Housing Crisis in Metropolitan Areas

Housing Crisis in Metropolitan Areas

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Affordable housing remains a major problem in many U.S. metropolitan areas. Over the years, demand for housing has outpaced supply, driving up the cost of housing. Housing takes up the most spending in most American households, especially for renters. The stagnation of wages with the rising cost of living has contributed to the higher proportion of income spent on housing. Some important metro areas facing a housing crisis in the country include New York City, San Francisco, Boston, and Washington D.C. more and more people are moving to these areas, further driving up housing costs by increasing demand. The U.D. Department of Housing and Urban Development is responsible for the creation and enforcement of housing laws and policies across the country. Many other local and state bodies create and implement local housing policies to supplement the federal role of the U.S. Department of Housing and Urban Development.

The main cause of the housing crisis is the fact that there are fewer houses being built. The location of these houses is also a major factor. There are various arguments as to who benefits from expansion, or lack thereof, of new housing. An explanation for rising costs of housing is the gentrification of neighborhoods, while the other reason is increasingly restrictive land-use policies that prevent the construction of new housing (Calder, 2017). Regulation plays a significant role in the housing market. Profit is the primary motive behind risky investment in housing, and excessive regulation increases the risks. When local governments enforce barriers to development, they contribute to the crisis. For example, if local governments implement restrictive zoning laws, developers may opt to acquire then rehabilitate existing properties. Old, cheap apartment buildings are then renovated and upgraded, raising their cost without providing alternative cheap housing. Such laws have contributed to the housing crisis in metropolitan areas.

The housing problem in metro areas affects multiple parties. The most affected parties are home owners and renters. People have to spend an increasing proportion of their income on housing, and some of them can no longer afford to pay for their homes. The housing crisis also affects employers. Employers need employees from all economic backgrounds, and when these employees cannot find affordable housing, they cannot take up jobs in certain areas. Employers will have a hard time filling low-level positions whose pay cannot sustain living in the area. The housing crisis also affects the economy of the metro area. When people spend more money on housing due to rising costs, they have less disposable income to spend on other things. Customers have to restrict their spending based on housing costs, affecting the economy of the area. Reducing the cost of housing will have a multiplier effect on the economy (Terwilliger, 2017). Higher consumption of goods and services will stimulate employment growth in other sectors.

One of the significant reasons why housing is so expensive in D.C. is the high cost of land in the area. One acre of land costs approximately $1.2 million, driving up housing costs (Brooks et al. 2020). This, coupled with construction and other associated costs, result in very expensive rates for housing. Another reason for the restriction of housing in D.C. is zoning laws. High-priced neighborhoods have laws preventing the construction of new housing in the area. Restrictive zoning laws drive up the price of properties in two ways. First, since developers cannot increase the number of new developments in the area, they increase the existing properties’ quality and size. This increase further drives up the values of housing, making the situation worse. Additionally, homeowners in such places have adequate space to expand their homes, increasing their value as well. A Brookings article examining the issue explains that restricted zones receive more permits for alterations and expansion than those in high-density zones.

D.C. Mayor Muriel Bowser has proposed several measures to address the metro region’s housing crisis. It is approximated that the area requires an additional 320,000 housing units between 2020 and 2030. From this number, the number of affordable housing units needed stands at 75% (Brooks et al. 2020). Mayor Bowser has already set in motion plans to achieve this goal. She plans to have 36000 new housing units completed by 2025. The city has also committed to having a third of these units affordable. The Department of Housing and Community Development is in charge of this project, whose goals include the revitalization of neighborhoods and preservation and creation of affordable housing. Although these units may seem few compared to the overall need, it is still a step in the right direction. The major beneficiaries of this project are home renters and employers who will be able to hire low-level employees from the area.

President Biden has proposed several measures to ease the housing shortage in the country at the federal level. The administration has come up with a ten-year plan that will cost approximately $640 billion. Although most of the policies in the new proposal will ease the housing crisis from the covid 19 pandemic, they will also form part of long-term solutions. One of the proposals is that $ 5 billion be dedicated to addressing the health and housing needs of the homeless across the country (Skahen, 2021). Homelessness has become a major issue in metro areas where people cannot afford to pay their rent and get thrown out, leaving them with nowhere to go. Some of this money will go towards building affordable homes for low-income earners, reducing the proportion of income that families and individuals spend on rent.

These solutions will work best in a Home Rule City. Home Rule allows local governments to create and implement policies that fit their needs best. For example, with the housing crisis, local governments can implement policies for affordable housing depending on community needs. Different metro areas have different needs and demographics, meaning that flexible policies would work best. Solutions need to be tailored to local needs to make them as effective as possible. Using the example of D.C., the mayor is working with local officials to create a local solution to a local problem (Baca, 2020). Leaving the problem to state legislature would take years while the problem grows as time goes by. Home Rule also allows quicker implementation of projects as local legislatures frequently meet to discuss and decide on local issues affecting them.

In summary, the housing crisis continues to grow by the day across metropolitan areas. The higher demand for housing in these areas, coupled with lower supply, has driven up the cost of housing. Low-income earners can no longer afford to live in their former homes. The housing problem affects many people, such as people buying and renting homes, the local economy, and other players in the real estate market. Some possible solutions to the problem include implementing local regulation on affordable housing and setting aside funding for new housing projects based on demand. Home Rule cities will have an easier time addressing housing crises as they can create and implement policies that fit their unique local needs. Housing should be treated as a fundamental human right rather than a situation where the highest bidder wins.

References

Baca, A. (2020, 10 March). “DC’s housing crisis is about more than just how much housing to build—but where it goes as well.” Department of Housing and Community Development https://dhcd.dc.gov/release/dc%E2%80%99s-housing-crisis-about-more-just-how-much-housing-build%E2%80%94-where-it-goes-wellBrooks, L., Denoeux, G.,& Schuetz, J. (2020, 4 June) “The Washington, DC region needs more housing, and satellite data can tell us where to build.” Brookings. https://www.brookings.edu/blog/the-avenue/2020/06/03/the-washington-dc-region-needs-more-housing-and-satellite-data-can-tell-us-where-to-build/Calder, V. (2017). Zoning, land-use planning, and housing affordability. Cato Institute Policy Analysis, (823).

Skahen, R. K. (2021). Opportunity in a Pandemic: Ending the Eviction Cycle by Constitutionally Providing for Inclusionary Zoning with State-Enacted Land-Use Regulations. Campbell Law Review, 43(3), 375.

Terwilliger, J. R. (2017). Solving the Affordable Housing Crisis: The Key to Unleashing America’s Potential. J. Affordable Hous. & Cmty. Dev. L., 26, 255.

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