2021 Election, Ari Armstrong, Boulder, Denver, Housing, Uncategorized

Armstrong: Let’s try a free market in housing

If you’re trying to buy a house in Colorado, the market sucks. I know people who have fled the state because of housing prices. I worry that a couple of families in my son’s social network may have to move elsewhere to afford a house.

Sure, “affordable housing” mandates help a few people, but at the cost of jacking up prices for everyone else (and at the cost of damaging economic liberty, if anyone still cares about that). The federal government gave $400 million “to alleviate Colorado’s affordable housing crisis,” as Newsline reports, spending which, predictably, became mired in politics.

Sure, the housing market is complicated. My wife and I bought our house in 2008, after the federal government caused the mortgage meltdown by promoting high-risk loans. I won’t mention what we paid because I don’t want to make those of you currently in the housing hunt sick with envy. We did have to do quite a lot of work to the place. After we bought, another house on my block sat abandoned for another couple of years. We toured one house in the area with walls covered in spray paint and filled with holes. In retrospect I wish I’d purchased a second distressed property.

These days, I fear, one of the drivers of high costs might be lot of people dumping their extra government money into real estate.

Colorado, with its fine weather, great outdoors, robust economy, and relatively sane political climate (despite Democratic efforts to turn us into East California), continues to attract new residents. Even on the relatively isolated Western Slope housing prices continue to rise. Earlier in the year Pew published data on growing states (including Colorado and Texas) and declining states (including California and New York). It does look like people are starting to move back to New York City, but Colorado’s popularity has never been in doubt.

Given these complexities and underlying market and political forces, we should not expect any magic-bullet policies to dramatically bring down housing costs. Yet we should bear in mind just how radically restricted the housing market is and how much that drives up prices. Instead of turning to yet more political mandates and subsidies to address the problem, we should work to free up the market.

As I discussed earlier this year, housing policy is a topsy-turvy realm where many Progressives fight for freer markets while many conservatives fight for government-controlled markets. Neither side admits that’s what it’s doing, of course. In this one narrow area, Colorado should be more like California, because, strangely, California is better-following Colorado’s libertarian(ish) vibe.

Recently economics writer Noah Smith discussed “SB9 and SB10, two new California laws that end single-family zoning by allowing duplexes everywhere, upzone areas near transit hubs, and streamline the permitting process for this new housing.” Denser suburbs would work out pretty well, Smith argues, claiming they will drive down housing costs. Meanwhile, as more people work from home in the aftermath of the pandemic and some people turn to e-bikes and the like, traffic can remain manageable.

Voters in Denver and Boulder face ballot questions regarding the number of people who legally may live in a house, one aspect of a much broader debate over housing controls. Obviously, I’m on the side of more freedom. People should be able to use their property as they want, provided they do not violate the rights of others, as by causing pollution.

In Denver, 2F would repeal an ordinance passed earlier this year. Here’s how Denverite summarizes the previous measure that 2F seeks to overturn: “The update to the zoning code allows up to five unrelated adults to legally live together in a single home, up from two,” and “made it easier to set up residential-care facilities.”

Unfortunately, the Denver rules combine the issues of people in homes with that of “residential-care facilities,” which could include things such as homeless shelters and halfway houses. That second point is the harder political sell. However, as posted in Denver’s pro-con text, advocates of the original language say, “The group living ordinance does NOT allow any community corrections facilities serving people coming out of prison in single-family residential areas” and “put more limits on how many [residential care facilities] could be in any one area.”

In Boulder, 300, the “Bedrooms are for People” measure, asks, “Shall the City of Boulder expand access to housing by allowing all housing units to be occupied by a number of people equal to the number of legal bedrooms, plus one additional person per home, provided that relevant health and safety codes are met?”

The usual complaints against such loosening of restrictions clearly are rooted in class discrimination. People who tend to rent out or move into extra bedrooms tend to be younger and poorer and therefore associated (on average) with more crime and general slovenliness. In economics terms, those against more freedom in this area are making a sort of externalities claim: People living in such arrangements will tend to make life worse for others in the neighborhood.

The externalities claim here forms a bad argument because the law properly treats people as individuals, not as averages. If people behave themselves, great. If some people commit crimes or pollute surrounding properties, then government should address specific problems, not violate the rights of the innocent because of the misdeeds of a few. If the problem is number of cars on the street, government can tackle that issue directly, as by issuing limited parking permits.

Colorado’s dominant ethos is “live and let live.” If other people want to use their property to house additional people, then, insofar as such use does not inherently interfere with others’ use of their property, no one has any right to block it. If you want to micromanage other properties, then buy them on the open market. The principle is property rights. Let’s give it a try.

Ari Armstrong writes regularly for Complete Colorado and is the author of books about Ayn Rand, Harry Potter, and classical liberalism.  He can be reached at ari at ariarmstrong dot com.

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