affordable housing

2020 Democratic Presidential Hopefuls Shouldn't Focus on Lowering Rents - Here are 3 Other Things

Frenemies at the gate (usnews)

Frenemies at the gate (usnews)

Along with every housing activist, I have been beating the drum for more attention to housing at a national level for several years now, so on one hand, the recent focus from Senators Kamala Harris and Cory Booker is a welcome development. Both senators have proposed similar housing bills that would aid renters nationally. On the other hand, neither of the bills, which are very similar, would solve the affordable housing crisis and would likely feed it in other ways. It goes without saying that both bills are largely rhetorical devices for shoring up progressive cred leading up to 2020 and won’t go anywhere, but let’s take them both at their face and see why they don’t excite me.

First, it’s important to point out that the affordable housing crisis is a crisis of late capitalism. In our current era, wealth and opportunity are concentrating in a narrowing pool of individuals, firms, industries, and geographies. Housing costs are skyrocketing in the select few environments where many of these factors overlap and housing costs (and values) are going down in the many more environments where few or none of these factors exist.

That is to say that there is no national housing policy that alone can address those forces AND there are no national economic or social policies that are currently up for debate that come close either. I believe we can absolutely craft smart housing policies at the national level that can help millions of Americans, but the larger crisis of late capitalism must be addressed to end the factors that fuel the housing crisis. That will take big change.

I don’t see Senator Booker or Senator Harris acknowledging the larger fatal flaws in our current iteration of capitalism (though they may have to if they want the nomination). Both have made their careers supporting this system and supporting those who benefit from it. No amount of social progressiveness can erase their explicit endorsement of this economic system even if they say otherwise. If either of them did, these bills wouldn’t look the way they look.

Instead, both senator’s plans aim to treat — or really, manage — the symptoms. That doesn’t mean that either plan lacks good ideas. There are some good ideas and good intentions, which should be acknowledged. Although there is virtually zero political courage behind either of these, so I don’t give either that much credit. The bigger issue is that they accept the basic economic and political premise that the market must drive the solution. That’s just not true or viable in the face of our present reality.

Senator Booker’s plan differs slightly from Senator Harris’s in that it proposes tying community development block grants to efforts to increase density in local jurisdictions. Basically, its a soft diplomacy effort to remove local land-use regulations (things like parking requirements, height limits) while encouraging more construction (density bonuses, as-of-right development). 

Both of these are admirable and necessary policy goals. But it’s a too-cute way to get around the vast limitations the federal government has on local land-use policy and that’s where it ultimately falls apart. The carrot isn’t that great and there is no stick. HUD currently ignores existing Fair Housing laws, so they aren’t going to care about this bill even if it did pass. 

It would take much more political courage to argue that the Fair Housing Act empowers the federal government to supersede restrictive local zoning and create an Eisenhower Interstate Highway System-esque system of federally-funded local development systems (or even just enforcing Further Affirming Fair Housing efforts at the late end of the Obama Administration) but the Senator from New Jersey (of Mount Laurel fame, no less) did not take that opportunity. 

Like Senator Booker’s plan, Senator Harris’s plan proposes a set of interventions that include discounting rents above 30% of income even for six-figure income households up to 150% of HUD’s Fair Market Rent calculations. By covering the difference as a tax credit, it would sort of work like the Mortgage Interest Deduction and would help some low-income families in high rent geographies and even middle-income families. 

That’s also an admirable policy goal. But the MID is a terrible waste of public money (that mostly gets to wealth households) while inflating the value of homes, so doing that for renting is arguably worse since we should know better. It would clearly create an inflated market as landlords would just raise rents even more. It also doesn’t help people outside of the usual suspects of coastal cities with high rents, so it’s impact would miss the vast majority of renters.

Both plans rely on the market with some subsidization. This isn’t a surprise since that’s how housing policy has (not) worked for 80 years. That this doesn’t work seems to have gone unacknowledged. But there are more creative ways to pursue a market-based solution and there are other non-market solutions that should also be included. (I have written about how any housing policy needs to fundamentally remove the advantage of homeownership, so I won’t touch on that for this particular article, though its obviously important.)

Here are three broad areas where the federal government can address the housing crisis right now. These are by no means the only areas or the most detailed analysis of them, but they are great starts:

Build the best public transportation systems in the world

It’s obvious that public transportation is an afterthought in the US. Post-war policy makers bet on homeownership and car ownership and socially engineered our modern landscape around them. That makes it particularly hard for people to get back and forth within most American cities commuter sheds 

Just as a small example of this, even for a transit rich city like NYC, it is a pain in the ass to get to Hoboken, NJ from where I live in the East Village (a 3-mile trip) because it involves two different transit systems (the MTA and the PATH). It would go from a roughly 30-min multiple-seat (and ticket-swipe) trip to a 10-min single-seat trip if they extended the L train into NJ (which has been proposed at various times, to no avail.) Christof Spieler in Houston writes a lot about this particular problem and I highly recommend you check out his stuff and upcoming book.

