Evicting government from the housing market
Government, whether at the federal or local, is quite the deadbeat tenant when it comes to housing.
Housing demand is through the roof, but housing supply, like a deadbeat roommate, is refusing to leave the basement.
So who’s to blame for our housing shortage? At the risk of sounding like a tinfoil-hat-wearing Dale Gribble, I blame the government.
Nationals leaders oh so eagerly want to increase the homeownership rate in U.S., which is comparatively low to the rest of the world, but they are oh so terrible at it.
In their desperation, they often resort to worshipping graven images (i.e., bad policies). One such sacred cow: the mortgage interest deduction (MID). This deduction, which less than 1 percent of the population qualified for when it became law, wasn’t originally intended to influence homeownership. The MID still does nothing to increase homeownership and subsidizes higher-cost, lower-density development — all to the tune of $77 billion per year. Such sacred cows should be as prevalent as they should be cooked: as rare as possible, please.
One doesn’t have to look much further for inept housing policy than the national eviction moratorium enacted by the Centers for Disease Control and Prevention (CDC). Nobody wants to see economically struggling families be thrown out of their homes, but we also should be sympathetic to the plight of small-scale landlords — the “mom and pa” operations — who are owed the bulk of the estimated $1 billion in delinquent payments and don’t qualify for relief aid. Fortunately, a judge ruled that the CDC should stick to what they are good at: confusing the hell out of us during this pandemic.
U.S. trade policies aren’t helping housing costs, either. In April 2017, former President Donald Trump slapped a 20% tariff on Canadian softwood lumber. These duties were eventually reduced to 9% after Trump left office, but the damage was already done: The tariffs, according to the National Association of Home Builders, resulted in “unprecedented spikes in lumber prices,” adding “more than $24,000 to the price of the average, new single-family home.” U.S. leaders might consider focusing their protectionism on more harmful Canadian imports like Justin Bieber.
Though the federal government has done quite a number on the housing market (lest we forget Fannie Mae and Freddie Mac’s contribution to the 2007 crisis), the bulk of government mismanagement takes place at the local level through land-use regulations. These regulations come in many forms — zoning, building codes, permits, minimum lot sizes, rent control, etc. — but they are unified by one principle: You are free to do what you want with your property, so long as you’re not allowed to do everything you want with your property.
Land-use regulations are the manifestation of NIMBYism — the passionate ideology that the world is one big covenant community. Most people will tell you that they loathe homeowners’ associations because they don’t like to be told what to do with their properties. But if you ask these same people how they feel about their neighbor’s front lawn — which looks more like an exotic ecosystem with unique flora and fauna cohabiting within it — and you can bet that they have some opinions.
And these opinions, when codified into municipal regulations, have real-world costs. Researchers studied land-use regulations in the mecca of regulatory overreach — California — and found each new individual regulation correlated with a 4.5% increase in housing costs. This state proved to be a great environment to research due to the regulatory variance between heavily regulated California municipalities, like San Francisco and San Jose, and slightly less regulated California municipalities, like Denver and Telluride.
Understandably, we like some rules that keep a uranium plant from moving next door and dumping mill tailings near your vegetable garden. But, too often, these hypothetical and hyperbolic examples only serve as a post hoc justification for rules that more directly impact your veggie garden than any imaginary uranium mill.
Case in point: Steven Miller of DeKalb County, Georgia. Miller faced thousands of dollars in fees for growing an illicit plant in his yard. No, not *that* plant; something far more nefarious: broccoli. Miller’s grow operation, which he used to supply his local farmers’ market, was illegal because his property wasn’t zoned for “crop production.” Code enforcement in DeKalb County (ironically, nicknamed the “The Greenest County in America”) issued fine after fine against Miller while he fought to get his property rezoned. Miller isn’t alone in this fight. Nationally, the number of legal cases challenging land-use regulations has more than doubled since 1980. And these legal battles are costing homeowners a lot of green — and I’m not talking about broccoli.
There’s only one thing to be done when you come across a deadbeat tenant as delinquent and costly as government has proven itself to be when it comes to housing: You evict them.
