Why The Rent Is So Ridiculously High

I live in Washington state, specifically in the People’s Republic of Seattle area. In case you aren’t familiar, the rent is ridiculously high. By “high,” if you’re wondering, I mean you’re paying around $1,000 for a studio apartment. The housing market is incredible, with the average home around $500,000.

Incidentally, not only has the area experienced a massive population boom, but the traffic has gotten to the point where the interstates are referred to as parking lots.

There’s a reason for why this is happening. In 1990, the state legislature passed the Growth Management Act, ostensibly to prevent urban sprawl. It requires the counties to set up urban and rural boundaries. The urban areas are allowed to build 4-8 units per acre, while the rural areas can build 1-2.

Cities are actually required to meet certain job, population, and housing quotas.

Furthermore, cities can also have requirements on top of that, such as necessitating that developers dedicate 10 percent of their residential space to affordable housing, or require they take Section 8 vouchers.

The Cato Institute explains why this form of state intervention and meddling is such a disaster because they artificially raise the demand in a certain area while cutting off the supply that would otherwise be available to alleviate and lower the price.

First, urban-growth boundaries and other land-use regulations in most of these regions have limited the amount of land available for new housing. Urban planners say these regulations are needed to control the externalities caused by urban sprawl. However, as New Zealand’s Deputy Prime Minister recently noted in a speech about a similar housing crisis in Auckland, urban planning itself “has become the externality” that is making housing the most expensive.

Although these problems are obvious to anyone who understands the rudiments of supply and demand, they are almost completely ignored by politicians, housing officials, and low-income housing advocates. Instead, the almost exclusive focus is on building government-subsidized (or, in the case of inclusionary zoning, developer-subsidized) housing. Yet this does nothing to solve the problem for the vast majority of homebuyers and renters (bold emphasis added).

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