The more interconnected a commuter shed, the bigger the housing market. High rents are partially a product of land-use regulations and land scarcity in certain markets. But rents are high because people want to live close to things and there are huge cost increases the further out you go. 

If we developed deeper, more frequent rapid transit systems that cut down on time and cost of commuting, we would make surrounding areas more viable. It’s been done before in the US. Look at how the Bronx was developed in the 1920s and 1930s when the subways reached the area. Even if you can’t make the argument for more public intervention in housing in the Senate, you can get transportation networks built.

Fund public housing and expand what it can include

I write a lot about how we need more public housing. It works when the necessary tools and processes are put in place. There is no reason to subsidize private landlords when we can build and manage publicly owned homes directly. 

Most people think of towers-in-the park megablocks that fell into disrepair and became crime riddled. That did happen in many areas, but it also didn’t happen in many public housing complexes, particularly in NYC. Committed funding, competent management, and empowered tenants have been the winning formula for many years with NYCHA even as its funding gap has eroded that in more recent years to tragic results. The playbook exists, however.

There are also new ways to think about public housing. Instead of building new developments, we can preserve exiting communities by converting housing into municipal land trusts. This is already happening in Houston’s Third Ward. The city owns the land and removes it from the speculative market and a community board of elected officials and residents runs it. This would address many of the concerns of displacement and affordability. It would take federal funding to maintain, but would that be as much as subsidizing rent or a massive building program? Definitely not.

Stop wasting public money on dumb shit

The final point is much larger than a few paragraphs, but it warrants repeating. We give away too much public money to powerful, private interests — at all levels of government. We can absolutely afford to address the housing crisis if we stop subsidizing these interests.

We spend trillions of public dollars on our military and national security complexes - enriching contractors, arms manufacturers, and many other private actors. These things murder lots of people, erode our civil rights, and generally keep us permanently afraid. 

We spend billions of public dollars on local pet projects like stadiums, casinos, and privately-owned mixed-use developments — that in most cases turn around and charge us to use them.

There are laws on the books that are supposed to manage these costs or outright prevent them from happening and yet our money keeps getting hoovered up on policies that the majority of us don’t support. Until we hold our elected leaders accountable for spending our public resources on priorities we do support, this will never change. (I have no time for people who think we shouldn’t spend public money in general.)

That goes back to my earlier point. The housing crisis is a crisis of late capitalism. We can’t fix housing without fixing our economy and our politics. That means rejecting the premise that the market is the sacred end all be all that we all must slave away for. It means rejecting the idea that the accumulation of wealth is the best and highest use of our labor and our resources. 

It is encouraging that Senators Harris and Booker are moving in the right direction, even if these bills are dead on arrival and flawed on their face. They are creatures of this system and even the smallest acknowledgement from them that it is failing is reason to be optimistic that our political process can evolve to fix it.

We should all be worried that the housing market is so bad while the economy is so 'good'

Amen. (s.h.a.r.p.)

Amen. (s.h.a.r.p.)

 

Last week, The Join Center for Housing Studies at Harvard released their 30th annual report on the state of housing in the US. With a few exceptions, the picture is bleak. At every corner there are major red flags about the present and future of housing in the US for owners and renters alike. What is clear, a full decade after the foreclosure crisis, is that the housing market is at best exacerbating wealth inequality and at worst sowing the seeds for an even more destructive economic downturn. This is all happening while the national economy is allegedly roaring along. And that should scare all of us.

Let’s start with the most important point: for a lot of Americans, there is simply no evidence that the economy is doing well. Sure, the stock market is up and unemployment continues to fall.

These data points have long been two popular shorthands for talking about our economy’s health, but it’s hard to believe that it is healthy when 40% of adults don’t have $400 on hand to cover an emergency. The ‘millennial’ generation is already 34% poorer than previous generations at the same age. Clearly, if we think this is a good economy, how we measure it and how we talk about it are deeply flawed.

Who cares about the stock market when half of Americans don’t own stock and the richest 10% of Americans own 84% of them? Who cares about a low unemployment rate when wages aren’t increasing and most job creation is in low-wage, high-insecurity positions? Who cares about how well the economy is doing if the richest 1% captured 82% of wealth created last year while the bottom 50% captured none?

