Show-Me Institute analysts have written often about housing in these pages. Missouri doesn’t face the same affordability crisis as coastal markets, but that doesn’t mean policymakers are powerless to further reduce costs.

A recent executive order from President Trump aims to lower housing costs by reducing federal regulatory barriers. The order directs federal agencies to review environmental rules, permitting processes, and other regulations that can delay projects or raise costs.

This isn’t a new insight. A 2016 report from the Obama administration warned that regulatory barriers—especially zoning and land-use restrictions—have made it harder for housing markets to respond to growing demand.

The Trump order addresses part of that problem. But the most consequential barriers to new housing are found at the municipal level. Zoning determines where housing can be built—and how much. Minimum lot sizes, parking mandates, height limits, and single-family zoning can sharply restrict supply. When zoning allows only a small number of homes on large parcels of land, the cost of each unit inevitably rises.

Federal action also played a role in shaping these systems. Throughout the twentieth century, federal housing programs promoted local zoning and land-use regulation as tools for stabilizing property values and guiding development. Those policies encouraged the spread of zoning frameworks that remain common today.

The administration’s order stops short of addressing local land-use restrictions directly. Addressing federal rules may help at the margins, but without local reforms, many communities will continue to limit the amount of housing that can be built.

Supporters of strict zoning sometimes argue that land-use decisions should remain entirely local. Local authority is important, but it does not eliminate the broader consequences of housing shortages, and it should not be used in a way that violates individual property rights. When cities restrict construction, as Kansas City did with rigid energy code standards, the effects ripple across regions through higher rents, longer commutes, and constrained labor markets.

If policymakers in Kansas City, St. Louis, or anywhere else want to make housing more affordable, they should start with the rules that determine whether housing can be built at all.

The post Trump Executive Order Targets Some Housing Regulation appeared first on Show-Me Institute.

In 2019, I argued that Kansas City’s debate over “luxury” apartments missed a basic point: housing markets are connected. When higher-income households move into new buildings, they leave something behind. Those vacancies matter. New research now makes that case with concrete evidence.

A recent piece in The Atlantic detailed the study. Researchers studied a 43-story condominium tower in Honolulu and tracked what economists call “vacancy chains”—who moved into the new units and who moved into the homes they left. The results were measurable and citywide.

The building’s 512 units generated at least 557 vacancies elsewhere. On average, residents moving into the tower left homes that were 38 percent cheaper per square foot. One step further down the chain, homes were 44 percent cheaper than the new condos. Each new market-rate unit created roughly 1.6 vacancies elsewhere in the city.

This research builds on earlier national work, which found that new market-rate construction prompts substantial movement out of below-median-income neighborhoods. As households move up, older units filter down. The process is gradual but observable.

Kansas City is not Honolulu. Our housing stock is less geographically constrained, and our prices are lower. But the economics of supply do not change by region. When we restrict new multifamily construction—through zoning caps, parking mandates, or prolonged approval processes—we constrain mobility.

Mobility allows households to adjust to new jobs, schools, and changing family needs. Nationally, residential mobility has fallen sharply over the past half-century. Culture plays a role, but so does housing availability. Fewer vacancies mean fewer options.

Kansas City faces a quieter risk: complacency. Because our prices have not reached coastal extremes, it is easy to assume supply is sufficient. Yet rents and home prices have risen faster than incomes in recent years. If we make it harder to build—luxury or otherwise—we should expect fewer vacancies and higher prices over time.

Certainly, luxury housing construction should not be subsidized. Much of the local controversy over “luxury” projects arises when developers seek public incentives. But housing construction at all levels is welcome. Today’s Class A building becomes tomorrow’s middle-income housing. Aging is built into the market.

The real question is not who benefits from the first occupant of a new building. It is who benefits over the next decade.

If Kansas City wants more affordable options tomorrow, it needs more housing—of all kinds—today.

The post Luxury Housing Still Helps Lower-Income Renters appeared first on Show-Me Institute.

On December 2, Jabal Companies and Calvary University filed a federal complaint alleging that the City of Belton discriminated in rejecting a proposed 252-unit affordable housing project on city-owned land. The plaintiffs argue that public opposition included racially coded language and that the city council’s decision violated the Fair Housing Act by relying on stereotypes about prospective tenants.

The project was modest in scale, encompassing just over eight acres near Westover Road and Bong Avenue, across from Calvary University and adjacent to a public golf course. Plans included a mix of one-, two-, and three-bedroom apartments, along with amenities such as a pool, playgrounds, and a community clubhouse. The site had remained undeveloped for decades.

Belton’s own community development staff had described the parcel as “an underutilized property not being used for its highest and best use.” The city was expected to contribute nearly seven acres, with Calvary selling an adjacent one-acre parcel. Jabal Companies had already secured low-income housing tax credits and begun engineering and design work.

Public opposition quickly emerged. During rezoning hearings, residents raised concerns about crime, school overcrowding, and declining property values—common themes in debates over subsidized housing. According to the lawsuit, many of these objections, and the council’s response to them, reflected coded language around race and socioeconomic status.

Whether the legal claims succeed remains uncertain. But from a policy standpoint, this case illustrates a broader challenge: what political scientist Francis Fukuyama termed a “vetocracy,” in which a small number of actors can block change, even when there is widespread recognition that change is necessary.

