Social engineering in housing is a failure. America’s top tier cities are increasingly unaffordable for middle class renters. Ironically, the problem seems to be worst in the country’s most famously progressive cities, like New York, San Francisco, and Boston. Clearly, well-intentioned policies like rent control, strict zoning, and affordable housing mandates are not working.
In housing, as well as other political issues, a noisy group seem to think our problems are caused by greedy landlords or capitalism run amok. This is silly. You can’t run a huge economy like America’s based on landlords being generous to tenants. Rules and regulations have their place, but they’re not the solution either. Too much centralized control stifles innovation and growth. History has proven this many times.
It’s simple supply and demand. High prices signal developers to add more housing supply to the market. This is guaranteed to work, except if people stand in the way — and they do. San Francisco is famous as a hotbed for not in my backyard (NIMBY) opposition to new real estate developments.
One possibility is rent-seeking behavior. Local residents can keep their streets quiet, their views unobstructed, and their property values high, all if they keep new development out. Their private gain is a loss for the wider public. These people may give generously to charity, but they should think more broadly about how getting out of the way of growth might actually help their communities even more.
Greedy landlords are a convenient scapegoat and rent controls sound like an easy solution. But these kinds of government interventions actually make things worse. They’re fundamentally uncapitalist, and they ignore the wisdom of markets. Legally mandating lower prices will not create new housing units, and it won’t help all the other families that weren’t lucky enough to find a rent controlled home.
The solution to our housing problem is the same solution that has made us the wealthiest and most powerful society in human history: Harnessing the power of private property and free markets. Let them build. I hope San Francisco gets the memo.