MIT Center for Real Estate
2023
Albert Saiz
The paper titled "The Global Housing Affordability Crisis: Policy Options and Strategies" by Albert Saiz discusses the escalating issue of housing prices outpacing income growth, leading to decreased well-being and increased social unrest. It emphasizes the urgent need for proactive government intervention at both municipal and national levels. The author argues for clear articulation of housing policy objectives and acknowledgment of the tradeoffs involved. Saiz identifies thirty significant economic strategies that inform global housing policies, highlighting their advantages and limitations. He advocates for carefully targeted subsidies to mitigate adverse economic impacts, given the constraints of public resources. Through various international case studies, the paper illustrates the importance of anticipating behavioral responses from stakeholders to ensure effective program design. It concludes that successful implementation requires an unideological and professional approach to navigate the complexities of housing policy.
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.