Across the country, similar dynamics play out in neighborhood meetings, zoning boards, and advisory councils. These forums are intended to enhance democratic participation. In practice, they often amplify the voices of politically engaged homeowners who oppose new housing near their properties.

In Belton, the developers spent months working with city officials and cleared several early procedural steps. Yet because no binding approvals had been secured, a single up-or-down vote by the city council effectively killed the project—despite prior staff support and what the plaintiffs contend was a complete and compliant application.

These decisions carry real consequences. Projects that are blocked or delayed leave more families searching for housing that doesn’t exist. Each additional layer of discretionary approval adds uncertainty and expense, discouraging developer investment.

The current system also distorts the market. Developers recognize that affordable housing proposals often face the most resistance and may instead pursue higher-end projects with fewer political risks—or leave the market altogether. Or, as is too often the case, developers seek public subsidies to offset the additional costs of delays and red tape. In contrast, cities such as Raleigh, North Carolina, which have restructured local review boards and relaxed zoning restrictions, have seen measurable increases in “missing middle” housing options such as duplexes and townhomes.

Community input remains essential, and many developers are willing to engage with residents. But Missouri’s approval process, which features duplicative reviews, ambiguous standards, and politicized hearings, is simply too burdensome.

The post Legal Challenge over Belton Housing Project Highlights Flawed Approval Process appeared first on Show-Me Institute.

That result should raise alarms—but not eyebrows. Set-aside requirements like this often function less as solutions and more as stumbling blocks. Rather than spur construction, Kansas City’s policy has become something to work around. Developers have leaned on other incentive-granting agencies or opted for minimal in-lieu payments instead. Meanwhile, regulation continues to inflate costs and suppress supply. As I’ve written before, regulation can be a root cause of unaffordability.

The KCBJ analysis looked at 114 development incentive applications since 2021. None resulted in affordable units under the set-aside rule. Many projects qualified for exemptions—using low-income housing tax credits (LIHTCs), being historic rehabs, or receiving incentives from agencies outside the city’s economic development corporation (EDCKC).

Examples:

• Of six qualifying EDCKC projects since August 2022, just one plans to meet the 20% set-aside (16 of 78 units at 60% MFI).
• Larger developments often went through the Port Authority of Kansas City (Port KC) or other entities, thereby sidestepping the requirement entirely.

The result is a policy with good intentions but poor results—and plenty of incentive for developers to seek workarounds.

Two themes stand out.

First: Incentives, not mandates, are doing the real work. Port KC has become the go-to agency for developers. Since mid-2023, it’s reviewed 17 housing proposals totaling over 5,000 units and $2.6 billion in investment. Because Port KC isn’t bound by the set-aside ordinance, many developers simply pay a lower in-lieu fee and move forward. A city spokesperson even admitted that some of these workarounds were done “at the request or with the blessing of city leaders.”

Second: Regulation continues to push costs up. Developers cited permitting delays, costly energy codes, and other burdens as key barriers. As one put it, requiring reduced rent on top of high costs is a “double negative.”

This tracks with previous findings: When regulation increases costs, it restricts the market’s ability to deliver lower-priced housing. If the goal is more affordability, then cities must lower the baseline costs—not just impose mandates.

The post Shocker! Kansas City’s Affordable Housing Set-Asides Nets Zero Housing Units appeared first on Show-Me Institute.

Researchers at the University of Denver found that parking mandates significantly limited multifamily housing. Removing them could increase housing output by about 12.5%—roughly 460 additional units per year in Denver. Each mandated space often adds tens of thousands of dollars in construction costs, inflating rents or home prices. Give developers flexibility, and more money goes into housing, not concrete.

The economics are straightforward. Requiring parking regardless of demand drives up costs, reduces flexibility, and wastes land. A one-size-fits-all rule—one space per unit, no matter the neighborhood—locks inefficiency into the system.

Missouri has already started down this road. St. Louis exempts its Central Business District from parking minimums, showing that alternatives work here too. Still, much of the state relies on rigid, outdated rules rooted in mid-20th-century, car-first planning. These no longer reflect how people live or commute.

What would change if Missouri relaxed parking mandates statewide? Development would get cheaper. Land would shift toward housing instead of empty lots. Supply would grow—and housing would also become more affordable. Cities would also reduce red tape, giving builders room to respond to actual demand.

Some concerns are valid: What about spillover parking? Transit deserts? Residents who rely on cars? Eliminating mandates isn’t a ban on parking—it simply lets developers decide. Local governments can still manage parking through pricing, permits, or optional caps, without locking in costly minimums.

Missouri cities should audit zoning codes, identify outdated requirements, and revise them accordingly, while monitoring neighborhood effects.

In St. Louis, Kansas City, and beyond, this change could be a cornerstone of affordable housing policy. It would cut regulatory burdens, shift spending toward housing, and allow the market to work.

Denver shows it can be done. Missouri should take the cue: Scrap parking minimums, unlock housing supply, and let developers meet real demand.

The post Missouri Should Scrap Parking Minimums to Reduce Housing Costs appeared first on Show-Me Institute.

