One of the dilemmas facing city planners across the country has been the loss of affordability as municipal workers such as police and fire can not afford to live in the cities they work for [Matrix].

Now there is a new dilemma. White collar professionals are being priced out too. In Santa Barbara, California, the city is grappling whether to build affordable housing [Boston Globe].

Though not just any housing development: The City Council is considering whether to use the property to build affordable housing, a condominium complex called Los Portales for families earning up to $160,000 a year.

Now, “it’s hard to get sympathy for people making $160,000 a year if you’re down in Texas or something,” said Bill Watkins, head of the Economic Forecast Project at the University of California, Santa Barbara. Any household with that kind of money is in the nosebleed section of American earners, and “most of the country would think, ‘You’re going to subsidize that person’s house? You’re kidding me.'”

However, the median sales price of housing there is $1,200,000. Cities like Santa Barbara are worried that they may not be able to attract white collar professionals since they can not afford to live there anymore.

This is one of the byproducts of the housing boom and revitalization of urban areas. Cities like New York have long been lamenting the loss of artists and craftsman who have been priced out of the city they help create. This could be the next worry.

3 Responses to “Affordable Housing For The Upper Middle Class”

  1. iceberg says:

    “This is one of the byproducts of the housing boom and revitalization of urban areas.”

    That dog won’t hunt.

    This is a direct product of people naively believing in the Central Planning Fairy.

    The main reason why middle class incomed people are being priced out of the cities is tri-fold:

    The primary problem is the irrational belief in the goodness of centrally planned zoning; that which dictates the density, dimensional proportion, usage type, etc. allowed. Of course planners are only human, so they cannot fully forsee all the long-ranging effects of their economic devestation and class-polarity housing policies.

    The act of zoning is the grand pretense that experts have the right and privilege to tell you what is good for you, Citizen Joe, as though Joe would not have common sense enough to not live in unlivable living conditions.

    It thus serves to stifle development of all kind, leaving unmet demand at all price levels, but most especially the middle and lower price ranges.

    Think about it, because it’s purely logical. If you restrict availablity of any given product, the price will rise as people will bid up prices. Those who cannot afford to bid higher must seek alternatives. Those alternatives include finding housing in less desired areas, and maybe even out of state.

    Essentially, zoning thus serves to raise the price of housing by restricting competition. When private organizations engage in this activity, it is known as cartelization and angrily condemned. But when pretensious city planners do it, they are met with celebration as anybody can attest about the shameful participation and agitation by groups such as ACORN or the GVHPS.

    Secondarily, the white collar workers are the direct victims of the price war, as they cannot bid away the same quality housing as the rich, and they must live in inferior housing, less choice neighborhoods, etc.

    But tertiary, and most insultingly, the white collar workers are the ones subsidizing the lower classes, who thru the mechanizations of the city and state, end up bidding away the housing with the middle classes’ money!

    So in the end, the white collar worker are the rat which gets chopped from both ends– the rich can afford the higher prices (and might even prefer the exclusivity the housing shortage provides), and the lower class uses the middle classes redistributed money to buy up the lower end product. It’s no wonder the middle class are “fleeing”, as they are not in any politicians grace to not be plundered.

    The definition of insanity is to continue to act in a manner which is detrimental to your well being, because only the insane repeat the same actions and expect different and better results each time around.

    Alternativly, we can pull our heads out of the sand and abandon these puerile fantasies of “smart”, managed growth, and leave it to the wisdom of the common individual to decide how tall is too tall, how dense is too dense, etc.

  2. iceberg says:


    I did not mean to be disrespectful to you, nor your professional job, and I apologize for my prior uppitiness.

    I still do think that you don’t have a grasp of fundamental economics, and that is what “gets my goat”, so-to-speak.

    I say this because you make economic arguements that fall short of grasping the causal factor within. For example, you state that the reason why the middle class is disappearing because their incomes are not rising as fast.

    I’m no formal student of logic, but I cannot fathom how you jump from recognizing a relatively lower wage increase rate as the primal, causal reason why the middle class are “fleeing” the city.

    Your argument suffers for a few reasons; a) it does not explain why an affordable housing stock does not truly exist in the first place b) why a differential in wage increase rates should have a more than marginal effect upon housing prices

    Take automobiles for example; does the wage increase differential have an effect upon supply of affordable cars?

    Of course, the fundemental difference between cars and land is that in the former case, “they aren’t making much more of it”. But in truth, we havent come close to not having enough land for humanity– and this is because of the arbitrary limitations that NYC and other “progressive” megapolis’s have in place. (I’d rather not get into normative discussion of why I’d prefer Houston to Brasilia.)

    The second unwarranted assumption you make is that “renovation and revitalization drive prices higher”.

    Sorry, but that not how prices work. Price is a function of demand, and which ultimately determines what your costs will be (for the moment leaving out cases of quickly-adjusting entrepreneurial error).

    So if urban renovation is to occur, it is because the price has already moved up, and some entrepreneur has spotted the opportunity to take advantage of that differential between old valuations and the newer higher one, while of course he is at risk at misjudging the situation.

    I know its more complex than this, and I do have a lot more to say on this subject, but I only wanted to bring out the point that while you are probably the one of the best out there in assessing the general price level of real estate properties, your grasp of what drives those fundamentals seems lacking, and can’t be explained further than giving a correlations of historical trends.

  3. Jonathan J. Miller says:

    Lettuce – no offense taken. Thanks for taking the time to share your logic. I still think you are over assuming a lot. I deal with pricing first hand and still am not clear on what you are really saying. For example, urban revitalization does not occur after prices have risen. They occur as prices seem to have the potential or have just begun to rise. Property owners sell a rental building to the new owners who see the upside, they renovate and attract new tenants or property owners. Case in point, Peter Cooper/Stuy Town. Its being marketed not for what it currently is, but what it can be and many tenants are worried. Like yo say, price is a function of demand. The buyers see the highest and best use potential of a building and pay the price, not on its current use, but on its potential use. That means that the building or the neighborhood is below the current potential as compared to neighboring buildings or areas. You suggest that the price has already moved up. Certainly thats true but to what degree? In fact, you are saying the same things I am, but perhaps in a different way or are assuming way too much.