Maybe fewer subsidies would actually mean cheaper housing

Cities like San Jose continue to follow the failed assumption that the only way to create affordable urban housing is to subsidize it via grants to unaccountable nonprofit housing providers. What if the opposite were true? The comments section at Econlib offers a lively, bay area-centric, discussion of how housing deregulation would encourage lowered housing costs—accommodating already high demand to live in big cities. Moreover, sweeping nationwide exoduses to suburban cities would reverse, as citizens could finally afford to stay in previously too-expensive urban residences.

robc:

The prices for relatively subpar properties in urban areas suggests the demand is high.

There are a lot of people in the bay area, for example, who would love to not be commuting over an hour to work.

Chris:

Part of the decline in population within cities is due to a combination of regulations that make large developments more difficult to build, high demand creating a market for developers to replace two-flats with much more expensive single-family homes, and long-term disinvestment in poorer areas, pushing those populations out. I know, for instance, that my neighborhood in Chicago consistently loses population while housing prices increase substantially, all because of the two-flat deconversions.

Chris:

A lot of the big dense metro areas also see a pretty substantial domestic outmigration right now, which is almost certainly caused in large part by housing costs. Even a small percentage change of “people moving from the Bay Area to Texas” could have a dramatic effect on populations in both places over time.

KevinDC:

There aren’t that many people who want to move into the cities given current pricing and availability, but that doesn’t imply that there aren’t people who wouldn’t want to move into the cities if pricing and availability were different. Right now, I “don’t want” to live in the city, in a reveal preference sense of “want,” because it’s too expensive. If prices were lower, then I would want to live there. This is what Caplan is driving at when he notes “‘People don’t want to live like that’?  That depends on the price.”

Read the whole thing here.

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Image by Mel James.