Better Cities Project
  • Home
  • About Us
    Our Vision
    BCP’s vision is that free-market municipal policy solutions are broadly available, widely acceptable, and regularly employed, enabling American cities to achieve their full potential as engines of economic prosperity. We reject the idea that cities are lost to free-market principles or policies.
    Our Mission
    BCP uncovers ideas that work, promotes realistic solutions, and forges partnerships that help people in America’s largest cities live free and happy lives.
    Learn More
    • About Better Cities Project
    • Our Focus Areas
    • Our Team
    • Collaboration and Careers -- Work With BCP
  • Research and Projects
  • Latest Insights
  • Videos
  • Contact
    Our Vision

    Address

    304 S. Jones Blvd #2826
    Las Vegas NV 89107

    Phone

    ‪(702) 546-8736‬

    Hours

    Monday through Friday, 8 a.m. - 5 p.m.

    Email

    info@better-cities.org

    Email Us

    No Result
    View All Result
    Better Cities Project
    • Home
    • About Us
      Our Vision
      BCP’s vision is that free-market municipal policy solutions are broadly available, widely acceptable, and regularly employed, enabling American cities to achieve their full potential as engines of economic prosperity. We reject the idea that cities are lost to free-market principles or policies.
      Our Mission
      BCP uncovers ideas that work, promotes realistic solutions, and forges partnerships that help people in America’s largest cities live free and happy lives.
      Learn More
      • About Better Cities Project
      • Our Focus Areas
      • Our Team
      • Collaboration and Careers -- Work With BCP
    • Research and Projects
    • Latest Insights
    • Videos
    • Contact
      Our Vision

      Address

      304 S. Jones Blvd #2826
      Las Vegas NV 89107

      Phone

      ‪(702) 546-8736‬

      Hours

      Monday through Friday, 8 a.m. - 5 p.m.

      Email

      info@better-cities.org

      Email Us

      No Result
      View All Result
      Better Cities Project
      No Result
      View All Result
      Home Community, Growth and Housing

      Can Charleston, SC, housing prices level out?

      The city looks to make housing more affordable by removing price controls

      byPatrick Carroll
      May 4, 2022
      in Community, Growth and Housing
      Reading Time: 4 mins read
      A A
      Can Charleston, SC, housing prices level out?
      Share on FacebookShare on TwitterLinkedInEmail

      The City of Charleston is considering new legislation that would deregulate accessory dwelling units in hopes of increasing the supply of affordable housing in the city. Also known as carriage houses or mother-in-law suites, accessory dwelling units are small structures that are built in the backyards of homes, and they can be a great source of affordable housing for those in need.

      The initiative, which was proposed by Councilmember Ross Appel two weeks ago, would remove red tape that is currently presenting a significant barrier for building this kind of housing. The ironic part is that the regulation which is primarily to blame for stopping the creation of these units was passed specifically to make these units more accessible.

      “The city is looking at taking away a rule that requires these buildings to be affordable for 30 years,” WCSC reports, “which, Appel says, has been an obstacle for developers and homeowners.”

      RelatedInsights

      Will California Pass Bill Easing Zoning Laws for Church-sponsored Housing Projects?

      Book Review: “Arbitrary Lines” by Nolan Gray

      Book Review: “The Municipal Financial Crisis” by Mark Moses

      Institute for Justice: Meridian Woman Fights City’s Ban on Living in Tiny Homes on Wheels

      “We don’t want people to be artificially limited in terms of what they can charge,” Appel said. “The affordability requirement was a good-intended measure, but actually, that’s been currently in effect for the past year and a half, and we haven’t had a single accessory dwelling unit permitted since that time.”

      Put simply, the affordability requirement backfired big time. Its goal was to make new accessory dwelling units more affordable, but by restricting the price people could charge it actually made them so unprofitable that people just stopped building them altogether. For all practical purposes, new accessory dwelling units might as well have been banned.

      The implications are not hard to tease out. With no new accessory dwelling units to live in, people have been forced to bid up other kinds of housing, which has no doubt contributed to soaring housing prices. This is why Appel is eager to repeal this rule. He knows that building more supply is the key to bringing prices down, and he knows that regulations like this have been getting in the way of that process.

      There’s a maxim in economics that this story highlights: the solution to high prices is high prices. The reasoning goes as follows. When a good like housing becomes scarce, prices naturally rise. But as prices rise, producers see an opportunity for profit and begin expanding the supply. Then, as additional supply comes to market, prices begin to fall.

      But consider what happens if we disrupt this process. If we don’t allow prices to rise, if we insist that all new units have to be “affordable” according to some arbitrary standard, then there’s no incentive for developers to bring in new supply. This creates a shortage of accessory dwelling units, which leads to higher prices for other kinds of housing, many of which were already more expensive to begin with.

      If we don’t allow prices to rise, if we insist that all new units have to be “affordable” according to some arbitrary standard, then there’s no incentive for developers to bring in new supply.