The crooked nature of our housing market is making this all worse, perhaps for generations to come. The JCHS report reflects this widening wealth gap and its impact on housing in the US with some startling stats. It breaks down into troubling dichotomies between renters vs owners, wealthy vs everyone else, old vs young, white vs not-white. It’s worth picking out some quick ones and related stats:

  • 38 million American households (owners and renters) are cost burdened
  • Half of all renters are cost burdened (which has doubled over the last 50 years) and a quarter are severely burdened
  • Rents and home prices have risen 20% and 41% respectively over inflation in the last 30 years
  • Homeowners have on average 46 times the net wealth of renters
  • Overall, since 1960, wages have gone up 5% while rent payments have gone up 61%
  • Minority homeowners have half the net wealth as white homeowners and their homeownership rate is falling
  • Since 2000, the number of Americans living in poverty has increased by 28%t to 12.8 million
  • During the same period, the number of high-poverty census tracks grew by 53%
  • 51% of blacks and 44% of latinos live in areas of concentrated poverty, compared to just 17% of whites.
  • In 2016, 1.4 million people (including 175,000 families with children) were homeless at some point during the year
  • 56% of homeless live in the highest cost metros
  • 83% of homeless families experience it acutely as a product of eviction

This is during 9 years of continued growth that has little historic precedent.

The report highlights a couple of under-appreciated factors causing these stresses: the aging population of the country, the decrease in immigration, and the concentration of economic opportunity in fewer geographies, industries, and individuals. These all represent “new normals” that so far have failed to be acknowledged at the national policy level.

One factor that the report covers in great detail is obvious: we aren’t building enough homes, anywhere. Most urban centers, and virtually all of them in coastal regions, are not building enough housing to meet the economic growth (and concentration, relative to other regions) they are experiencing. That’s partly why mobility, an actual sign of economic and social health, has collapsed in the US.

Some of this is the problematic regulatory regimes of individual cities, but largely its the cost of land, labor, and materials, which has gone up across the country. The lack of productivity gains in the construction industry, whether for single-family or multi-family, is a major problem and doesn’t get nearly enough attention from the media, academics, or policy makers. While many industries are slowly starting to see gains from the IT revolution (while others are shrinking), construction hasn’t.

That’s not hard to understand. The industry was built on cheap labor and cheap land — those are not inputs that demand innovation. Add in 80 plus years of massive government subsidies either from financial guarantees or infrastructure spending, and what you get is a cartel of mostly local/small groups of very profitable players that have never needed a culture of innovation. Instead, they have formed a culture of protection that has largely manifested in spending millions to support their local political status quo.

Today cheap land and cheap labor are harder to come by, but, for the most part, public subsidies are still available. So we have in place a perverse system where an already-outdated industry has little ability or incentive to adapt that is matched with an equally outdated and inflexible policy regime. That’s a recipe for a disaster, which is what we are living through.

This is all to say that, of course our housing market isn’t providing enough housing (except at the top, where it is producing too much). But it is operating in a state that our policy makers can’t seem to recognize reflects a larger political failure. None of these problem are going away. They are, in fact, going to get worse.

That’s because, inevitably, the economy will sputter again. So what happens when it does? 10 years ago it meant the greatest economic crisis since the great depression. I’m not suggesting we are due for another foreclosure crisis, but at the same time, we haven’t fixed the underlying problems people have that caused it. Primarily, those problems include people not making enough money, having too much debt, and not having a lot of flexibility if the economy tightens suddenly. That has gotten worse since the great recession. Remember, 40% of Americans don’t have $400 on hand for an emergency.

People are barely getting by right now during a ‘good’ climate, but what about the government?

You can make a lot of complaints about how President Bush and President Obama handled the crisis ten years ago. (It is clear that both administrations focused on the financial system at the expense of the individual household. There were more options on the table than that and we’ve been suffering from what ended up being a blanket immunity for the financial industry ever since.) But they both worked together during the transition and both drew from a deep well of experts with steady hands and public trust. It could have gotten a lot worse, but it didn’t. As flawed as the process ultimately was, that’s what we expect of our government.

Nobody in their right mind can say that the current administration has steady hands or public trust. Obviously, the President clearly doesn’t understand economics and doesn’t know what he is doing other than exploiting racial animus. But look across the cabinet — HUD Secretary Carson thinks poor people should have a harder time and doesn’t know what he’s doing. Commerce Secretary Ross is spewing conspiracy theories about soybeans and doesn’t know what he is doing. Treasury Secretary Mnunchin either doesn’t understand the tax cut or is still lying about it and doesn’t know what he is doing.

Does anyone expect the Trump administration to handle a downturn well or honestly? Have they shown any ability to think strategically on policy? Or to even execute a policy well? The inevitable downturn will cause pressure on this administration that we have no reason to believe it can handle.

