Residents and local officials in cities around the country are concerned about housing affordability. One such city is Miami, where even upper-middle class people are feeling squeezed by high housing prices. Two big factors affecting housing prices in Miami and other expensive areas like Southern California are strong demand and land-use restrictions that make it difficult to build new housing. One recent report by two apartment trade associations concludes that Miami is the 4th toughest U.S. city in which to build new apartments, in part due to its land regulations.
Cities also add additional mandates that increase construction costs, such as South Miami’s new ordinance that requires solar panels on all new residential construction. South Miami’s mayor, Philip Stoddard, is a fan of the ordinance and lauds its environmental benefits. But while it may reduce carbon emissions, it also makes housing more expensive.
According to energysage, the average cost of a solar panel system in Miami is about $16,000 before any government subsidies, a significant expense and just over 5% of the average construction cost of a single family home in the United States, according to the National Association of Homebuilders.
Affordable housing starts with affordable construction. Every municipal building mandate that prioritizes some other goal—e.g. the environment—over lower costs pushes adequate housing further out of reach for many lower-income people. Cities don’t need to abandon building codes that mandate a basic level of quality, but they should consider the affordability tradeoff that accompanies mandating some other goal not related to shelter or safety—no matter how worthwhile that goal may be.
Supporters of the solar panel ordinance also note that using solar power generates energy savings in the long run. But it can take approximately 11 years to recoup the upfront costs, and for some this might not be a worthwhile tradeoff.
A similar argument applies to appliance efficiency standards. Like solar panels, appliance efficiency standards designed to help the environment promise lower long-run operating costs for a higher upfront price: For example, pay $42 more for an air conditioner in order to save $7 over ten years.
For the environment’s sake, municipalities could mandate that all apartment units be outfitted with the newest and most efficient appliances rather than the older models typically found in many lower-priced apartments. Luckily, I’m not aware of a city that has done this, but as a policy it’s similar to South Miami’s solar panel mandate and would also make apartments more expensive.
More building is the solution for the affordable housing problem, but the building needs to be done in a cost-effective way to ensure that the final product is actually affordable. This means cities should allow housing of various types and quality, both with and without solar panels. Micro units, trailer parks, tenement-style housing and accessory dwelling units are all viable options for people looking for affordable shelter, even if they don’t meet some idealized image of what a home should be.
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