The post Why America Can’t Build Enough Housing with Edward L. Glaeser appeared first on Show-Me Institute.

Soltas takes a close look at New York City’s 421-a tax incentive, a voluntary program meant to coax developers into adding affordable units to new construction. His conclusion? The marginal cost of delivering just one of those “affordable” units is about $1.6 million. Not per building—per unit.

To put that in perspective, housing vouchers or programs like the Low-Income Housing Tax Credit (LIHTC) can often serve a family for a fraction of that price. In fact, Soltas finds that the 421-a program is about six times more expensive than either LIHTC or Section 8 on a per-unit basis.

Supporters of these policies often say the premium is worth it because it moves low-income households into higher-income neighborhoods, opening up long-term opportunities. But even that goal comes with trade-offs. We can’t pretend money is infinite. When we choose to spend $1.6 million to house one family in a high-rent ZIP code, we are choosing not to house five or ten families elsewhere. Every dollar we overpay in one neighborhood is a dollar not spent reducing waitlists, repairing existing housing stock, or investing in other services.

The more we subsidize these costly outcomes, the more we distort the market—and not in subtle ways. Developers are rational. When inclusionary mandates make a project unprofitable, they don’t build. When they can get tax breaks for minimal public benefit, they take the deal. Soltas’s paper even shows that developer “windfalls” aren’t the biggest issue—it’s the simple fact that it costs far more to make units “affordable” in already expensive neighborhoods.

What this all points to is a deeper issue in housing policy: the unwillingness of lawmakers to prioritize. Inclusionary housing tries to solve everything at once—cost, segregation, opportunity—but ends up creating a system where we pay top dollar for minimal benefit. It’s the public policy equivalent of spending a fortune on a single winning lottery ticket while others go hungry.

We don’t have to take that path. There are more cost-effective ways to support housing affordability that don’t rely on distorting incentives or showering subsidies on high-income developments. Targeted vouchers, flexible zoning reforms, and letting supply meet demand are all better places to start.

Policymakers should stop asking, “How can we mandate more affordable housing?” and start asking, “What’s the most effective way to help the most people with the dollars we have?”

The post The Real Price of “Affordable Housing” appeared first on Show-Me Institute.

These are average values, of course, and not everyone can afford an average mortgage or rent payment. However, the United Way also ranks St. Louis second in the nation (tied with Pittsburgh and trailing only Cincinnati) for the highest number of affordable rental units (80) per 100 households.

It’s good to see St. Louis earn a high national ranking in something other than crime; nevertheless, 80 rental units for every 100 households that need a place to live still isn’t enough housing. So, what can St. Louis do to meet the remaining affordable housing demand?

First, local governments need to get out of the way and let the free market work its magic. My colleague Patrick Tuohey has highlighted the harm that misguided government intervention has done to housing markets in both St. Louis and Kansas City:

Kansas City’s adoption of the 2021 International Energy Conservation Code (IECC) stifled new home construction by inflating costs. Builders, facing steep regulatory burdens, simply stopped building. In St. Louis, a reliance on tax credits and incentives for flashy developments has left vast swaths of the city with vacant lots and dilapidated buildings. In both cities, the results are clear: policies that ignore basic market principles fail to deliver desired results.

Second, the demand for low-income housing can be met indirectly by constructing more expensive or luxury housing. More housing, whether low-income or luxury, is beneficial and will positively impact the availability of affordable housing. Even if the construction of luxury housing occurs when there is a greater demand for profitable low-income housing, the filtering effect will help address the need.

Andrew Cline of The Josiah Bartlett Center for Public Policy extrapolates on the positive effect of luxury housing construction, describing the filtering effects of new apartment development:

Building luxury or higher-end apartments draws higher-income renters out of yesterday’s luxury apartments and into the new luxury apartments. Increased vacancies in yesterday’s luxury apartments attract higher-income residents who’ve been living in mid-level apartments. As new construction creates more vacancies, rents come down. That effect filters throughout the housing supply, lowering rents all the way down. 

It is precisely because of this filtering effect that projects like the one in Town and Country are good news even for those looking for something in a lower price range. While a new luxury condominium development may seem irrelevant to someone seeking a more affordable place to live, it nevertheless represents an increase in supply and exerts downward pressure on housing prices.

The post For More Affordable Housing We Need More Housing, Period appeared first on Show-Me Institute.

Why Is This Proposition Being Brought to Voters?

This proposition is intended to address concerns about STRs affecting housing affordability. In fact, a St. Louis City alderman had this to say about Proposition S:

As we’ve seen a proliferation of short-term rentals, we’ve also seen rents and mortgage rates also climb as a result of that. . . . This [Prop S] is kind of a drop in the bucket to try and offset some of that.

Concerns about the effect of STRs on the housing market are not unreasonable, as some studies have indicated that STRs drive up housing costs by decreasing the supply of owner-occupied housing stock and long-term rental units. However, other studies have found that STRs bring increased tax revenue, supplemental income, residential renovation, business growth, and tourism to underdeveloped areas.

The City’s Previous Efforts on Short-Term Rentals

Last year, concerns with STRs arose following numerous horror stories of out-of-control parties. A slew of regulations (some reasonable and some harmful) were enacted through Board Bills 33 and 34, on which my colleague David Stokes and I testified.

