Housing Crisis Solution Will Require “A Bit of Both Sides”

Author and New York Times journalist Conor Dougherty joined the UCLA Anderson Forecast June 2020 Economic Outlook to discuss his new book Golden Gates: Fighting for Housing in America and the ongoing housing affordability crisis. Before the pandemic hit, housing affordability was a critical issue plaguing Americans—and it hasn’t gone away. In fact, in many ways, the pandemic will amplify housing shortages and unaffordability.

In his conversation with UCLA economist Edward Leamer, Dougherty posited that cities have become so expensive, service and lower income workers can no longer live near job centers. “We do not have a housing market that reflects the ability of lower income people to afford what their wages will buy,” he said. “We have this massive inversion where we look like European cities with rich neighborhoods in the core central to jobs and lower income people pushed to the fringe where they have to endure mammoth commutes.”

The solution to the crisis is going to have to be multifaceted, and really require a framework model with concepts from both sides of the argument: the private and the public. “This is going to require a little bit of both sides,” said Dougherty. “You need to build a lot more housing and a market mechanism and profit motive is going to be part of that. You also need a really robust policy response with higher taxes and some sort of direct subsidy for people that have been left out of the economy or at least been made to exist with very little chance for mobility.”

In addition, Dougherty made a case for some form of rent control, although he acknowledged the potential for negative impacts. “I became much more sympathetic for rent control, and I think that it is a policy area that is worth of investigation,” he said. “I think it is a dial, and you can fine-tune it. I certainly believe that if you get into really hard price controls, you will retard the market in a way that will leave everyone worse off. I also believe that between the tax code and a million other things, we subsidize real estate development in a way that is astonishing.”

He also thought revisiting public housing had the potential to have a positive impact, noting that public housing has worked in other countries and has even worked in the United States in the past. “I am agnostic to who owns it and who operates it, but the government, which owns a lot of land, seems worthy of investigation,” said Dougherty. “I also think community land trusts and other entities that pull housing off of the market are a good idea. I also think that you have to build new market rate housing.”