OBSTACLES TO AFFORDABLE HOUSING
December 1, 2009
Removing regulatory barriers to affordable housing solutions like manufactured housing and SROs would increase the supply of housing for individuals and families currently priced out of local markets, says James Franko, a legislative assistant with the National Center for Policy Analysis.
According to a 1991 Housing and Urban Development (HUD) report, local government policies that increase building costs and/or restrict the supply of housing are one of the primary reasons for the lack of affordable housing.
- These range from minimum lot sizes that encourage larger and more expensive homes to the prohibition of multifamily dwellings.
- In some communities, regulations have raised the cost of new development and construction by 35 percent.
- A 2005 follow-up HUD report found that in more heavily regulated localities rents were 17 percent higher; home prices, 51 percent higher; and homeownership rates, 10 percent lower compared to less-regulated areas. Impact fees and inclusionary zoning are particularly costly.
- If these costs were reduced, more affordable housing would be available.
- Many communities impose fees on developers and homebuyers that must be paid in advance of new construction.
- The fees are supposed to recoup the cost of connecting roads and sewer lines.
- But the fees are often far higher than the new infrastructure costs.
- For example, in 2001, many households in Alachua County, Florida, paid fees more than $3,000 higher than their share of infrastructure costs, according to HUD.
- Many communities have tried to increase the supply of affordable housing through inclusionary zoning laws; these laws give builders incentives, or require them, to reserve a portion of new units for low and/or moderate-income households.
- Numerous California communities have adopted inclusionary zoning; but, in fact, the regulations have made housing less affordable than ever.
- New home prices increased by up to $44,000 in 45 San Francisco Bay Area cities that enacted inclusionary zoning laws.
- Inclusionary zoning in Los Angeles and Orange Counties increased the price of new homes by up to $66,000.
Source: James Franko, "Barriers to Affordable Housing," National Center for Policy Analysis, Brief Analysis No. 680, December 1, 2009.
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