The Housing Conundrum
Bruce Nesmith is a Founding Member of Strong Towns. He blogs at Holy Mountain, and the following essay is republished from his blog with permission.
Almost a decade removed from the foreclosure crisis that began in 2008, the nation is facing one of the worst affordable-housing shortages in generations. The standard of “affordable” housing is that which costs roughly 30 percent or less of a family’s income. Because of rising housing costs and stagnant wages, slightly more than half of all poor renting families in the country spend more than 50 percent of their income on housing costs, and at least one in four spends more than 70 percent. Yet America’s national housing policy gives affluent homeowners large benefits; middle-class homeowners, smaller benefits; and most renters, who are disproportionately poor, nothing. It is difficult to think of another social policy that more successfully multiplies America’s inequality in such a sweeping fashion. — Matthew Desmond (2017)
Photo by Johnny Sanphillippo
35 years ago, I worked at the public library in Naperville, Illinois. There was a proposal to build affordable housing somewhere in town that was quite controversial, and which was ultimately rejected by the city council. This was a good thing, a library staff member explained to me, because the new housing would have negatively affected the values of the properties around it. I had no long-term plans to stay in Naperville, but if I had, my housing would have had to be "affordable." I thought property values could be, and possibly were being, used to keep people down.
What do you buy when you buy a house? According to the title, you’ve purchased a dwelling and the land on which it sits, as well as additional property as specified. And one would be foolish to make the purchase without ensuring that both are in sound condition. You want to know that the yard drains properly and can accommodate your pets or children; there’s a secure place for your car(s); the roof is in good shape, the basement doesn’t flood and isn’t filling up with radon, the kitchen’s up to date, and so on.
Most people take additional factors into account, which aren’t included in the title to the house: the qualities of the neighborhood, access to parks and schools, and the view from the living room window, for example. Change happens, and none of those amenities are legal entitlements, but they can be sources of powerful emotional attachment. Perhaps more importantly, for most American homeowners, their house is their major asset, representing, by far, the largest portion of their material wealth. According to the Federal Reserve Board, housing wealth in the United States is about one half of overall household net worth. Mess with the monetary value of housing and you're into people's pockets in a big way.
So it’s entirely understandable that homeowners react defensively when they hear of new development in their neighborhood, whether it’s low-income apartments, live-work spaces or even adding a sidewalk while narrowing the street. It's too easy to imagine change will involve noise, traffic, crime and/or drainage issues that are hard to fix once they're established. One of the costs of seven decades of bad development is that all development gets perceived as bad.
But "density doesn't have to be scary, if it's done right," says Bay Area designer Karen Parolek. A fourplex like this:
Source: Opticos Design (from urbanedge.blogs.rice.edu)
wouldn't look out of place in my streetcar suburban neighborhood.
The problem with protecting our neighborhoods from changes is that it harms the ability of other people to enjoy the quality of life they want to enjoy, and leaves them worse off.
Everyone has the right to shelter. I doubt I could convince you if you believe otherwise, but it seems fairly basic. Restricting access to our neighborhoods and keeping housing costs high has serious negative impacts on the people it excludes: Children in areas of concentrated poverty do less well than if they live in more socioeconomically mixed areas. Adults in areas of concentrated poverty have less access to economic opportunity and lower length and quality of life.
Governments are nowhere fiscally flush enough to build the infrastructure that would allow people to live in enclaves. This hasn’t stopped them from doing it for the last several decades, of course. Between intracity highways, the home mortgage interest deduction and an unwillingness to address the externalities of driving, governments at all levels have been giving big assists to their better-off constituents. (Because you have to claim more than the standard deduction to make the mortgage interest deduction worth it, more than 80 percent of tax expenditures under it go to households making more than $100,000 per year.) The federal government spends more money on the home mortgage interest deduction ($71B in 2015) than on housing assistance—even before the latter’s 13.2 percent cut in President Trump’s FY18 budget. This has reinforced disparities in wealth dating from the original discriminatory form of housing programs.
Source: nationalpriorities.org
So what should we do about housing policy in America? Here are some of the ideas currently being discussed:
Zoning of neighborhoods should be inclusionary not exclusionary. Economist Joe Cortright notes, “having a wide variety of housing types and sizes can also make room for people of a wide variety of incomes.” Ease the permitting process for multi-unit “missing middle” housing (as is being attempted by CodeNEXT in Austin, Texas).
Government can resolve the market’s failure to build “missing middle” stock, either by directly providing public housing, or by providing incentives to suppliers and/or buyers.
Reduce the home mortgage interest tax deduction by capping it at $500,000 instead of $1 million, so housing policy tilts less to the well-off and reduces current incentives to overbuild our towns and overextend our resources.
Suburban-style development is incentivized by the mortgage interest deduction. (Photo by Johnny Sanphillippo)
But each of these policy approaches depends on their political feasibility—in other words, us, and in particular the more politically-powerful portion of us that owns big houses and gets tangible benefits from current policy. We need to leave the door open, or the ladder down, or whatever metaphor you like, for the people who come after us. This means promoting more inclusive views of the city and the neighborhood, and understanding our inherent connections to them. "No man is an island," wrote John Donne, and no house can truly be, either, but only by affirming our connection to other people and commitment to opportunity for all do we become truly a "fairer city." (For more on that concept see this provocative essay).
(Top photo by Jessica Furtney)
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