SAVI Reports - Page 14

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