This week in California, public hearings have begun on SB-827, the bill (which is a series of bills actually) proposed by State Senator Scott Weiner from San Francisco which calls for a radical realignment of housing policy away from single-family car-centric development to multi-family transit oriented development. It didn’t take long for it to get ugly. The battle lines for and against the bill have skewed the typical partisanship we’ve come to expect in American politics, pitting NIMBYists (homeowners, many of whom would otherwise lean progressive) against YIMBYists (a wider range of pro-market and even anti-market interests). It will absolutely get uglier.
That’s because the stakes couldn’t be higher. Along with California, the entire nation has been locked in an unprecedented affordable housing crisis and to solve it someone has to lose — big. Until that reality is faced, this crisis has no end in sight.
The housing crisis won’t end until we stop calling it a housing crisis and start calling it what it is — a crisis of capitalism in housing. 80 years of housing policy that viewed it as a form of wealth creation has severely damaged our communities and our economy. It has racially stratified our society and left millions behind. It has ecsaserbated our climate’s instability.
If we want to “fix” the housing crisis we need to fix capitalism. In the long run that means changing how we view — and finance, build, and use — housing. That obviously won’t happen over night. But we can start by looking at how we solved previous housing crises in the US.
When has the market solved a previous housing crisis? Never.
The scale and length of the current housing crisis is unique in American history, but housing shortages are not. What is also unique today is the lack of national policy initiatives to fight it.
Many people (including many supporters of SB-827) will argue that we don’t need national policy. We justt need to unleash the free market to match supply with demand. That’s a nice idea, but we’ve tried that before.
New York City is the perfect example of what happens when you rely on the market. From 1890 to 1920 the city’s population grew from 2.5m to 5.6m due to a massive wave of immigration. The unregulated housing stock at the time was already overwhelmed and hellish (the tenement-dominated Lower East Side was the one of the densest areas on earth) but it couldn’t keep up with such a huge population increase. Even as the city physically expanded and private development sprung up further from lower Manhattan, adequate, affordable housing was hard to find the majority of the population.
There was minimal government intervention in housing at the time — this was pure market. It was before land use, occupancy, or even fire safety regulations let alone government sponsored housing. The city did however finance rapid transit, thereby indirectly subsidizing the construction of new housing on vast tracks of cheap green development in the boroughs— yet at no point was the private market willing or able to create enough affordable housing for the growing city. Expensive slums still persisted.
It should be noted that the federal government did build public housing during the tale end of this period in other parts of the US. During World War I, a massive influx of labor around war time production put a severe burden on port and industrial cities’ housing supply, causing inflation and price spikes. (A large part of this influx was the beginning of The Great Migration, which saw over 6 million African-American families move from the rural south to the urban north and west.)
The federal government built thousands of housing units for workers — although many of them were purposefully constructed as temporary to avoid angering local real estate interests who lobbied against the effort even during wartime. The market was and never will be interested in meeting demand.
How were previous crises solved? The federal government.
The housing crisis in NYC continued even in the boom years of the 1920s and came to head during the Great Depression. Millions of Americans lost their homes (whether they owned or rented) and were forced into dangerous tenements or shantytowns known as “Hoovervilles.” The market ceased to exist in any conventional sense.
Famously, President Roosevelt was able to enact the New Deal, which was a set of legislation that radically changed the relationship between the federal government and the economy. The two housing bills of 1934 and 1937 were, ultimately, a mixed blessing.
On the positive side, the scale of the Depression obliterated the ideological arguments against intervening in the housing crisis and spawned the first wave of public housing construction across the country. In conjunction with local governments, the federal government sponsored thousands of modern, clean housing complexes — in cities and in more rural parts of the country. Millions of Americans — the majority of which were middle or working class — received access to affordable housing never seen before.
On the negative side, the New Deal legislation racially segregated public housing and in fact displaced many communities of color to build public housing for white residents.
Even more damaging in the long the run, this was the beginning of massive subsidies for single-family housing. Originally conceived as a construction industry bail-out, the Federal Housing Administration would set the precedent of backing mortgages (for whites) that evolved into Fannie Mae and Freddie Mac.
These policy decisions have shaped the physical definition of America and the social and economic destiny of all Americans. It is no stretch to say that these polices set the country on a course that would inevitably lead to our current crisis.
This time must be different.
It’s fascinating and heartbreaking to think about what could have been different. Had the federal government intervened with public housing sooner, at the beginning of the 20th century, would it have demonstrated its value in different, smaller scale models that could have gained more political currency? Could the federal government have intervened by creating more mass transit and denser suburbs before the advent of the automobile? Could the it have avoided the racism that doomed a large segment of Americans and cities for generations?
Could we have avoided the tragedy of building our national and personal economic prosperity on homeownership?
These questions are important to ask because we must learn from the past if we are to truly solve this housing crisis. The short answer for all of these are yes, if we valued the public good over private interests. If we valued democratic outcomes over market outcomes. If we valued shelter before wealth. If we stopped equating the market with virtue or even basic efficiency.
It starts by learning the lessons from the fight over SB-827. Homeowner interests can not come before the public interest. Local towns can not implicitly segregate themselves through down-zoning — at least near public transit (and extend that publicly-funded highways.) Special interests can not kill the democratic process.
Next, it means avoiding the failed lessons of relying on the market with minimal regulation from the early 20th century and avoiding the failed lessons of the New Deal focus on homeownership and slum clearance as national policy goals. We need more public housing in addition to more density. This is the only way to ensure that displacement doesn’t ruin another generation of low-income families chances of mobility.
It means addressing the bigger problems inherent in our choice to make homeownership a priority because it drives wealth creation. There is nothing wrong with promoting homeownership, but doing so by warping the true cost of it is irresponsible. We learned that during the Great Recession and then quickly forgot it. We must finally address this at the national level.
Finally, we must address the larger errors within capitalism that have warped what a home is. We can’t allow homes to be speculated on by private equity firms, international investors, or even flipping enthusiasts. Homes are for living in, not extracting profit from.
We can’t allow homes to be the sole or majority source of a household’s wealth. It’s no wonder that homeowners freak out about potential risks to their home values — for too many Americans their perceived value is their only economic security. That is absurd and will likely trigger another major economic crisis in the years ahead.
The only way to do all of this is for the federal government to intervene with the resolve of a national emergency. We must push for our elected officials to make the difficult decisions and political sacrifices to ensure that Americans can find affordable housing everywhere. The stakes are clear. The costs of inaction are clear. The way forward remains unclear.