Here is a list of the regulations added to STRs in the City of St. Louis last year:

• Annually, STR Agents must acquire an STR permit, with a $150 fee.
• Minimum stay of 2 nights.
• No STRs in a place benefited by tax-increment financing or tax abatements.
• In structures between 5 and 23 units, no more than 25% of units can be STRs.
• In structures with 24+ units, no more than 12.5% of units can be STRs.
• No single owner can receive a permit for more than 4 units.
• The owner must be a natural person.
• An STR Agent must be physically present at the address within one hour if required.
• Three-strikes rule for bad conduct within 24 months (suspension can last for one year).

Adding a new tax on top of the numerous regulations from Board Bills 33 and 34 is likely to make things more difficult for the STR industry, which could in turn make it harder for the city to bring in substantial tax revenue from STRs. Alleviating rising housing costs is a worthy goal, but is this approach the right solution? It also raises the question of whether STRs should be taxed more than hotels in the City of St. Louis. These are issues for voters to consider as they decide on Proposition S.

The post Short-Term Rental Regulation May Again Be Changing in The City of St. Louis appeared first on Show-Me Institute.

In 2022, Maryville University planned to redevelop the Woods Mill Center into a complex featuring an e-sports arena, among other amenities. While the plan faced substantial public backlash, it was recommended to the board of alderman by the Town and Country Planning and Zoning Commission. However, Maryville ultimately withdrew the proposal in 2023. The school was hesitant to spend any more money on a plan that it felt was likely to be denied by the board.

Earlier this year, McBride Homes submitted applications for rezoning and preliminary site development plan approval to redevelop Woods Mill Center into an 80-home development. Unlike the Maryville proposal, McBride’s “Woods Mill Crossing” received significant public support, especially after the plan was revised to have slightly fewer homes in response to public concerns. Nonetheless, Town and Country’s Planning and Zoning Commission failed to recommend approval of the rezoning and preliminary site development plan.

After discussion during multiple board of aldermen meetings, McBride withdrew its plan. According to reports, McBride wants to revise its plan to address some officials’ concerns and resubmit on July 19.

McBride’s biggest hurdle? Density. The St. Louis Post Dispatch reports that “the new neighborhood would have been the highest density residential development in the affluent west St. Louis County suburb.” Members of the Planning and Zoning Commission think increased density would hurt the character of the city. But should increasing density in Town and Country really be met with such consternation?

Increases in housing density are shown to have various positive impacts. Higher-density housing can make providing services more efficient and improve housing affordability. For example, while the median home price in Town and Country is around $1 million, the homes in the proposed development would be priced between $600,000 and $700,000. In addition, there are environmental benefits to higher-density housing including decreased automobile usage and, of course, less land usage. On top of that, the Woods Mill Crossing proposal is to redevelop already developed land, meaning there won’t necessarily be a loss of green space, as is often the concern with new developments (see another of McBride’s developments in St. Charles).

McBride’s proposal has the potential to make smart use of underutilized land, something that many residents want for the city of Town and Country. We will see if officials accept a revised proposal and the benefits of higher-density housing are realized in this community.

The post If at First You Don’t Succeed, Try, Try Again appeared first on Show-Me Institute.

The request to amend the zoning map was approved by the Planning and Zoning Commission in May. The request was submitted in order to accommodate the development of a new subdivision, the Highlands at Busch Wildlife. The bill is revised from an earlier proposal called Tall Tree. The Tall Tree zoning amendment request, which was denied by the Planning and Zoning Commission in June 2023, was a 556-lot proposal on about 355 acres. The new development is for only 120 lots, cutting down the number of homes in the development by over 75% while reducing acreage by around 60% compared to the original proposal.

The St. Charles County Council chambers were filled with disapproval from St. Charles residents and nearby O’Fallon neighbors. Residents expressed concerns about negative environmental impacts (see the Missouri Department of Conservation’s comments on p. 42–43 of the amendment request) and increased traffic along state highway DD. Nonetheless, the bill passed by a vote of 5–2. Interestingly, the councilman of District 3—the district where the Highlands at Busch Wildlife will be built—voted in favor of the bill. Following the bill’s passage, a portion of the dissenting public in attendance left the room, and some even shouted their displeasure at the council while doing so. It is not uncommon for current residents of a community to be opposed to new development in their area. However, is this new development really something the citizens of St. Charles and the surrounding communities should be so upset about?

A 2018 paper titled Supply Skepticism: Housing Supply and Affordability from NYU’s Furman Center addresses many of the concerns commonly expressed by residents about new development. The paper discusses how development­—at any price point—can help improve overall housing affordability. Furthermore, development can also increase productivity and signal that the given community is a place where people want to live. This does not necessarily suggest that development should always happen anytime or anyplace. However, restricting housing supply is associated with numerous problems including increased racial segregation, decreased mobility, and slower economic growth.

While some St. Charles citizens may be dismayed by the passage of Bill No. 5300, hopefully the benefits of increased housing supply will become more evident over time. Who knows—maybe other communities around the state will even look to St. Charles as an example of how allowing the market supply of housing to move more freely can help meet the needs of their community.

