Gov. Greg Gianforte, likely due to immense constituent pressure, has launched a housing affordability task force. A “task force” is nice political speak, but those in the housing industry know state government has very little influence on housing affordability. The State cannot control inflation. The State cannot reduce Canadian lumber tariffs. The State cannot alter local zoning regulations to allow for greater densities and reduce the regulatory costs of construction. What can the State do? Set up a revolving loan fund for housing construction and implement (more) housing subsidies. Neither option will affect the lack of affordable housing and are more apt to worsen the problem.
Government involvement in the housing sector of our economy is rarely helpful. Typically, when government intervenes, things get worse. When the government issues subsidies or vouchers, the price of housing increases. Landlords base rent on the amount consumers can afford; when consumers are provided with a subsidy, landlords raise the rent for the non-subsidized renters because vouchers set a new floor of “affordability.” For example, I had a homeless vet that presented a voucher for $200 over what I was asking for rent. He could not obtain the housing unless he utilized the full voucher, forcing me to raise the rent. I didn’t want to increase the rent; truth be told, the unit wasn’t worth the value of the voucher. But due to government-imposed requirements, the vet would remain homeless if the rent didn’t meet the voucher amount. So I threw all utilities into the rental rate to get to the voucher amount. Other landlords might have simply reset the base rent and taken the windfall. Despite its desire to support housing veterans, the government was artificially raising the base rent for units like mine. This has a cascading effect on all rented units in the valley.
Likewise, a revolving loan fund will not cause developers to lower their profit margin. Housing development is a risky endeavor even in the best of conditions. Making a profit on every venture is the goal, as developers know that the profit they make on one development could be consumed by the next development. In Missoula, a housing development built via government tax credits less than 30 years ago is falling apart and needs $9 million in repairs because the developer used the “leg up” given by the government to build a housing development that barely outlasted the tax credit subsidy. Government subsidies to developers don’t contain greed, rather, they allow greed to proliferate.
Government task forces sound nice and give the illusion of a caring state government. Despite laudable goals, more state government is the last thing the housing sector needs.
Tammi Fisher is an attorney, former mayor of Kalispell and host of the Montana Values Podcast.