America’s supply of affordable housing is shrinking and a bevy of government regulations on residential construction only acerbates the homeless problem. As a result more people are now living “unsheltered” in tents along the freeway or beneath overpasses because they can’t afford to pay rent or a home mortgage.
The U.S. Department of Housing and Urban Development (HUD) reported on a single night in 2017, over a half million people were homeless in America. There were over 21,000 people homeless in Washington State last year.
In Seattle, HUD records show the unsheltered population grew by 44 percent over two years to nearly 5,500 and it is worsening.
For example, passage of California Proposition 47 in 2014 reduced jail sentences for nonviolent crimes, including shoplifting, theft of less than $950, and drug use.
“People who once would have been locked up, including those with drug addictions and mental-health problems, have been left to the streets. Many steal to feed their habits,” Wall Street Journal reporter Allysia Finley wrote.
“The King County homelessness crisis would cost an estimated $360 million to $410 million per year to address at current levels,” the Puget Sound Business Journal reported earlier this month. The Seattle City Council is considering a per-employee tax on 585 of the largest employers in the city to raise an estimated $75 million per year for housing and homeless services.
Rather than imposing a tax which threatens jobs, elected officials must find ways to stop skyrocketing rents which have made it harder for low-income people to find affordable quarters.
“Because of regulatory restrictions on development, the demand for housing hugely exceeds the supply. The stock of public and rent-controlled housing is especially limited,” the Wall Street Journal reported.
Nationwide, regulations imposed by all levels of government account for nearly 25 percent of the sales price of a new single-family home, according to a 2016 study by the National Association of Home Builders. It found that regulatory costs in an average home built for sale went from $65,224 to $84,671 between 2011 and 2016.
Regulatory costs impact rentals as well particularly in West Coast cities. RentJungle.com reports a two bedroom apartment in Seattle rents for $2,700 a month on average compared with $1,450 in Pittsburgh, PA. Rent in Austin, TX, is 20 percent lower and consumer prices are 30 percent below Seattle. (Both cities are attempting to lure Amazon’s HQ2).
Elected officials and regulators need to look at the cumulative impact of all regulations and consider the impact on affordable housing with each new mandate.
For example, in California, the state Energy Commission’s decision mandating solar panels be installed on all new homes which will add $8,000 to $12,000 to the cost.
“California’s astronomical housing costs are a result of these government mandates, zoning restrictions, and permitting fees. The state Legislative Analyst Office estimates that it costs between $50,000 to $75,000 more to build a home in California than in the rest of the country. Building a low-income housing unit costs about $332,000,” WSJ reports.
One of the big problems is people cannot afford all of the added compliance costs built into the price of a home or apartment rent.
Last November, Seattle Times Reporter Mike Rosenberg wrote that “households now need a record $93,400 annual income to afford monthly payments on the median home ($478,500) home in the Seattle metro area.” That figure is up from about $82,000 in 2016.
The bottom line is wages are not keeping pace with the costs of housing. Unless elected officials look deeply in the root causes of housing affordability, the homeless problem will only grow.
Don C. Brunell is a business analyst, writer and columnist. He recently retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.