The post St. Charles County Council Approves Zoning Change for New Housing Development appeared first on Show-Me Institute.

Whether this is a good thing or a bad thing depends on why it happened. If rents are up due to increased demand to live, work, study, and invest in Missouri, then it is a good thing. If rents are up because we are not allowing enough housing to be built, it is a bad thing. Which is it? Well, we don’t know for sure, and it certainly could be both. It might be the former—increased demand—and it might be the latter—restricted supply. I think it’s unlikely that it is primarily the latter. Overall, Missouri does not have especially strict zoning rules, environmental rules, or building restrictions to limit housing. For example, the Institute has published papers on the lack of centralized planning and resulting affordable prices in the St. Louis and Kansas City housing markets. But we can always be better as a state. Our cities have made mistakes in this regard and our counties have made some questionable choices, too.

There is a downside, of course, with higher rent costs—the rent for your apartment or office is higher. For landlords, that may result in higher property taxes. Similarly, there are benefits and downsides to increases in housing prices. But, overall, I think the increases in rental rates in our two major cities are a beneficial sign. It’s important to remind people that housing throughout Missouri is affordable, including in our big cities. Perhaps some of this increase is simply that there is more “room to grow” here than elsewhere. Perhaps we haven’t done anything at all, but limited housing supply and high housing costs elsewhere have driven some people to Missouri. We don’t really know for certain.

I do know for certain that some groups will take this “fastest rental increase in the country” news as an opportunity to try to add more government mandates in the name of “affordable” housing. That is the last thing our state needs. We don’t need more “source-of-income” rules or attempts to initiate rent control (which is, thankfully, illegal in Missouri). We don’t need affordable housing mandates on developers or further expansion of the low-income housing tax credit. (Although, to be fair, developers can avoid most of that by simply not asking for a tax subsidy in the first place.)

If you think housing or rental costs are too high, one can trust the free market to help lower the cost of housing in St. Louis and Kansas City if we let it. One of the reasons housing costs (buying and renting) in the United States have risen so much recently is constraints on supply, primarily via zoning limits. In recent years, Minneapolis and Austin have both made a point to increase the housing supply by substantially reducing their zoning rules. Housing costs and rental rates have significantly decreased in both cities as housing supply has increased. If we want rental and housing costs to decrease in Missouri, zoning reform is the way forward for St. Louis and Kansas City, not new government regulations or mandates.

The post Ask Famous Missourian Bob Barker if the Price Is Right? appeared first on Show-Me Institute.

This topic is in the news now because of a lawsuit against a St. Louis landlord illegally renting out very cheap homes to struggling people in St. Louis. This post is not a defense of that landlord. Many of the places she was renting were condemned, had no utilities, or had other problems. The court system will presumably deal with those issues.

But it is worth noting that these cheap homes—some of which did have utilities and were suitable for habitation, even if just barely—were being used for inexpensive shelter by previously homeless people. That’s a good thing. Have you noticed how cold it has been lately?

Yes, landlords should keep their buildings up to code, and things such as working utilities and sanitation systems are all properly part of various building codes. However, zoning laws almost everywhere (including in much of the City of St. Louis) require apartments to be rented out whole, meaning every unit must have its own kitchen, bathroom, etc. Obviously, that is how most people want to live. But we made it illegal in much of the country to have a cheaper option, like Elwood Blues had, to live in a large building where you rent by the room and share other facilities with the other tenants. The elimination of the housing market option for these types of facilities is one of the reasons for the increased homeless population in our country.

Nobody is saying rooming houses like these are nice (I also saw Taxi Driver). But they are an affordable option that some people will choose that is far better than being homeless. I am not suggesting that boarding house–type facilities should be allowed everywhere. But blanket zoning prohibitions against them in Missouri cities are harmful and should be repealed.

The post “Did You Get My Cheez Wiz, Boy?” appeared first on Show-Me Institute.

In an attempt to increase the supply of affordable housing in Kansas City, the Mayor and council have passed, with various amendments over time, requirements that developers seeking city tax incentives set aside some units for lower-income residents. There have been arguments over the exact details of the law, but overall the requirement is valid because it is, to a large extent, voluntary. Developers don’t have to seek tax subsidies. However, if they choose to seek them, they have to play by certain rules. So far, so good.

The latest proposal to support affordable housing in Kansas City, however, is the opposite of voluntary. The city council is considering a requirement called a “source of income” rule. This rule would prohibit landlords from refusing to rent to tenants who pay with housing vouchers or other types of government assistance. The most familiar of these programs is called Section 8. This proposal is a violation of the individual rights of landlords and a dangerous expansion of city government’s role in the economy and housing market. Beyond that, it is simply infuriating that local officials think they have the right to do this.

The Section 8 housing voucher program, along with the other programs run by the Department of Housing and Urban Development (HUD), is a federal government program. It has always been voluntary for landlords to participate. That voluntary nature is one of the program’s strengths, and there is no shortage of landlords who choose to take part in it. The most recent estimate we know of stated there were around 695,000 landlords nationwide who participated as of 2016. Many of those are large, property-management businesses with numerous units.

