The town of Truckee, CA is an upscale community nestled in the Sierra Nevadas near Donner Summit off I-80. Housing is expensive. Truckee’s origins were as a railroad town, so there is older housing. In Truckee, however, downscale is funky and comes with upscale prices. The Truckee Town Council has decided to provide “downpayment assistance” with loans at interest rates as low as 2 percent.
Those who work in Truckee often cannot afford to live there and the Truckee Town Council hopes to make housing affordable for them. The program is thus paved with good intentions, but we know where that road leads. Cato’s Randall O’Toole and Hoover’s Thomas Sowell have shown that land-use restrictions and zoning are principal causes of high-priced housing. The recent housing boom and bust demonstrated how efforts to make housing “more affordable” largely made it more expensive. And they ended up putting many into homes that they could not ultimately afford.
There are no reports that the Truckee Town Council is planning to ease land-use restrictions. So they have done nothing to address the problem of pricey homes. It’s supply and demand, and the Council is working the wrong side of the equation.