in other words, a barista in San Francisco is
likely to have more future opportunities
than one in an underperforming economy. 5
Prices can be further pushed up by zoning
and other building restrictions when they
artificially keep supply from reaching
equilibrium with demand. (e.g.,
Washington, DC’s building height
restriction which prohibits any buildings
taller than the US Capitol as well as other
restrictions on height). While it may be
argued that this regulation has merit for
any number of reasons, from an economics
standpoint it limits supply thereby
increasing prices for the housing units that
do exist. Minimum lot sizes and restrictions
on multifamily housing, duplexes, and
accessory dwelling units (e.g., an
apartment above a garage) have the same
effect of restricting supply. 6
Demand: From a demand perspective, a
home-seeker’s poor credit and/or the
inability to consolidate enough capital to
make a down payment on a mortgage or a
security deposit on an apartment can be a
barrier entering the market. Further,
demand among those of greater means
can result in reduced supply of affordable
units and higher prices, diminishing the
ability of those of lesser means to
participate in the housing market at a
price that would represent an optimal
outcome for them. This reality may result
in home-seekers being forced into tradeoffs related to housing quality, location,
school quality, neighborhood safety,
commute times, proximity to amenities,
and other considerations.
Drivers of Subsidized Housing
The drivers of subsidized housing are
mostly political in nature. As a policy tool,
the US Congress decides funding levels for
these subsidies, which are then distributed
to states and local governments through an
established formula. The amount available
for subsidies is driven by national politics
and national macro-economic issues.
At the state and local level, these resources
are administered and distributed by
departments within these governmental
entities and can be used to serve many
purposes. Generally, these resources must
be used to support a low- or moderateincome areas, low- and moderate-income
individuals, or places that have formally
been designated as blighted. The HOME
program must be used to support lowincome housing, but it may serve several
ends. In a rapidly-accelerating
neighborhood market, it may preserve
affordability; whereas in a market with little
activity, it may seek to ignite the market. In
declining neighborhoods, it may be used to
help stabilize the area.
5
See Enrico Moretti, The New Geography of Jobs (published 2012)
6
See Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Healthier, and Happier by Edward
Glaeser (2011)
10