Balancing housing options
FEW DECISIONS facing the next governor will rival housing policy in their impact, but the importance of housing is surpassed only by its contentiousness. The problem is that four powerful constituencies, each representing a different set of values, face off in the debate over new construction. All four have laudable goals, albeit ones that conflict mightily. The new governor will need to find the way between them.
Homeowners form the largest interest group. For them, unaffordable housing is not a problem; it increases the value of their portfolio. Moreover, since any new development brings some inconvenience, most homeowners prefer new construction in any community but their own. Antigrowth homeowners get ideological cover from environmentalists who do not care if housing is cheap or expensive as long as new homes don't eliminate green space. They don't much like cars, either.
On the opposite side, affordable housing advocates, who represent the poorest, count their victories in the number of inexpensive units brought to market, especially those that are subsidized. These friends of affordability have made a strange alliance with the friends of growth, a group that includes employers, builders, and the occasional cranky economist. The growth crowd wants the state to be able to attract new workers without paying a fortune to compensate them for extravagantly expensive housing.
In the quest to satisfy all four groups, the next governor has four big options in housing policy . The time-honored path of doing nothing is always easy and will be particularly attractive if housing slumps. This path represents victory for the homeowners who now have the upper hand in all but the largest cities. This policy is not perfect for environmentalists, as towns on the suburban fringe will continue to develop former green space, and it is a disaster for friends of affordability and growth because doing nothing means fewer units and ensures that Greater Boston will be a small, pleasant enclave for the privileged few.
The second approach is to build subsidized housing, either directly with public funds or by requiring new builders to include affordable units in new projects. This approach divides the affordable housing advocates from the pro-growthers, who argue that requiring subsidized units is a tax on new construction. Like any tax, it will reduce production, they believe, and ultimately make housing less affordable for those who do not live in the subsidized units.
The third approach expands Chapter 40B, the state law that allows state officials to override local zoning for developments that include subsidized units. Giving the state more power to override local zoning for other reasons could guarantee significant new construction. Of course, this policy would generate even more intense opposition than the already disliked Chapter 40B. The new governor should expect the homeowners of Lexington and Concord to give him or her the same treatment that they gave to King George. Environmentalists will be similarly livid. Daryl Hannah might come east and bring her Californian penchant for protesting development by climbing trees.
The fourth approach ties state aid to local construction, and thereby both provides incentives for communities to allow more building and compensates residents for the inconvenience of new construction. This path was pioneered by Chapters 40R and 40S, recent state laws that give extra funding to communities that allow the construction of dense, mixed-income housing near transit nodes.
The incentive approach seems to balance the need for growth with respect for home rule . Chapters 40R and 40S are great first steps, but since their bonuses are modest, their impact will be modest as well. Communities will need much bigger incentives than these to see a real effect.
Just as important , 40R and 40S tie bonuses to a form of development that appeals particularly to environmentalists. Many friends of growth believe that these environmental restrictions ensure that the incentives will not be widely used.
Candidates who want to tie housing incentives to prodensity restrictions are friends of the environmentalists, not friends of growth. My own preference, as a cranky progrowth economist, is for a robust incentive program that rewards all new construction but provides extra bonuses for so-called ``smart growth."
In this campaign, the candidates have done too little to discuss the tradeoffs and their own plans. Voters must remember that you cannot favor affordable housing and oppose new development. Restricting supplies always brings higher prices. The candidates need to tell us whether they are for restrictions or for growth and affordability.
Edward Glaeser is the Glimp professor of economics at Harvard and is director of the university's Rappaport Institute for Greater Boston. 
