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09/24/2009

Housing Supply Discussion Crucial


Column by Del Gallo in September 24, 2009  Pittsfield Gazette.  "In a free market, the only thing that affects price is the ratio of supply to demand. (Demand being defined as willingness to consume coupled with purchasing power.) Less supply necessarily means higher prices, which means less affordable housing. And less supply is what was being advocated. " 

 

Category: Essays
Posted by: admin

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Rinaldo Del Gallo, III

You think it would be a truism that Pittsfield needs more affordable housing. You would also think that advocating for affordable housing would be one of those campaign season terms thrown out with abandon to win voters longing for change, but showing so little life after Election Day.


For the courage to argue otherwise, I have to give a thumbs up for the honesty of GLC Developmental Resource/Dietz & Company Architects for a fact sheet and presentation they gave in the Pittsfield City Council chambers this past Wednesday regarding the Westside and Morningside neighborhood. The presentation was under the auspices of the mayor's Office of Community Development.


During an election season, these consultants had the bravery to argue that there was an "oversupply" of housing in Pittsfield, especially in the Westside and Morningside neighborhoods (Pittsfield's poorest sections). My mouth dropping, during the question and answer section, I asked if they had misspoken; they had not. After the meeting was over, I asked once again-they had not misspoke and advocated decreasing the supply of housing.


In a free market, the only thing that affects price is the ratio of supply to demand. (Demand being defined as willingness to consume coupled with purchasing power.) Less supply necessarily means higher prices, which means less affordable housing. And less supply is what was being advocated.

The consultant's case for reducing the supply of housing (which ineluctably increases the cost of housing) went something like this: Pittsfield has lost 25% of its population since its peak of 58,000 in the 1960's and 1970's. Since there were no renters, the places went derelict and are now eyesores.


There is a lot wrong with this reasoning. First, Pittsfield has many undocumented immigrants and other undocumented community members (that were not here 30 years ago) that consume housing (adding to demand) but are not reflected in census figures. I believe that the pressure caused by second home owners (who do not indicate Pittsfield as their primary residence during the census), and by the new immigrant community and section 8 voucher holders transplanted from elsewhere in eastern Massachusetts have driven up housing demand, causing prices to escalate. This phenomenon is not well reflected in census figures, since many of these people do not participate in the census or list somewhere else as their residence.


More importantly, we have gone from the third wealthiest municipality in Massachusetts to the third poorest in the past thirty years; people are in desperate need of affordable housing for survival. Whatever price relief that has been caused by population loss, the loss of family income far outstrips gains in affordability due to population loss. This affects the local economy because so much is spent on housing, little is left for local businesses.


Poor people also have a hard time renting because frankly, when they do not pay rent, it is almost impossible to evict them in Housing Court. In turn, landlords do not want to rent to this sector of the population on the margins; this is a test case of liberal compassion in the long run hurting the very people they claim to be helping; landlords will not take a chance on those at or below the poverty line since our eviction laws have artificially greatly increased the cost of tenant failure.


We try to kid ourselves by comparing ourselves to Boston or New York or other big cities when measuring the affordability of housing. But if you compare our cost of housing to the rust-belt cities such as Erie, Pennsylvania, our housing is far less affordable. Not only does this present a humanitarian concern, it presents a serious economic development problem in corporate recruitment. According to corporate surveys, affordable quality housing is a concern far more important than cultural amenities. One's quality of housing is much more directly linked to one's quality of life than cultural amenities such as theaters and ballparks, yet Pittsfield focuses much more on the latter.


During the introductory remarks, the mayor spoke of "opening a conversation." Let us have that conversation. Let us consider increasing the supply of housing in Pittsfield, so that house prices go down, and housing is more affordable. Almost everyone I have spoken to regarding this matter has indicated to me that the price of housing in Pittsfield is overwhelming to them.


And when housing is in great supply there is less need of code enforcement, which was all the buzz at the presentation. The market naturally takes care of substandard units. If you try to rent a dump when there is a glut of rental housing, well, you better be giving it away for almost nothing or you won't be renting it.



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