Even if we had a more predictable political landscape than we do today, we have fewer policy tools available to deal with a significant downturn. The government is starved for revenue and will get worse over the life of the tax cut. Republicans plan to come for the safety net next. Even the Fed, though in steady hands for the most part, has fewer policy tricks up its sleeves than last time even if it somehow remains insulated from political pressure or partisan erosion that has crippled other institutions in the Trump Era. Will it still be immune when a crisis hits?

It’s not hard to see what has to change. Fundamentally, the public needs to claw back a large portion of that 82% of wealth created in the last year (and over the previous decades) in order to raise our collective standard of living. We need to reject the money-fueled political status quo at the federal and local levels that have killed long-term planning and prevented big ideas from entering the public discussion. And we need to reboot our social and economic contract that currently makes education, healthcare, and childcare/elderly care prohibitively expensive.

Fixing the housing market can go along way to starting this process. Housing is a right and should be the baseline for any public or private policy goals. We need a robust private sector to support housing, but we need to incentivize innovation by shaking up the tired regulatory and subsidy process. Public goals for the private sector should move towards equitable access, community ownership, and sustainable affordability. Public ownership of housing (which was not even covered in the JCHS report) must be expanded with direct ownership of housing and direct ownership of land.

It’s not hard to see what has to change, but it is hard right now to see how or where that change begins. The last great opportunity to have this conversation occurred during the great recession and it was ultimately squandered. It is hard to see how we even weather the next downturn in whatever form it comes let alone how we begin a massive reboot in housing. That might be the best we can hope for, but it is not what we need.

Public housing works, it can help the housing crisis, but The New York Times isn't helping

This Richmond Barthe sculpture near the Johnson Houses contrasts the image of intended residents (white families) with the current racially diverse demographics of NYCHA residents, which is part of why support for public housing has vanished. That must change. (homebodynetwork)

This Richmond Barthe sculpture near the Johnson Houses contrasts the image of intended residents (white families) with the current racially diverse demographics of NYCHA residents, which is part of why support for public housing has vanished. That must change. (homebodynetwork)

Over the weekend, the New York Times came oh-so-close to writing a fair, nuanced story about NYCHA. Most of the time, the paper of record ignores the 80-year old agency, the 2,500 buildings it manages, and the 400,000 New Yorkers who live there. When the paper does write about it, it is almost always in the context of failure, scandal, and waste. There’s plenty of that to go around, which is fair game, but there are many other positive facets of the agency’s story that remain, at best, alluded to while the core problem fueling these issues — federal abandonment — is only referred to passively.

The paper’s approach to public housing does a disservice to NYCHA residents and the agency, but it also does a disservice to public housing in the US in general. The simple truth is that public housing works and should play a larger role in solving the affordable housing crisis. In order to leverage public housing’s vast potential, we must first change how we talk about it.

I find this particularly frustrating because at the same time, there are elements within the Times that are (slowly) changing the conversation around housing. It published Matthew Desmond’s work on how the federal government spends $134 billion a year subsidizing $1million dollar homes across the country. Emily Badger and Quoctrung Bui wrote a devastating series on the eviction machine in much of America.

These provide important context to the affordable housing crisis, but public housing never seems to get that same coverage. The paper certainly doesn’t put all of these elements together to show why public housing (and other models like community land trusts) need to be part of the solution.

The problem with the Times coverage on public housing can be captured almost entirely in the title: “After Years of Neglect*, City Public Housing Is Poised to Get US Oversight.” Two problems jump right out.

(*The online edition appears to have replaced “Neglect” with “Disinvestment” after I started writing this. The print edition’s title is “US is Expected to Get Oversight of City Housing”. In either case, the problems remain obvious.)

First, it is bizarre to refer to impending federal oversight of a domestic government agency as “US oversight.” This might strike you as nitpicking — and I’m not blaming writers for editor’s decisions — but this falls into the much longer problematic history of how the Times (and the media at-large) adopts colonialist language when writing about housing in the US. Think of every real estate section story about mostly white “urban pioneers” moving to neighborhoods that…have been lived in by (mostly non-white) New Yorkers for decades.

Framing the built environment like this completely warps the public discourse around housing, specifically on gentrification and displacement. These are complex topics with significant policy trade-offs, but we aren’t presented with equally-weighted narratives to consider them responsibly.

This may be because the press, at any given level in an organization, is uninterested, only partially informed, or even ideologically opposed to public housing (its hard to see how corporate media would be inclined to support it). As much as the press gets labeled “left wing” or accused of having a “liberal bias,” public housing is a good example of that simply not being the case.

