The New York Observer’s Stephen Smith describes New York city’s efforts to subsidize housing for middle-income households before turning to the root cause of the affordability problem:
The city has cemented neighborhoods as they were in 1961, when the modern zoning code was adopted, with only pockets of growth allowed—in Downtown Brooklyn, Long Island City and the Far West Side today, for example.
“New York has made it so difficult to build that you forget what free and easy supply really does,” said Harvard economics professor Ed Glaeser, who co-authored a study a decade ago that found that half of the cost of housing in Manhattan could be blamed on artificial supply constraints. “Chicago remains a vastly more affordable city because Mayor Daley unleashed the cranes on Lake Michigan”—a reference to the Windy City’s far more lenient land-use regulations and commensurate low rents.
When it comes to New York City housing policy, said Mr. Glaeser, “there’s been a funny combination, from an economic point of view, of on one level making it difficult to build housing supply, and then trying to make up for it on a smaller scale by giving a privileged few access to housing.” In other words, those lucky enough to win the housing lottery like the couple at Elliott-Chelsea, who said they’d been applying for 15 years before they won a spot.
One barrier to reform is that the city’s real estate incumbents profit from building restrictions that limit the ability of new entrants to develop new housing units, and so they have relatively weak incentives to fight them. Voters with an intense desire to limit development, meanwhile, outgun voters who are either indifferent or who have a weak preference for development that might foster job creation and reduce housing costs. David Schleicher has written extensively on institutional reforms that might mitigate this anti-development bias, and Matt Yglesias argues that New York city could stand to learn a thing or two from Texas.