There are many examples of government social programs in which participation is voluntary. Doctors are not forced to accept Medicaid payments, yet many do. Grocery stores are not required to accept food stamps, yet many, if not most, do. That is how the Section 8 housing voucher program has successfully worked for many years. Imposing a local mandate in Kansas City will force landlords either to join the program against their will, creatively find other reasons to deny high-risk renters, or sell their properties to larger landlords. Each of these results is bad.

Denying high-risk renters is made more difficult by other aspects of the bill, which take the proposal beyond tragedy to farce. The bill states landlords cannot reject applicants based on things like poor credit scores, past eviction history, or criminal record. It is essentially forcing landlords to rent to anyone who applies, no matter their financial state or criminal history. Are laws requiring school bus companies to hire drunk drivers and pre-schools to hire sex offenders coming next?

It is fair to question the presumption that something needs to be done about Kansas City’s supply of affordable housing in the first place. The Kansas City metropolitan area was ranked the 13th most affordable housing market in the country in one survey. Another very recent survey ranked Kansas City 27th out of the 100 largest metro areas in total affordability, where housing was an important part of the calculations. Among the many other worthy objections to this source-of-income rule is the fact that it’s a solution in search of a problem.

If Kansas City wants to do something that might actually help lower-income people find more affordable housing, it could rezone parts of the city, especially those near transit stops, to allow for more multi-family housing units. Increasing the supply of housing of all types is the best way to lower the cost of housing. Minneapolis dramatically reduced its zoning requirements in 2018 to allow more apartments and condominium developments. Since that time, median rental rates in Minneapolis have increased by just one percent—the lowest in the nation—due to increased housing supply. The law of supply and demand remains undefeated, no matter how much members of the Kansas City Council may prefer addressing this issue by ordering people around.

Landlords and developers can meet this demand for housing if they are allowed to—authoritarian mandates are not required. This council can let the free-market work for housing in Kansas City, as it has done very effectively for decades.

The post Kansas City’s “Source of Income” Housing Rule Is an Abuse of Government Power appeared first on Show-Me Institute.

Often referred to as granny flats or in-law suites, ADUs are built near or inside existing homes and provide a separate living space from the main house.

You might hear of the university student who rented out space above someone’s garage or in their basement to afford an education–that student is renting an ADU. And if you search Airbnb (with the filters “Entire Place” and “Guest House”), you can get an idea of what ADUs might look like.

Historically, ADUs have been used to house older family members or relatives—hence the names granny flat and in-law suite. This helps promote multigenerational living, making it easier to maintain relationships with close friends and family (which could help ease a recent increase in loneliness).

ADUs are not currently illegal by name in the City of St. Louis, but a convoluted set of regulations make it extremely difficult for many homeowners to build them; the city requires 4,000 square feet of land per dwelling unit, so residents need at least 8,000 square feet of land to build an ADU. Additionally, parking minimums and setback regulations make it very difficult to build ADUs in homes of certain sizes and shapes, even on larger lots.

ADUs can help lower-income residents afford mortgages and other living expenses while also providing an affordable living space for renters. They also have the potential to increase the value of homes for owners—the extra living space, as well as the potential to rent it out and earn passive income, can increase a home’s appeal.

Board Bill 43 will allow ADUs to be built and used in all residential zones of the city (this interactive map shows how the city is zoned if you’re interested).

Allowing people to use their properties as they see fit and strengthening the rights of homeowners will let the market work freely, increasing the amount of affordable housing in Missouri. This is a much better approach to affordable housing issues than misguided regulations and tax-credit programs.

The now awaits discussion in the Housing, Urban Development and Zoning Committee.

The post How to House Your Family—and Make it Affordable appeared first on Show-Me Institute.

In October, RideKC buses served just under one million riders, while the streetcar served around 142,000 riders, according to city data. Less than 3% of workers in Kansas City, and 1% in the metro, use the bus to commute. [Emphasis mine] Earlier this year, Kansas Citians told the Star that there was a lot they love about RideKC, but infrequent or unreliable service and too few routes can make the system difficult to count on.

“It’s really a 50/50 for me,” rider Aaron Griffin told the Star over the summer. “Sometimes it’s good and on time, other times it’s late or early and leaves before it should. Every day is different.”

The article has a lot of really interesting reactions from Challenge participants this fall, and as someone who used public transit heavily at different points in my life, I can relate to many of the cheers and jeers of their transit experiences shared with the Star. Of course, your mileage may vary on the purpose of a “green” initiative like this, but in practice, the challenge also serves as an insight into the challenges that Kansas City’s physical layout can present to people without their own motorized transportation.

From the perspective of affordable housing, which we’ve discussed previously, widely available public transportation can be a mitigating factor to rising apartment and home prices, bridging the space between Kansas Citians and their jobs, their families, and their friends if their affordable housing is comparatively distant. Notably, Kansas City has adopted a zero-fare initiative for its buses that will run through 2023, so one hopes that people on fixed or very limited incomes are able to take that factor into account as the look for housing that meets their financial needs.

But as the article teases out, unreliable transit that’s free is almost as good as no transit at all – especially if it means you can’t get to your place of employment reliably and on time. It goes without saying that if your poorest residents are reliant on a public system that could get them fired because it’s unreliable, that’s a system that needs to be dramatically improved to ensure the buses at least arrive and depart on time.