So much of the media adopts a real estate-centric language that the public conversation has already been shaped to internalize the virtues of market outcomes exclusively. (This is also true because poverty barely gets written about in the press. And that’s because poor and/or minority writers are absent from pressrooms.)

When minority communities speak about feeling like they live in occupied territory, particularly in the context of excessive-force by the police, this type of real-estate centric language is also what they are referring to. It either erases existing communities or otherwise “others” them into feeling like they are part of some imperial conquest that views them as an inconvenience. This language has real world impact and the Times should know better by now.

It should also be noted that no NYCHA residents were interviewed for the article. It quotes Ritchie Torres, the councilmember from District 15 in the Bronx and chair of the committee that oversees NYCHA, who grew up in public housing. Not for nothing, he suggested, correctly, that NYCHA should sue the federal government for neglect.

That brings us to the second problem with the title — where is the blame for neglect placed? And what neglect is actually being referenced? Just reading the headline makes it seem that the city is to blame. Even within the article, it largely frames the neglect as failures of the agency. That. Isn’t. True. For all of the many flaws that NYCHA is guilty of, they are not guilty of neglect (nor is the city.) They are obviously trying to manage their buildings. But they are doing so under untenable and inexcusable circumstances.

The true neglect, as Councilmember Torres pointed out, comes from the federal government. The federal government helped fund the creation of NYCHA and public housing for the first 30 years of its existence but (as it became less-white) subsequently abandoned it and demonized it (and its residents).

In NYCHA’s case, since 2001, the federal government has cut an estimated $3 billion in operational funding. This is a catastrophic loss. Out of NYCHA’s $3 billion annual operating budget, almost 2/3 comes from the the federal government, either from direct federal budget support (29%) or Section 8 subsidies (30%). These are existential cuts that compound quickly across such a large and old system. When the premise of public housing is based on continued federal funding, it doesn’t work when that funding dries up. Pretty simple.

The article dutifully mentions these cuts but frames it as background on the agencies’ problems rather than central to them. While the failures of NYCHA are presented as direct fact from the writer, the funding cuts are presented as “city estimates” and even the issue of racial prejudice is mentioned in a quote by a professor. Those are apparently not facts. This may be unintentional (the Times and much of the media generally shies away from calling something “racist” or “a lie”) but it means the narrative of this story (like every other NYHCA story) misses the more salient point.

The real story is the federal government slowly abandoning thousands of Americans. Adding in the fact that these Americans generally aren’t white deepens the scandal, but not much more.

Just as problematically, this narrative absolves the federal government from responsibility for fixing NYCHA and presents the only real solution implicitly or explicitly as privatization. That’s been the editorial board’s position for some time.

This article, despite its detailed analysis, is no different. It mentions the city and state squabbling over increased funding but also says (accurately) that neither can fill the gap in funding. It discusses some of the public/private options being explored (which also won’t cover the gap) but doesn’t entertain the idea that the federal government could return to previous funding levels, let alone why it should. What is the solution other than the slow death of public housing?

It matters when no one at the paper of record is explicitly defending the idea of public housing. It’s not a reporter’s job, but they should at least be covering the many people who are. Ignoring the argument for it robs the public of the full housing policy landscape.

It matters further because most Americans, including many well-meaning liberals and even housing advocates, are guilty of holding decades of media-fueled negative stereotypes of public housing that harm residents and harm our prospects of solving the housing crisis: Public housing equates to scary looking, crumbling brick towers by the highway. Crime and rodent invested buildings. Poor and lazy minorities. A well-meaning but failed experiment from another age. A poorly run government program that should be privatized. But these images are bullshit.

There’s a more accurate way to think about public housing’s legacy and future. A civic treasure that has provided affordable homes for 80 years. A collection of buildings that have held up remarkably well and just need proper maintenance. A refuge for a population that the government and the market has otherwise ignored or exploited. A well-meaning but failed promise that should be renewed. A solution to a failed market that will always fail to provide enough housing. A vision for a more equitable republic.

The biggest tragedy of NYCHA’s recent history — which has included federal investigations for fraudulent lead inspections, boiler failures in the dead of winter, the slow selloff of assets, the unfortunate resignation of its Chairperson, Sholya Olatoye (who wasn’t exactly set up to succeed), and now a cynical state takeover — is that its viewed as a failure at all.

Its frankly remarkable that NYCHA is standing with such gaps in funding, indifference from the public, and flagrant neglect from the federal government. In a city where there are over 60,000 homeless and the average rent in Manhattan is over $4,000, the average rent in NYCHA is $509. That’s incredible. NYCHA is a success story. (The article points out that NYCHA is a “relative success” compared to other housing authorities.)

