Asheville – At their last two public meetings, Chair Brownie Newman introduced to the Buncombe County Commissioners the recommendations of the Affordable Housing Subcommittee. In short, the plan is to “impact” 2,800-3,150 units of affordable housing by 2030. Impacts could include constructing stigma-free housing for persons earning between 30% and 120% of AMI, helping owners of dilapidated housing with deferred maintenance, housing the homeless, and increasing homeownership for BIPOC.
The program would come at a cost of $99 million, with the pace of spending banking on near-instantaneous turnaround times for design approval. The county was going to partner for $45 million and pay the rest through an annual budget allocation of $2.3 million, which is expected to grow; construction on county-owned land; ARPA expenditures, which are now at $8 million; and bonds, which would first have to pass a referendum.
Commissioners Jasmine Beach-Ferrara, Parker Sloan, and Amanda Edwards all used forms of the verb “excite” in their response. Terri Wells said the county needed strong education and outreach to sell the program, Sloan said Congress should expand its Low-Income Housing Tax Credit program, Al Whitesides said subsidized housing should be rent-controlled in perpetuity, and Edwards said vouchers were important for preventing stigma. Beach-Ferrara suggested the county pursue economies of scale for affordable housing, like it did contracting with a single employer for all 45 of its solar projects.
Nobody mentioned causality, let alone correlation, as they spoke about housing prices rising as the city and county have been pouring more into subsidies. In 2021, rentdata.com reported fair market rents in Buncombe County were higher than those of 96% of communities, but in 2022, that number had fallen to 93%. At $1,378 per month for a two-bedroom apartment, rents were up 7.74% year-over-year. It should be noted that these numbers average Asheville rents with more affordable rates in rural areas.
According to redfin.com, the median selling price for houses in Asheville was $406,000, up 15.1% year-over-year. In Black Mountain, the median selling price was $521,128, up 55.6%, compared to a national median of $389,520.
According to basic principles of economics, in a ceteris paribus argument, the subsidy should be causatively correlated to prices. One analogy would be a supermarket with a rewards program. The markdowns for members are expected to be offset by overall price hikes, as good citizens don’t launch businesses with the intention of going out of business. Similarly, the federal government will include welfare payouts in its statistics for area income, as it raises the spending power tide that lifts all ships.
Economics, however, deals with group trends. Unlike chemical formulations for clockwork molecules, economics models can’t nail down free agency. For example, laws are sometimes so horrible, they force people to find creative workarounds, such as turning to black markets or innovating unanticipated technologies. Economic data can, therefore, show strong, positive correlations between oppressive regulation and productivity. Therefore, while results of a study published in 2020 as “Housing subsidies and property prices: Evidence from England” concluded, “Property purchase prices in England fell in response to cuts in rental subsidies,” it qualified, “Governments commonly give rental subsidies to poor households, but it is not known whether or to what extent this distorts underlying property prices.”
As stated above, local rents are increasing, but rents in other areas are catching up. One obvious hypothesis would be that subsidies exert upward pressure on pricing in housing markets, as they do elsewhere, and that more jurisdictions are offering more in the way of subsidies.
Prices of materials can be blamed for increasing construction costs, but among conspicuous drivers of those costs are government power-plays such as tariffs, trade wars, and other restrictions to free trade. In addition, as has been stated ad nauseam, regulation comes with costs of compliance. This was recently highlighted when attributions for price overruns for the Buncombe County Sports Park included the City of Asheville’s stormwater and tree ordinances.
Regulations, almost by definition, put up hurdles along the path of least resistance. It is not uncommon for this to require more design, legal counsel, materials, equipment, and labor, extending timelines, usually in a context of rising costs. Back in the day, whenever regulations interfered with a Biltmore Farms development, CFO Paul Szurek would come before Asheville City Council to present an ameliorating ordinance for adoption just prior to project approval. It is doubtful that multimillionaire Szurek and whatever legal team drafted the ordinances were working for free.
Zoning is regulation writ large. So, affordable housing stock could be increased simply by letting up on rules that don’t promote health and safety. Neighborhoods agreeing to fancier digs can write their own homeowner association agreements.
Reasons stated above have been used to bash capitalism, under the assumption that electing a small group to force collections and distribute according to their tastes will promote healthier economies than free trade. Annual indices that compare economic freedom and prosperity, published by the Heritage Foundation among others, consistently speak against this.
Yet, elected officials and activists talk as if the dollars funding noblesse oblige are not first taken out of the economy through taxpayers. Little consideration is given to workers who live in rickety apartments, eat discount groceries, and do without medical care yet pay their taxes so the poor can enjoy healthy diets in new homes without stigma. The mindset provides a disincentive to work and an accompanying erosion of the private sector, in a vicious cycle.
An alternative, then, is to rely on federal funds, which are marketed by government as being free money; subtrahends, like opportunity costs, make for bad press. In actuality, though, the acceptance of federal funding for everyday housing, a far-stretch from the original intent of the General Welfare clause, is forcing people in Kansas to pay for Asheville’s misguided housing policies.
As government takes over housing markets, traditional, private-sector developers will be replaced. Numbers presented by the subcommittee assume people trying to earn a living, run a business, or even provide the finer things in life for their families, will not be content to build at a loss in the county. Government can change the regulations to fit its purposes, use its built-in admin, fast-track the development review process for its projects and siderail private-sector developers who don’t fork over enough “community benefits,” and it can procure financing at better rates than the private sector. So, why wouldn’t a developer make more money with less hassle in Greenville or even Hendersonville?