Can we really afford to create affordable housing?

History shows that New York has never had a useful housing system that provides equitable distribution of housing on all levels.

If subsidizing housing--which we have been doing since World War I--could solve the problem of affordability, the problem should have been eliminated by now. However, political and special interest groups, a major voting power, continue to influence this delicate housing market and perpetuate the problems of affordability.

Basic laws of economics state that whenever there is any external form of control, or intervention, on a market, there will be an imbalance. If left to its own forces, without intervention, equilibrium will result.

How can anyone say with such confidence, that the basic fundamental laws of economics, the laws of supply and demand, would not cure what ails this market?

Why hasn't our government given it a try after seeing that all forced interventions have failed?

New York's current building boom has added some benefits that come naturally with the market forces when guided by supply and demand, rather than intervention.

Today's boom has enabled and encouraged middle class residents to enter neighborhoods that were previously shunned. This move has freed up a sector of older apartments that are being rented by working class residents who wish to move into more established neighborhoods and are willing to accept the older units for the convenience of location.

As upper middle class residents move into newer apartments, vacating their older apartments, the middle class residents can now move into those apartments freeing up their larger apartments for working class residents. This allows each segment, the opportunity to find housing in an affordable neighborhood. In addition, the evolution of a wider housing market increases the supply of apartments and the demand is satisfied at rents that each can afford.

Unfortunately, this isn't happening fast enough for our elected officials, who need to see results within their elected term, regardless of the damage being done to this recovering system.

Current legislation proposes building somewhere in the area of 200,000 affordable apartments. Of these, 70% will be earmarked for families earning below $50,000 per year. Sadly, over one million families would qualify. The balance of the apartments would go to families earning under $75,000. The problem here is that over 400,000 families would qualify. So, in effect, the new plan has created an inequitable system that does not solve the problem, but perpetuates the chase to nab one of these valuable units that eventually will be resold to a higher bidder, a far cry from the system that was supposed to be neutral and fair.

By creating a shadow market, or black market, for these units, the dilemma is promulgated, which puts an additional financial burden on the rest of the residents who are subsidizing this fiasco through higher housing costs, and increased taxes which are necessary to fund this housing bureaucracy.

In contorting the market by affording a select few cheap rent, the rest of the city bears the brunt of that discount. No subsidy can be created for a few without costing someone a premium. By forcing market-rate residents, in newly built housing, to pay a premium so that 20% or more, of their neighbors can pay a severely discounted rent on the same apartment, we are, once again, prolonging the dilemma. Subsidies are coming from an already penalized segment of residents who pay exceptionally higher taxes than their subsidized neighbors.

By subsidizing this "attitude" of housing entitlement, as well as the rents, we are prolonging the imbalance and rewarding residents for inertia. Is this really helping anyone? Why not develop incentives for empowering them to progress in their lives and earn better housing? Instead, we are promoting dependency on an overly-abused system.

Yes, "affordable housing" has become a popular electoral buzzword, but the real problem is in not dealing with the fact that this can all be resolved if the market is left to its natural forces.

If more attention is placed on simplifying the city's building code and antiquated zoning laws, more apartments can be built, decreasing the gap in supply and allowing rents to drop naturally. Free-market housing policies are the solution, not the problem.

BY ADELAIDE POLSINELLI, SENIOR EXECUTIVE BROKER, PLATINUM TEAM AT BESEN ASSOCIATES