[quote=EconProf]This program is a wonderful example of what happens when the local government interferes with the natural outcomes of the free market. In this case, five out of ninety buyers get a 20% break on the purchase price. The initial impact is a slightly higher price for the other 85, since the developer has to spread the discount among the other buyers.
That should only amount to a $5000 bump to their price. But with the “cloud over the title” that has been described, the hit to future values upon resale is unknown, and could be much more. Knowlegeable buyers will steer clear, thus hurting prices and costing the developer an unknown amount.
So the government manages to cost the vast majority of buyers much more than the subsidy to the lucky few poor families who get to buy, who, by the way benefit little in terms of future appreciation. The developer is forced to do this in order to get permission to build to satisfy local housing activists (and I believe to get higher densities), and politicians get to claim they are doing something to lower housing costs. And the few buyers that are helped are a tiny fraction of the needy population. Net net society as a whole loses far more than it gains.
We could lower housing costs far more efficiently by removing silly barriers to growth that local governments erect.[/quote]
Amazing.
You frame your arguments with sufficient partisan vitriol that I need to re-think my positions every time you agree with me.
I am also glad that you agree.
