It sounds like a really good idea: cities and towns across North Carolina build affordable housing to help ensure more people can realize the American dream of home ownership. Michael Sanera, the John Locke Foundation’s research director and local government analyst, says local government leaders who really want to help people with affordable housing should actually just get rid of their affordable housing policies. Sanera co-authored a recent report on the topic. He explained the findings in an interview with Donna Martinez for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Martinez: It sounds a little bit counterintuitive, Michael — get rid of the very policy that has been put in place to help people. Explain why that would be the case.
Sanera: Well, let’s start with the fundamental principle here, and that is that the housing market automatically produces affordable housing, unless government steps in and prevents that. And so many government policies are preventing the market from producing affordable housing. And then, on top of it, they’re putting these affordable housing policies in [place], which make it even worse. So the market produces affordable housing. Let’s say a family that got into a starter home 10 years ago, they’ve increased their incomes, they move to a larger home. That leaves the other home available for people at affordable prices.
Martinez: For a new family moving into the market — perhaps their first home.
Sanera: Absolutely. And so what we see is that the market, when you look at it, is producing a tremendous amount of affordable housing. Now, the problem is that so many of our communities, especially our so-called elite communities such as Chapel Hill and Davidson and Carrboro, what they have done is they’ve put restrictions on building homes. Chapel Hill has a greenbelt all the way around it, kind of like a medieval moat to keep out the riffraff. And so that constrains the amount of available land that is available for new homes. And so it interrupts this whole process of automatically producing affordable housing. Therefore, all the prices go up. Then the city fathers and mothers, in their ultimate wisdom, start feeling guilty that lower-income people can’t live in their community, and they latch on to these affordable housing policies.
Martinez: So essentially, it sounds like they’ve got dueling policies in place that are actually counteracting each other.
Sanera: Absolutely. One policy is creating a problem. Therefore, they can’t admit that they should just repeal that one and solve the problem. They have to have another round of government intervention in order to solve the problem they created in the first place.
Martinez: And the tinkering begins.
Sanera: Absolutely. And it just keeps going on and on. It’s like a treadmill that they somehow can’t seem to get off of.
Martinez: Michael, in your paper released for the John Locke Foundation on this issue of affordable housing policies, you talk a lot about land-use policies, about so-called “smart growth” policies. Chapel Hill, for example, has a tree ordinance that has all sorts of requirements for preservation of trees. Now, I have to say that when I talk to people about communities they’d like to live in, when I say these things to them, they say, “You know, I’m pro-environment. I want to save the trees. I’d like to see a lot of open land.” How do you counteract what seems to be a belief of many people that these policies are good?
Sanera: Well, the issue is who pays and who benefits. And so the issue is, if you want to live in a community like that, then you should be willing to pay for it, and not for someone else to pay for it. When you have a tree ordinance, that’s forcing that property owner to pay an extra amount for your benefit. You know, I’ve always said that if you like trees in the neighborhood, why don’t you buy a couple of trees and drive down your street and ask if you can plant them in your neighbor’s yard? That’s a much more equitable solution than forcing people that may or may not want to cut down trees to pay for your benefit. So many of these policies transfer the costs onto other people, and that’s exactly what we’re talking about. We’ve transferred the costs of these, as I say, elite communities, onto the backs of poor people who can’t afford to live in these communities.
Martinez: So not only are the low-income families affected by the lack of affordable housing that’s created by these policies, but Michael, you also touch on something I think is really interesting. You write in your paper that middle-class buyers are particularly affected when these policies are in place. How and why?
Sanera: Well, absolutely. Some of the lucky low-income people that can get a home through these affordable housing policies, they see some benefit. Now, the vast majority of those low-income people can’t see it because it doesn’t produce enough affordable housing. But the middle-income people can’t afford to buy an extremely high-priced home in these elite communities, and they make a little more money than it takes to qualify for these affordable housing policies. So they get it in the neck. The other issue here is that, in a dynamic area like the Triangle, when Chapel Hill puts out an affordable housing policy, they think there is some requirement that those people actually live within the city limits of Chapel Hill, when right outside Chapel Hill, there are many, many affordable housing units that are available. We documented that in our report, and we used their methodology to calculate affordable housing. We found if they use the federal numbers for the median income in the Chapel Hill area, there are 120 units available for affordable housing. And then, if you use Chapel Hill’s numbers for median income, which is much, much higher, there are 350 affordable housing units right in that area surrounding Chapel Hill.
Martinez: Bottom line, who is it who really benefits from these policies when they’re in place?
Sanera: Well, I think two people … two groups. The politicians, of course, that get a lot of play on this because people just don’t understand — and anybody that opposes this is off, you know, evil and against poor people — so the politicians that pander to the public on that. And then also we have these housing trusts, and so many of the affordable housing policies require that builders transfer these affordable housing units to a housing trust. Here we have a group of very self-interested people, and I also would say probably very self-righteous, because they think they’re helping the poor when they’re really not. And what they’re also doing is a charade of tricking people into believing that they are getting into homeownership. I mean, the key here is that we’re promising homeownership when we’re really not. When you look at the details of how affordable housing works, the person that gets this house thinks [he’s] a homeowner. But when you look at the details, they don’t have — there are so many restrictions on the use and the resale of that home — that they’re really actually long-term renters.
Martinez: Michael, you’ve mentioned a number of communities across the state that have these policies in place and you say are on the wrong track. You mentioned Davidson, Chapel Hill, Carrboro. Are there any North Carolina cities and towns that have really taken the right steps in order to let the market work?
Sanera: There are many, many communities that have not put in “smart growth” or other restrictions, where we have homes that are actually below national averages. And so those towns are not suffering from these problems.