs on the social value of these units. A trough does not mean that we abandon a program, but rather adjust it to suit the market conditions. Therefore, the formula for subsidies could be adjusted to reflect market conditions. The problem you identify is probably a deeper one, than that of the efficacy of a subsidy program. It could be that we are not negotiating well as a public agency, and entering into bad deals regardless of who puts in the money.
This is exactly the discussion I hoped to provoke. Perhaps you could, as Murtaza suggests, tie the price of affordable for-sale units not to the wages people earn but to the housing market itself. In other words, you would make sure that affordable homes were always, say, priced 10 percent below comparable market rate homes in addition to being affordable to certain wage earners.
This would, ostensibly, deal with the potential (gasp!) problem of so-called affordable homes costing more than similar homes priced by the market.
But it opens up its own huge can of worms and again reinforces the awkwardness of government trying to control the price of a vital commodity like proprietary housing.
For instance, one problem would be the government trying to decide what measure of the housing market it used to set the prices of its affordable units. As our writers have explored more intelligently than just about anyone, there are serious problems with all the major indices that track housing prices. The most accurate housing measures, the Case-Shiller Home Price Indices, don’t even measure condos and other so-called attached units, which comprise the bulk of affordable housing units. Rich Toscano has wrestled with what measures to use for years now. Watching the government try to decide which to use to price condos would be downright painful.
Murtaza writes that we may just be making mistakes. That’s clearly true — we are making mistakes. One need only look at what happened in the Southeastern Economic Development Corp., where homes subsidized and set aside as affordable by the city were repeatedly sold by their owners for major profits shortly after their purchase at the discounted rate. That’s a mistake if not something worse.
And we may be making bad deals. If my column had any point at all it was that the $3 million we as taxpayers gave to this condominium developer probably could have and should have been spent better. And the money we have to spend now overseeing that development’s affordable units undoubtedly could be used more effectively.
Mistakes and mismanagement can be corrected through better leadership. The question, though, is whether these mistakes are inevitable and whether the city is trying to do something it simply can’t handle. And, I guess the next question is, how much will we have to spend to find out?