Marxist Is the Way to Describe Hochul’s Approach to Housing

In a state struggling with crime and losing population, it was not obvious for Governor Hochul to make housing policy the top priority in her State of the State address. So it goes, though, in New York, where decades of market-distorting policies such as rent controls have led to a perennial “crisis” in housing costs.

The governor, in her speech Tuesday, does get one thing right. The best approach to meeting demand for lower-cost housing is more supply. She has actually noticed that the Empire State has built far fewer new homes than even neighboring New Jersey, not to mention Florida. She acknowledges that it already has more public and subsidized housing than any other state.

Thus the idea of pushing local municipalities to permit new construction, by relaxing zoning barriers (such as large-lot, single-family districts), has merit. Unfortunately, though, on the big question, Mrs. Hochul opts for what amounts to a central planning approach and a declaration of war on localities. 

For no obvious reason, the governor sets a goal of 800,000 new housing units over 10 years — and proposes percentage targets for each locality (three percent Downstate, one percent Upstate). This may be how housing policy is understood at Beijing or in the Kremlin but here in the land of liberty and markets, it must be viewed as arbitrary at best. 

Not every community is as attractive to newcomers as another. Builders are the best judges of demand, not politicians. Better to persuade local officials — perhaps through financial incentives (state local aid) or even model zoning ordinances they might adopt (think two-family districts rather than single-family only) — rather than to push a one-size-fits all.

Ms. Hochul’s “Housing Compact” gets worse, however. Proposed projects that meet “key criteria” — “including a minimum number of homes and a minimum affordability requirement” — “must be approved even if existing zoning restrictions do not allow it.” Advocates for YIMBY, shorthand for “yes in my backyard,” will cheer but this will lead to political backlash. 

Note the fine print about affordability. This is a stealth, low-income proposal to spread yet more price-restricted housing state wide, in a state which already has too much. Don’t expect middle-class communities, not to mention the Hamptons, to cheer.

There is one nod to markets in the Hochul housing plan, though. It acknowledges that some communities might fail to meet their state goal for the simple reason that no one wants to move there. 

Of course, that’s a symptom of the state’s much larger problem:  its economic malaise and population flight.

Build it and they will come is not a policy that will mitigate a regime of high taxes and uncontrolled spending on social services such as Medicaid. Nor will such ideas as an indexed minimum wage (part of Governor Hochul’s agenda) do much for business and employment growth.

The Hochul Housing Compact is at least more closely linked to market realities than demands by New York City Council members that new apartment complexes be “100 percent affordable.” It would be far better, however, were the Governor to move to un-distort existing housing policy.

Such a demarche could focus on New York City’s million-unit rent stabilization program, which rewards the affluent and discourages turnover. So, too, would it make sense to reform the city’s property tax system so as to stop punishing new development. That would be better than setting a headline goal.