The truth is that NYCHA has been a victim. One that is as resilient as it is flawed. It has been a victim of federal neglect but it is also a victim of terrible federal policy, which is why the affordable housing crisis exists and persists. Without making the story about the federal government failing in its responsibility to fund public housing (while giving away billions of tax dollars to wealthy homeowners) nothing will improve for public housing or for the housing crisis.

Housing advocates should place more effort on making the case that public housing works and call out the media for lazy tropes that keep it off the political agenda. Even more importantly, they should help the already highly organized tenants groups within NYCHA have the reach they deserve to improve their homes.

Finally, we should all outline what public housing could look like in the 21st century if we force the federal government to return to its basic responsibility. We should then make the case that a reboot of public housing can help Americans all over the country have secure affordable housing.

The real estate section shouldn’t be the only place the average American reads about housing issues. And failures shouldn’t be the only thing they read about public housing. As the paper of record, the Times must do better.

What startups can teach community land trusts about narrative

You just need to sell it to people (neweconomyproject)

You just need to sell it to people (neweconomyproject)

Recently, Grounded Solutions Network, which is the national umbrella organization for community land trusts, received $1 million from Citibank’s development arm to form an accelerator to launch more CLTs. As a housing advocate, a startup founder, and a tech educator who runs an accelerator, I’m excited. I’ll talk about the accelerator in a moment, but I’m particularly excited because it finally gives me a chance to talk about all three through the power of narrative. Forming a strong narrative is drilled into startups from the get-go, but the housing community, so far, has failed to appreciate its importance, or at least how to do it right. That might be changing.

A bit of background first. I got involved with the community land trust movement 6 years ago to help solve the foreclosure crisis in Brooklyn. As part of a grad school studio at Columbia, we were contracted by the New Economy Project (they were NEDAP at the time) to come up with a way to protect minority homeowners from losing their homes or to regain their lost homes from the particularly heinous predatory lending practices that laid waist to many majority-minority communities. (The foreclosure crisis has never endedin these communities, by the way.)

While working with visiting professor Jeffrey Lowe and the legendary Peter Marcuse, we were able to study the CLT model in great depth. I visited and researched the Lake Champlain CLT in Burlington, VT (the biggest CLT in the country) and Dudley Street Neighbors Initiative in Boston, MA (the first community group to be granted powers of eminent domain).

I was and remain enamored by the story of these organizations and the people that made them possible. The CLT model changed the destiny of these communities. It created permanent, community-controlled affordable housing in places largely abandoned by the public and private sectors. These people showed how working together against unbelievable odds could make something big happen.

Their stories made me believe that CLTs could happen in NYC. By the end of the studio, we began crafting a vision for how the model could work and how it could help these homeowners and communities who had been sacked by the financial industry. It was a very exciting time.

However, most people in city government had no idea what a CLT was or flat out laughed at a bunch of lefty grad school students and community groups for suggesting that it could work in the real estate capital of the world (that is slowly changing). This is despite the presence and decades-long success of Cooper Square, the first CLT formed in NYC. Even in the wake of the foreclosure crisis, when the city was taking over hundreds of properties, the model never found an audience. In retrospect, we put a lot of work into research and policy, but failed to appreciate how crafting a good narrative could get people’s attention.

At the same time, on an entirely unrelated note, I was launching my first startup company, Brightbox. (Going to grad school for urban planning and building a tech company confused a lot of people -including my parents- at the time) Brigthbox is a secure cellphone charger for bars, nightclubs, and restaurants that allows people to charge their phones when they need to. My good friend Adam Johnson came up with the idea while we were bartenders in NYC’s Meatpacking District dealing with this problem every night. Our experience as scene-y bartenders gave our product two key insights —highlight security and sexiness. Through some grit, dumb luck, and smart luck, we got funding and began the Quest to Scale into other markets and sectors with some notable ups and downs.

Along the way, there was one key lesson that we could always come back to for guidance — no matter who we worked with, whether it was a dive bar or Disney, as much as they liked seeing the product, they loved hearing the story about how we were bartenders. We saw an everyday problem first hand and did something to solve it. It is a great story.

To this day, it is clear to me that the power of that narrative — simple, plucky, aspirational — is what took Brightbox from a literal cocktail napkin idea to a business with hundreds of kiosks across the country and world. (One of my former coworkers just shared a Facebook memory from Internet Week 2012, where Brightbox shared a small booth in the back corner of an event with Uber. We obviously didn’t learn how to scale compared to them.)

Telling a good story is the foundation for growing a startup company (or a campaign or a religion). It’s what attracts users, talent, and investors that ultimately help build the product and the business. I have kept that lesson with me as I have started my second company, homeBody, and we drill it in to my students at CUNY Startups: Everything is built on the power of your unique narrative. There’s a big problem a lot of people have. But there’s an elegant solution. You’re the one who can make it. You’re the one who can get it to people. A lot of people. And it’s going to change everything.

