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My Opening Remarks for the Affordable Housing Forum
First of all, Iíd like to extend thanks to the HCA, the League of Women Voters, and everyone for taking the time to watch this forum. Special thanks go to Les Masterson for the patience to moderate us twice in one week.
Iím using these opening remarks to set the framework for the answers I will give later tonight. Please keep in mind that my comments are about what the government should can and should do. I applaud the HCA and its work. The role of private citizens and government differ. My answers tonight are at aimed at government action, not the HCA.
The cost of housing is set by the laws of supply and demand, not the laws of the commonwealth. When demand for a good exceeds the supply, then the price of the good goes up. The rising price signals suppliers that it is a good idea to supply more of the good. The rising price also signals buyers that they need to reconsider what they actually need.
Here in Arlington, weíve created a great community. We have good schools, good roads, nice people, and superb restaurants. Thousands of people would like to join us here: they represent housing demand.
Unfortunately, weíre already highly developed. There is a relatively small housing supply.
This high demand and small supply drives our housing cost.
When we talk tonight about different possible ways to make housing more affordable, I expect to keep referring to supply and demand.
Too many of our possible solutions ignore supply and demand. Consider the most basic option: the town buys houses and sells them below market price to needy families. This doesnít actually solve the problem: it just moves the problem around. Even worse, taxpayers end up paying for this twice.
We pay for it the first time in the loss on the houses; we bought higher than we sold. We didnít change demand; the same set of people who wanted a house before still want a house now. But, we did change the supply. We took houses off the market. The supply is smaller, and the price goes up. This is where we pay for it the second time: increased housing prices for everyone.
Remember, I also said that this plan didnít actually solve the problem. Consider the family that could just barely afford to buy before the town bought houses. The price just went up; that family is now out of luck. Our neediest families have homes, and our wealthy ones too, but the ones in the middle are still looking.
This example is obviously simplistic, but I think it makes the point. Instead of the town buying houses, we actually try several other gambits: tax breaks, tax hikes, corporate incentives, the options are endless. In general, these donít actually increase supply or decrease demand.
Itís hard to reduce demand. I do have one suggestion for reducing demand that Iíll get into later tonight (and no, Iím not going to suggest that we start a tire fire or store nuclear fuel rods).
The other side of the equation is increasing supply. I think this is where our discussion tonight should focus. We canít simply build high-rises. In Arlington, for us to add supply, we also have to increase density. Too often, affordable housing is viewed as an issue that stands by itself. The reality is that affordable housing is deeply intertwined with population density, zoning, schools, public safety, and other quality-of-life issues. I hope that tonightís forum will serve to explore these connections and possible compromises.
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