| The Cost of Unaffordable Housing |
| Written by Bill Russell | |
| 06.19.2008 | |
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Discuss this article on the forums. (0 posts) On Tuesday I showed that, for most of the US, affordability has been stable or improving since 2000 but that some markets have gotten less affordable. Today I want to look at one of the consequences facing those less affordable markets. As can be seen in the graph below, job growth is closely tied to home affordability. The graph groups the 361 largest markets into 10 groups, from most affordable to least affordable. As you move from the most affordable groups down to the least affordable, job growth declines from around 10% since 2003, to around 2%. Clearly, businesses prefer to locate and expand in areas that have affordable homes. This shows that markets with high home prices pose a real problem. Lack of affordable housing is not primarily a problem for the poor, but a problem that kills job growth. The cause of high home prices is most likely restrictive zoning that prevents new single family homes from being built. Such restrictive zoning typically is supported by environmentalists, anti-sprawl crusaders, and many people who already own single family homes. Those who prefer the status quo and rally against new single family homes should know that there are no free lunches, and that their chosen policies will cause slower job growth that will eventually make everyone suffer. 
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