That also means there remains an economic incentive for even low income Kansas Citians to buy a car of some kind, “green” or not. For good reason: the City of Fountains was and is built around the automobile. Only two other cities in the country have lower traffic volume per lane mile as Kansas City, meaning residents who choose public transit don’t do it to avoid gridlock on the roads that could be caused by private vehicle ownership. That fact also undermines any traffic-busting reasoning around fixed rail projects like the city’s streetcar, which continues to be more of a tourist attraction and an oddity than a practical means of transit for locals.

Whatever the reason one might choose to use KC’s public transit system—whether it’s to “go green,” to save money relative to car ownership, or because it’s one’s only viable transportation option—there remains the question of whether it’s a reasonable option for most people here. While public transit serves as a backstop for poorer residents, it isn’t necessarily a very good one, and its appeal to other potential riders is meager. Indeed, the car is still king in Kansas City, and will be for the foreseeable future.

The post How Easy Is It to Commute KC without a Car? appeared first on Show-Me Institute.

The concerns people have over housing affordability raise a number of policy questions ranging from zoning to the fees Fannie Mae and Freddie Mac charge for new mortgages to the minimum wage, vouchers, and the low-income housing tax credit (LIHTC). In Missouri, the largest state-funded tax subsidy is the LIHTC program. The analysis in the previous two blog posts helps reveal why Missouri’s current LIHTC program is not designed to meaningfully improve housing affordability in Kansas City.

As I explained in the previous post in this series, Kansas City has a surplus of affordable housing for all income groups except those at the very bottom. But does the LIHTC program actually help those at the bottom of the income ladder?

There are numerous problems with the LIHTC program, such as the fact that it inflates construction costs. But arguably the biggest problem is that the criteria it imposes for developers to receive subsidies do nothing to promote additional housing at the cheapest rent levels. The most common arrangement for LIHTC developments is for 40% of the units to be reserved for those earning below 60% of the area median income (AMI). But the rents for the LIHTC units are not based on the income of the potential residents; rents are set based on the income in the surrounding area (the AMI). Because of this, even LIHTC-subsidized housing would likely not be affordable enough for the lowest-income families.

To use some numbers to illustrate this example: As explained above, rent needs to be no more than 30% of your income to be considered affordable, and LIHTC units considered “affordable” can be reserved for those making 60% of the AMI. So rent for that “affordable” unit in a LIHTC development will be 18% of the AMI (30% x 60% of AMI). Based on the $78,000 AMI in Kansas City, this means that the monthly rent for a family of 3 in that LIHTC unit is about $1,170 per month ($78,000 x 18% / 12). But as was described previously in this blog series, a family of three in Kansas City making 30% of the AMI needs rent to be about $585 per month to be considered affordable—and the cost of the LIHTC unit is nearly double that figure. Because of this, LIHTC tends to offer little to no help to the poorest residents.

In future work, the Show-Me Institute will provide more insights into not just the LIHTC program but the broader array of policies that have been discussed—or even new proposals that have not garnered as much attention—to promote a dynamic housing market that serves the needs of all Missourians.

The post Affordable Housing and Kansas City: Further Thoughts appeared first on Show-Me Institute.

Our results in the previous blog post indicate that Kansas City may have an affordable housing problem, but one that doesn’t affect most residents. These findings don’t seem to match public perception on the issue. According to a recent national poll, approximately 90% of respondents stated they believe housing affordability to be a major issue where they live. According to the table below, using data from the same American Community Survey as used previously in this series, many households in Kansas City say they are spending more than 30% of their income on housing. Does that confirm there’s an affordability problem or is there more to the story?

Using household income as our primary measure for housing affordability may make the most sense based on the data our government collects, but it is not a perfect measure for gaining insight into what households find affordable, especially for those with lower incomes. For example, if you don’t have a car or another means of transportation, housing that’s miles away from your place of work that costs 30% of your income is likely not affordable once daily commute costs are taken into account.

In times with record-breaking inflation like we’re seeing now, and rising home prices, it’s easy to feel like there’s a housing affordability problem. Because for many people, the place they live or want to live has become more expensive to them. And as long as all Kansas Citians, regardless of income, are allowed to freely choose where they live and pay how much they feel they can afford to pay to live there, these same data will show some level of housing unaffordability that is not reflective of a need for government intervention, but a result of consumer choice.

That’s also why when discussing housing affordability and the public policies that are aimed at combatting the issue, we have to be careful and say specifically what we mean or the policies that follow will be sure to miss the mark. As I hope my posts have made clear, affordable housing policy is hard. Moreover, with house prices, rents, and interest rates rising more rapidly than incomes, the debate over housing affordability is likely to grow, and with it, the potential for misleading analysis and counterproductive policy solutions. In particular, any one-size-fits-all policy that aims to improve housing affordability in Kansas City by treating households with varying incomes the same would likely not be successful at achieving the desired results.

The post Part 8: Does Kansas City Have and Affordable Housing Problem? appeared first on Show-Me Institute.

In the last post in this series, I talked about how to estimate potential housing demand. Now it’s time to talk about the supply. Since the majority of households earning below the area median income (AMI) are renters (as the graph in the last post showed), we can use census data to determine the number of units rented in Kansas City and how much they cost, which should give us a pretty good estimate of the supply of rental housing.