This urgently needs to happen with the affordable housing crisis. The crisis is massive and painful, but housing advocates have not been able to craft a narrative to solve it that captures the nation’s attention. Coincidentally, as I worked on this blog this week, Citylab had an article about the nonprofit agency Public Interest who is trying to make an “Inconvenient Truth” type doc about the crisis to do just that. I hope they do it.

That’s why I’m so excited about Grounded Solutions CLT accelerator. It shows that a powerful narrative is forming about how to solve the housing crisis: communities taking control. First, the fact that Citibank is investing in it shows that at least some major financial institutions are coming around to the model. I have no love for the financial industry or its role in creating the housing crisis, but there is no way to solve it without them playing some role either. Second, creating a formal structure to grow more local CLTs spreads the model to more organizations and more communities. The more people hear about CLTs, the more they like them. The more they get started and succeed in one place, the more they will get started and succeed in other places.

The Ground Solutions accelerator isn’t like a traditional startup accelerator, but calling it that shows a willingness to adopt a startup vernacular, which is an important signal to the public (and press) that there is something cutting edge going on in the housing crisis. I hope that insight is embraced within the accelerator as well — Leveraging technology to form and manage CLTs; Adopting branding and growth hacking techniques to gain support; telling a compelling story to secure stakeholders in the community.

I’m excited to see the beginning of a convergence with my startup experience and my housing experience. Of course there are unique complexities in trying to scale a community-based model of housing that don’t compare to scaling a hardware startup, but there is at least one major similarity. It’s a heck of a story.

There is a massive, wide spread problem (phone batteries die, housing is too expensive) with a really simple, elegant solution (secure phone charger, community-owned housing.) As the accelerator gets off the ground, I hope that Grounded Solutions, their local partners, and other housing advocates continue to embrace the tools startups use to craft their narrative. The CLT model can be a game changer in the housing crisis if more people hear its story.

3 Reasons Local Landlords Should Support Stronger Tenant Protections

(@homebodynetwork)

(@homebodynetwork)

Cynthia Nixon, the former actress and longtime public education advocate who is mounting a primary challenge to Governor Cuomo, announced a progressive housing plan that continues her disciplined assault on the governor’s dismal track record from the left. The plan, called Rent Justice for all, outlines many long-sought after reforms to protect renters across the state. A few real estate publications, including the Real Deal, have been quick to point out that landlords won’t like it.

I think this is partially true. Some landlords will absolutely hate these proposals and many of those landlords are quite powerful. However, I’m here to argue that I believe there are other landlords that should welcome stronger tenant protections — the majority of landlords, in fact.

Small, local landlords own more than half of the 2.18 million rental units in NYC and most have very little in common with bigger developers, publicly traded property management companies, or private equity firms that have flooded parts of the NYC market. However, small landlords don’t come close to having the same political power, which often means their interests are ignored or actively subverted.

Despite this contradiction, these more powerful interests continue to successfully flatten the perception that all landlords are the same homogenous blob (buffered by the generally uncritical real estate press in NYC). This narrative is obviously false, but big developers and Governor Cuomo trade in it freely. For example, the Governor’s Affordable New York plan does nothing for small landlords and gives away millions of public dollars to major developers (while failing to provide enough actual affordable housing).

This narrative maintains the strict landlord vs tenant political divide that feeds the toxic decades-old political status quo in New York: A small contingent of highly dedicated tenant groups fight to maintain tenant protections while the affordable housing stock slowly disappears. Small landlords get squeezed. Big developers get more tax concessions and rezoning opportunities. And the affordable housing crisis continues on unabated.

Breaking this toxic political status quo is the first step towards addressing the affordable housing crisis on a meaningful level. Housing advocates can start by rejecting the narrative that all landlords have the same shared interests and recognize that small, local landlords are hurt by this dynamic too.

We must do more to convince small landlords that they have more cause to work together with tenants. There is no meaningful solution to the affordable housing crisis that doesn’t incorporate small landlords and doesn’t make it easier for them to operate. As Matthew Desmond points out in his Pulitzer Prizing winning 2016 book Evicted, 3/4 of all affordable housing in the US is provided by small, local landlords. We must make the argument that these landlords will benefit from stronger tenant protections.

