Government intervention hypocrisy

Is it not odd that many people who complain about government involvement in the housing market are the very ones who encourage zoning laws for their preferences? While there are good critiques on the short-sightedness of the Obama administration's plans to increase the government's role in helping the poor acquire access to better housing, the problem is that government intervention is one of the largest variables in the housing crisis in the first place. And this includes zoning laws.

The major government players in the housing market include the Federal Reserve, the government-created and privately owned Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), the U.S. Department of Housing and Urban Development (HUD), and multiple state and local agencies. These agencies tend to serve as guarantors of risky lending practices that, when left to market forces, would have saved thousands from taking on debt they could not manage.

One of the unnoticed villains in the crisis were local zoning laws. Zoning laws are generally ways in which the elite use government intervention to keep "riffraff" out their communities as well as to thwart local land development that does not fit with the social preferences of the elite, explains Thomas Sowell in the book The Housing Boom and Bust. Restricting the use of land for the sake of "preserving open space," "saving farmland," "protecting the environment," "historical preservation," and other political mantras actually work to drive up property values in ways in which the market would reduce. Having minimum lot-size restrictions, for example, is a sinister way in which the elite, according to Sowell, "watch the values of their homes shoot up after the restrictions, so that they gain financially as well as by keeping out less affluent people and thereby preserving the character of the community as they like it."

Local planning commissions often introduce so many regulatory impediments for housing developments that it is no longer cost-effective to build new housing in the first place. Land use restrictions, used by liberals and conservatives, over the past 50 years had a role to play in distorting the supply and demand matrix in the housing market. The market was not free to meet real needs because the elite used the government to prevent development. The elite doesn't want low-income people living near them, either. Why aren't those against government intervention fighting against zoning laws that prevent low-income housing developments?

Because of property inflation due to zoning restrictions, there are more and more calls to "make housing affordable." This is happening in some areas because lower-priced options like trailer parks, apartments, homes on smaller lots, and so on are similarly not available nor allowed in certain areas. If conservatives are truly against government intervention in low-income housing, they should also be against government intervention used to codify social preferences of the elite.