As the figure below shows, there weren’t many rental units available for less than $500/month at the time the survey was conducted, but there are more than 123,000 available between $500–999 per month. Moreover, the data below are not broken down by the number of bedrooms. Undertaking an even more granular analysis of the balance between housing demand and supply through a decomposition by family and unit size is left for future analysis.

With that in mind, we can combine the data we’ve put together in the last two posts to strictly compare the estimates of affordable housing supply with demand. This allows us to establish a potential surplus or shortage for any income group. Using the table below, we can see for each income bracket the supply of affordable housing. Then, by subtracting the demand for units from the supply, we can determine whether there’s a surplus or shortage of housing at the 30%-of-income affordability threshold for households at each income level.

The table above shows that there is a shortage of housing under the 30%-of-income affordability threshold in the Kansas City area for those making less than approximately 30% of the AMI but a significant surplus for all remaining income groups

The results in the table above are similar to what I referenced in part 5 of this series about a supply and demand analysis of St. Louis City and County contained in a report commissioned by the Community Builders Network of Metro St. Louis for the Affordable Housing Trust Fund Coalition. It’s not that Kansas City clearly lacks rental housing, but it may lack sufficiently affordable rental housing for the city’s poorest residents. And when “affordable” in this instance means rents lower than $580/month for a family of three, it’s somewhat understandable that such places could be hard to come by.

It is important to remember that these estimates for the potential housing supply and demand in Kansas City are only as good as the assumptions made to create them. In the next post, I’ll dive a little deeper into how different examinations of the same data can lead to different results for what should be done in Kansas City.

The post Part 7: Does Kansas City Have an Affordable Housing Problem? appeared first on Show-Me Institute.

As earlier posts in this series have explained, defining an affordable housing problem is complicated. So too, is solving one. Because the issue is so complex, the definitions and data used to characterize the issue are incredibly important. Over the next two posts, I’ll walk through an analysis that sheds light on the affordable housing situation in Kansas City, which can then serve as a jumping-off point for a discussion of potential solutions for the region.

Even though the U.S. Department of Housing and Urban Development (HUD) defines “affordable housing” as a household spending no more than 30% of their income on housing, it is important to distinguish between situations where households exceed that threshold out of necessity because of a lack of sufficient options versus situations where they actively choose to spend more than 30% of their income on housing even when more affordable and still viable options are available.

Every household is free to choose where they want to live and pay what they feel they can afford to pay regardless of whether the government would view their choice as “affordable.” Conversely, there is nothing wrong with choosing to spend as little on housing as possible. The point is that while an aggregate story tells a tale, the personal stories of individual Kansas Citians shouldn’t be lost in our discussion.

For these reasons, this post focuses on estimating the potential demand for affordable housing–namely, the number of units needed at different cost points to accommodate Kansas City households if they were to spend no more than 30% of their income on housing. This analysis is primarily about households making less than the area’s median income (AMI), as the term is defined and published by HUD. In Kansas City, the AMI for a family of three is $78,000 per year.

To determine the potential demand for affordable housing, we need an estimate for the number of households in different income ranges, and then we can multiply each income range by 30% and divide by 12 to arrive at the monthly housing cost range that would be affordable to those households. The definition of income we use comes from the U.S. Census Bureau’s American Community Survey (ACS) and encompasses labor market earnings, self-employment income, interest and dividends, retirement income, and “any public assistance or welfare payments from the state or local welfare office” but not other sources of government assistance such as Medicaid.

In principle, one could consider augmenting this measure to include non-cash benefits like Medicare for retirees, Medicaid, employer-provided health insurance and other such fringe benefits in the income measure for purposes of calculating the 30% affordability thresholds. But obtaining data on each of these items is quite difficult, and deviating from the widely used ACS definition would entail making judgment calls about the cash value that households attach to them.

For example, if a household receives $20,000 of income a year according to the ACS income definition, the 30% of income affordability threshold for the household would be $500 (= $20,000 x 30% x 1/12) in rent or mortgage payments. If the household also receives Medicaid benefits that cost the government $6,000 to provide—and if the household would have otherwise chosen to spend that same $6,000 itself absent Medicaid—then the household’s income effectively rises to $26,000, and one could argue that the affordability threshold should increase to $650 (= $26,000 x 30% x 1/12). However, if the household would not have spent a full $6,000 to obtain alternative health insurance in the absence of Medicaid, the cash equivalent value is less, and the affordability threshold would be between $500 and $650. Thus, you cannot assume that various government benefits are the equivalent of income.

You can see in the table below based on data from the ACS and compiled by HUD that there are approximately 820,000 households in the Kansas City metropolitan area. Additionally, the majority of those making less than the AMI are renters (which should make some intuitive sense).

The table below gives an idea of how much a family of three with various incomes below the AMI can pay for housing that is considered affordable using the 30% rule of thumb from HUD.

Taken together, we have an idea of how much housing could be needed in Kansas City, and at what price points. The next question is how those figures compare to the reported supply of housing in Kansas City, which will be the topic of the next post.

The post Part 6: Does Kansas City Have and Affordable Housing Problem? appeared first on Show-Me Institute.