At last, a rare opportunity to quibble with Duncan Black on something:
Lack of affordable housing becomes an issue when land prices increase greatly, increasing prices/rents generally and encouraging developers and landlords to develop and redevelop more upscale units. Land prices in much of Philly are still really cheap. We had decades of population loss, only just (maybe) reversed.
Whatever the merits of that development, it’s proposed for an area that by any measure has lots of affordable housing already.
Now I’m all for helping poor people. I would give them all of Donald Trump’s moneys and some of mine, too. But housing isn’t unaffordable for poor people here because it’s expensive, it’s unaffordable because there are a lot of people living in poverty.
That’s all true, but check out the news today from the Biz Journal and you’ll see that the land rent problem Duncan’s talking about is starting to happen. And the fact that it’s happening citywide means it’s going to be even more concentrated in the subregions seeing embiggening sales price growth:
Philadelphia ranks 10th among the 25 largest U.S. metropolitan areas in terms of home affordability, according to a new report from Interest.com.
The median household income in the Philadelphia area is 1 percent less than the income required to purchase a median-priced home in the region. In 2012, the local median household income was 3 percent higher than the median-priced home.
This is going in the wrong direction. High poverty is a big issue, but people who aren’t in poverty are also seeing housing prices rising faster than incomes. I think it should be city policy to aim to keep median rents down to around a quarter of area median income – “a week’s pay for a month’s rent”. Philly doesn’t have so much housing demand that we can’t accomplish this. We could reduce the zoning costs and let more developments happen, which would tend to push the prices down on the margin. We could tax land value at a higher rate than buildings. I don’t think Duncan disagrees with that political program, but I feel like saying that Philly doesn’t have an affordability problem takes some of the pressure off city politicians to take a more activist pro-construction posture. The city’s affordable now, but we have to be active about maintaining that affordability as more people move in.