MIT Center for Real Estate
2023
Albert Saiz
The research paper titled "The Global Housing Affordability Crisis: Policy Options and Strategies," published by the MIT Center for Real Estate, addresses a pressing global issue: the rising housing prices that outpace income growth. This phenomenon is not just a statistic; it profoundly affects the well-being of individuals and communities, leading to increased social discontent. The paper emphasizes the urgent need for active governmental intervention at both municipal and national levels, arguing that passivity is no longer a viable option. The author, Albert Saiz, provides a detailed analysis of the trade-offs involved in various housing policy objectives. He advocates for transparency in policy goals and the acknowledgement of their inherent trade-offs. The paper suggests that given the long-term implications of real estate development, housing and land-use policies should strive for broad bipartisan support. Additionally, it highlights the importance of carefully targeting subsidies due to limited public resources and potential negative effects on the economy. Throughout the paper, Saiz outlines thirty significant economic strategies utilized in housing policies across the globe. He discusses the advantages and caveats of these strategies, illustrating their application through diverse global case studies. The findings underscore that successful housing programs must not only implement a mix of these strategies but also anticipate behavioral responses from various stakeholders, including individuals, firms, and governments. Ultimately, the paper calls for a professional and unideological approach to policy implementation to ensure effective outcomes in addressing the housing affordability crisis.
The Global Housing Affordability Crisis: Policy Options and Strategies
MIT Center for Real Estate Research Paper No. 23/01
55 Pages Posted: 29 Mar 2023
Albert Saiz
IZA Institute of Labor Economics; MIT Department of Urban Studies and Planning
Date Written: March 27, 2023
Abstract
Housing prices are rising faster than incomes in many areas of the world, reducing well-being and engendering social discontent. Passivity by municipal and national governments is no longer an option. In this essay, I will describe the tradeoffs between different housing policy objectives of governments and the public. I suggest that policy goals should be made explicit, and their tradeoffs acknowledged. Due to the durable impact of real estate development, housing and land-use policies should seek broad inter-partisan consensus. To avoid pernicious general equilibrium effects and because of limited public resources, subsidies ought to be carefully targeted. I will describe the thirty major economic strategies underpinning housing policies worldwide and discuss their main advantages and caveats. Effective housing programs must skillfully deploy a combination of these basic economic strategies, as I will illustrate through several global case studies. Programs should be carefully designed to anticipate behavioral responses from individuals, firms, governments, and markets. Unideological and professional implementation is critical for their success.