Seek the Government Distortion to Solve Affordable Housing Problem


Upon reading an article such as a blurb by Christine Dunn in today’s Providence Journal, about Rhode Island’s high rental costs, my first reaction is always to wonder why nobody ever looks to the causes of supposed problems:

Rhode Island’s state minimum wage is $9.60 per hour, but a worker would need to earn $19.06 an hour to affordably pay a rent of $991 a month, the state’s fair-market rent for a two-bedroom apartment, the study added. The estimated mean hourly wage of Rhode Island renters is $12.59.

“Today’s report shows what we already know: we need to invest in and build more housing in Rhode Island,” said Barbara Fields, executive director of Rhode Island Housing.

Of course, one should challenge the assumptions of an article that is so thoroughly in line with the cause of an activist who has a personal interest in public policy on the issue.  Why should we assume, for example, that a person earning the state’s average should be able to afford a two-bedroom apartment on his or her one paycheck?  Add in a spouse or a roommate at the average, and suddenly Rhode Island rentals are very affordable.  Or hey, do what millions of families (like mine) have done and take on additional work!

But even going with the concept that Rhode Island needs “to invest in and build more housing,” why ought that to be done with government involvement?  Unless something (probably government policy) is getting in the way, the market should take care of this.

If apartments are drawing such an exorbitantly high rent for the area, then more people should be seeking to become landlords.  The higher the profit, the greater the motivation.  This should ensure that housing expands until its ready availability drives the price down to the point that the incentive to build more is no longer there.

If that isn’t happening, something is keeping the cost of building and maintaining rental property artificially high or keeping wages artificially low.  In Rhode Island, it’s probably both.  Or maybe the assumptions about what is “affordable” are flawed.

Whatever the case, using government to force more money into housing — with strings and bureaucratic rules — doesn’t solve the underlying problems, but takes resources away from something else that our community needs and wants, which could be the very something that will help resolve those underlying problems.  (Hint: like innovation and jobs.)

  • Rhett Hardwick

    Considering that Providence’s population is approximately half of what it was in 1950, I have always wondered why there is a housing shortage. It isn’t just that so much is old “three deckers”, try renting one of those in Cambridge, MA. Probably it is that so much of it is undesirable for reasons of crime, lack of parking and deferred maintenance. Changing social constructs of what people want and deserve have also had an effect.

  • Mike678

    The assumptions behind “affordable” housing are a continuation of the entitlement mentality. If you make min wage, you get min housing–it’s an incentive to move up the chain–or move to a state where opportunity isn’t just for the insiders. Funny how many college students have roommates and actually make ends meet…

  • GaryM

    You miss the point that the insiders are making a bundle off this affordable housing scam. To begin, every project I’ve seen goes up at an incredibly high cost per sq foot. Since these places don’t have granite counter tops or upscale anything, someone is pocketing the difference. Then there are those tax credits, which the developer gets to keep if the project stays affordable for 15 years. And of course the developers don’t have to pay normal property taxes, and get the luxury of highly subsidized rents for the low income renters from none other than the advocate groups who promote this fake housing crisis using taxpayer money.

  • D. S. Crockett

    Why should I subsidize folks who cannot make it on their own? That’s not what America is about, so-called liberals.