Does it Make Sense to Build “Affordable” Housing in Santa Monica?

Among the people I admire most in the urban research business is Marjorie Turner.  I was talking to her at a conference sometime within the last year, and she put a difficult question to me: shouldn’t housing policy allow everyone who wants to live in Bethesda, Maryland the opportunity to do so?  (Bethesda is among Washington, D.C.’s most affluent suburbs).

I have been pondering this question for some time, and it was thrown into relief for me when I witnessed a person bragging about building affordable housing units at $650,000 a pop in Santa Monica.  The presentation brought me around to the view that it is not society’s responsibility to assure that everyone gets to live anywhere they like, just as it is not society’s responsibility to buy everyone a Mercedes Benz (a night on the town every now and then might be something else).

Every household should have the opportunity to live in a clean, safe community with a decent school.  For this reason, expanding the Section 8 housing vouchers program, which allows low income households to rent market rate housing while paying no more than 30 percent of income, would make a lot of sense.  Given the fiscal realities of the moment, a sensible source for funding an expansion would be the Low Income Housing Tax Credit Program–a program that funds $650,000 properties in Santa Monica.

The median price of a house in Los Angeles County is around $275,000. The median neighborhood in LA County is a fine neighborhood.  So one could put someone in a decent house and a decent neighborhood and still have $375,000 left over relative to Santa Monica.  That $375k could go toward better schools, more transportation options–or more housing!

Do I wish everyone who wanted to live in Santa Monica could do so?  Sure.  I also wish everyone who wanted to take a vacation to Paris could take a vacation to Paris.  But when resources are scarce and getting scarcer, it is important to use them as effectively as possible.

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About Richard K. Green 103 Articles

Affiliation: University of Southern California

Richard K. Green, Ph.D., is the Director of the USC Lusk Center for Real Estate. He holds the Lusk Chair in Real Estate and is Professor in the School of Policy, Planning, and Development and the Marshall School of Business at the University of Southern California.

Prior to joining the USC faculty, Dr. Green spent four years as the Oliver T. Carr, Jr., Chair of Real Estate Finance at The George Washington University School of Business. He was Director of the Center for Washington Area Studies and the Center for Real Estate and Urban Studies at that institution. Dr. Green also taught real estate finance and economics courses for 12 years at the University of Wisconsin-Madison, where he was Wangard Faculty Scholar and Chair of Real Estate and Urban Land Economics. He also has been principal economist and director of financial strategy and policy analysis at Freddie Mac.

His research addresses housing markets, housing policy, tax policy, transportation, mortgage finance and urban growth. He is a member of two academic journal editorial boards, and a reviewer for several others.

His work is published in a number of journals including the American Economic Review, Journal of Economic Perspectives, Journal of Real Estate Finance and Economics, Journal of Urban Economics, Land Economics, Regional Science and Urban Economics, Real Estate Economics, Housing Policy Debate, Journal of Housing Economics, and Urban Studies.

His book with Stephen Malpezzi, A Primer on U.S. Housing Markets and Housing Policy, is used at universities throughout the country. His work has been cited or he has been quoted in the New York Times, The Wall Street Journal, The Washington Post, the Christian Science Monitor, the Los Angeles Times, Newsweek and the Economist, as well as other outlets.

Dr. Green earned his Ph.D. and M.S. in economics from the University of Wisconsin-Madison. He earned his A.B. in economics from Harvard University.

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