      The point is, by forcing prices down below the market rate we actually hamper the solution. Rather than becoming affordable, new accessory dwelling units become nonexistent. And the housing that does exist becomes far less affordable because the supply of housing in general is being constrained. The result is that the poor don’t have as much access to affordable housing as they could have had.

      This phenomenon is hardly limited to housing, however. In his essay Middle-of-the-Road Policy Leads to Socialism, the economist Ludwig von Mises points out that shortages inevitably arise whenever price controls like this are put in place. “The government believes that the price of a definite commodity, e.g., milk, is too high,” he writes. “It wants to make it possible for the poor to give their children more milk. Thus it resorts to a price ceiling and fixes the price of milk at a lower rate than that prevailing on the free market.”

      The problem, Mises points out, is that producers are not willing to produce milk at this lower rate, because they can’t do so profitably. Thus, less milk is produced.

      “As no individual farmer or businessman can go on producing at a loss,” Mises continues, “these marginal producers stop producing and selling milk on the market. They will use their cows and their skill for other more profitable purposes. They will, for example, produce butter, cheese or meat. There will be less milk available for the consumers, not more.”

      The result is that the policy backfires. The very actions that were supposed to make the situation better actually make it worse. “The measure proves abortive from the very point of view of the government and the groups it was eager to favor,” Mises concludes. “It brings about a state of affairs, which—again from the point of view of the government—is even less desirable than the previous state of affairs which it was designed to improve.” In short, it hurts the people it was supposed to help.

      Applying this logic to the topic of housing, the economists Milton Friedman and George Stigler point out that policymakers are faced with a choice between roofs and ceilings. You can have more roofs (homes) or you can have price ceilings, but you can’t have both.

      Charleston’s affordability requirement was, in Appel’s words, “a good-intended measure.” But as Milton Friedman famously noted, “one of the great mistakes is to judge policies and programs by their intentions rather than their results.”

      The fact is, this policy has produced terrible results. Results that, quite frankly, should have been foreseen. So rather than continuing with this misguided measure, Charleston would be wise to learn from its mistakes and remove these affordability requirements that are contributing to their housing crisis.

      The good news is, if they do follow through with this, they may quickly become an example to other cities of how deregulation can help address the growing need for affordable housing.

      Source: FEE Stories
      Tags: GrowthHistory of CitiesHousing AffordabilityReal Estate
      Previous Post

      Will Americans return to urban living?

      Next Post

      The Bills’ new stadium is a bad deal for taxpayers

      Patrick Carroll

      Patrick Carroll

      Patrick Carroll has a degree in Chemical Engineering from the University of Waterloo and is an Editorial Fellow at the Foundation for Economic Education.

      Explore More

      • Economic Prosperity
      • Criminal Justice and Public Safety
      • Transportation and Infrastructure
      • Education
      • Energy and Environment
      • Community, Growth and Housing
      • Clean, Open and Fair Government

      Recent News

      Lawsuit: Jacksonville, FL

      Lawsuit: Jacksonville, FL

      December 22, 2022
      Will California Pass Bill Easing Zoning Laws for Church-sponsored Housing Projects?

      Will California Pass Bill Easing Zoning Laws for Church-sponsored Housing Projects?

      December 22, 2022
      Lawsuit: Humboldt County, California

      Lawsuit: Humboldt County, California

      October 6, 2022
      Book Review: “Arbitrary Lines” by Nolan Gray

      Book Review: “Arbitrary Lines” by Nolan Gray

      October 5, 2022
      Load More
      Facebook Twitter RSS
      Better Cities Project

      Better Cities Project helps people in America’s largest cities live free, happy lives. We uncover what works, promote solutions, and forge partnerships that turn ideas into results.



      © 2021 Better Cities Project

      Our Focus Areas

      • Economic Prosperity
      • Criminal Justice and Public Safety
      • Transportation and Infrastructure
      • Education
      • Energy and Environment
      • Community, Growth and Housing
      • Clean, Open and Fair Government

      The Fine Print

      • Privacy Policy
      • Terms and Conditions
      • Reports and Financials

      Recent News

      Lawsuit: Jacksonville, FL

      Lawsuit: Jacksonville, FL

      December 22, 2022
      Will California Pass Bill Easing Zoning Laws for Church-sponsored Housing Projects?

      Will California Pass Bill Easing Zoning Laws for Church-sponsored Housing Projects?

      December 22, 2022
      Lawsuit: Humboldt County, California

      Lawsuit: Humboldt County, California

      October 6, 2022
      No Result
      View All Result
      • Home
      • About Us
      • The Team
      • Work With Better Cities Project
      • Research and Projects
      • Latest Insights
      • Videos

      © 2022 Better Cities Project

      Welcome Back!

      Login to your account below

      Forgotten Password?

      Retrieve your password

      Please enter your username or email address to reset your password.

      Log In

      Add New Playlist

      Love Cities? So Do We.

      Get ahead of the curve -- learn about innovations, ideas and policies driving change in America's largest cities, with BCP in your inbox.



      You have Successfully Subscribed!