On affordable housing

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By The Staff

Several of the candidates at the council Q&A session talked about the need for affordable housing in Los Alamos, evincing what to me is a basic ignorance of economics.

The cost of housing is based on the cost of its economic inputs; that is, land, labor, materials and capital. The price of housing is established in an auction market between a willing buyer and a willing seller.

As the run-up and collapse of the recent housing bubble illustrate, the two are only loosely linked.

A developer analyzes the local market and attempts to find the right combination of land, labor, materials and capital to entice buyers to his product. He can reduce the land inputs by building higher density housing (trailer parks, apartments, town homes, duplexes and quads).

He can reduce the labor inputs by using mass-production techniques based on common designs (see Piñon Trails in White Rock), or factory assembly line processes for modular, Denver Steels, mobile homes, or pre-assembled panels (SIPS).

Material cost can be reduced by using cheaper materials or less of them by building smaller homes.

The cost of capital these days is low, so it is less of an impact unless the property doesn’t sell. The point is that there are a variety of choices to meet the demand for affordable housing, ranging from rent-sharing, to mobile homes, to apartments, to town homes, to single family detached housing.

Affordable housing advocates seem fixated on only one choice: the single family detached home with a mortgage, even though it may not be the right choice for someone early in their career, with limited financial means, or who intend to move on in the near future. It is this fixation on the “affordable mortgage for everyone” (even though they had no chance of paying it off) through Chris Dodd and Barney Frank’s Community Reinvestment Act that got us into the current financial mess in the first place.

If Los Alamos County, with its top-down, centrally managed, government-controlled mindset were to make building in the county more flexible, with less hair-splitting and intervention from the Community Obstruction Department, we would have more affordable housing.

If there is demand, it will be filled, but only if the country government permits it. It just may not be the taxpayer-subsidized single family detached home on a quarter acre that advocates demand.


David W. Thomson

White Rock