In previous blogs, I have written how I think a universal rental control could work, but to sum up quickly, I stress that it would not represent a simple extension of the current system (to be clear, I support the measures in Ms. Nixon’s proposals but think they must go further). It would be an entirely new system that would also need to offer more diversity in housing options (from co-living to senior living) and would absolutely involve trade-offs that no doubt would appear to be painful, particularly for some older rent controlled tenants. Measures to protect these tenants would have to be included (preferably with federal aid). Clamping down on the small minority of tenants that abuse the current system would also be a necessary step as part of a new system. This is no small task and I understand that many readers will be skeptical of even engaging in this discussion.

That being said, the first step in a larger reform is making the easy argument that small, local landlords will have more success by working with tenants rather than bigger landlord interests. Here are three reasons why I think this is true:

1. Simplifying compliance reduces costs and hassle

It is no secret that managing multiple classes of tenants makes compliance more challenging for small landlords. Many of these types of owners are landlords as a second source of income and are not professionally trained or resourced. This invites a lot of mistakes that can turn into costly problems that hurt both parties.

Having all renters fall under the same level of protection would remove a number of the steps that most small landlords trip over. Rather than having to follow every evolving law, loophole, MCI exemption, or annual RGB guideline and see how that impacts certain units, both sides would know exactly what to expect and what is required under a universal system.

A system where protections are offered across the rental landscape for every unit would potentially alleviate a lot of the tensions between rent stabilized tenants and landlords, particularly on fixing infrastructure within units. Much of the distrust that arises between both parties comes from a landlord’s reasonable need to make upgrades to a unit and a tenant’s reasonable fear that this will trigger a rent increase that may lead to a larger decontrol. Without the fear (and perverse incentive) of vacancy decontrol and bonus, both sides can operate in good faith.

It could also offer tenants more options. In many cases right now, landlords and neighbors change while a rent stabilized tenant remains. In a classic example, a tenant might age while their neighbors get younger. This might not be the ideal environment for that tenant, but moving to a better-suited location is virtually impossible financially. Knowing that a system is in place that could provide a similarly priced unit (again, presumably with some federal or state aid) with similar long-term protections could make moving more attractive.

2. More tenant protections mean fewer expensive eviction processes

Eviction is an ugly, painful process for all parties involved. However, the loss of shelter is simply nowhere near the loss of rental income. Greater tenant protections mean more resources to keep tenants in their homes — and to keep the rent checks coming to landlords.

This is already happening in NYC. Mayor de Blasio signed a Right to Counsel bill last year that guarantees tenant legal aid in housing court. These resources mean that fewer disputes will lead to evictions (which could save the city $320m a year). Intervening earlier in the cycle gives the tenant more opportunity to receive the necessary help to maintain good standing with their landlord.

No doubt there are bad actors in real estate (more on that later) but for the most part, small, local landlords aren't; they don’t have the resources for a lengthly eviction fight and don’t want it to get to that point. Landlords also generally don’t want to kick people out of their homes outside of the most extreme cases. They want peace and quiet.

More resources for tenants means a greater ability to intervene at critical junctions when a tenant may be at risk of falling behind on rent payments. Every landlord can support a process that appeals to their humanity and their bottomline.

3. Discouraging bad actors from the market opens up space for more local landlords

One of the biggest, if perhaps abstract, benefits of universal tenant protections to small, local landlords would be the shift in the market that would transpire over time.

The vast commodifcation of the American housing market caused the Great Recession. Instead of solving that crisis by reducing the incentives to speculate on homeownership, the economy has morphed into exploiting rental housing.

Large investment companies, private equity firms, and foreign capital all compete on small-scale properties in NYC. It’s difficult information for the casual observer to find, but, particularly in neighbors facing displacement concerns, these entities are forcing out small landlords who are often local, community-connected operators (which is why I have been stressing the ‘small, local’ modifier.)

The idea that the best, highest use of capital is virtuous on its own merits doesn’t hold up when you see the practical implications of this trend in housing. In many neighborhoods across NYC, poorer residents (many of them minorities) are being replaced by wealthier (largely whiter) residents. (This is a particularly shocking reality in California as well.) Many of these properties sit vacant as investment shields or as Airbnb cash cows.

NYC is already one of the most economically stratified cities in North America. Continuing this trend (which mirrors other trends of disinvestment in public institutions and local infrastructure) is simply not sustainable. The long-term viability of the city, let alone a given neighborhood, is at risk if it is simply closed off to all but a select wealthy population.

NYC is a city of immigrants, entrepreneurs, and artists — many of them start out poor. Many of them start out renting from small, local landlords. This can not end.

I will continue to advocate for more public housing and alternative forms of ownership, but I also believe that the private market must play a central role in property management in NYC. But this must be in the form of local landlords. New Yorkers should be able to cycle into ownership and renting in their communities. As housing advocates, we must acknowledge the importance of local landlords and reach out to them as allies.

The Fight Over SB-827 Shows Why We Need a Massive National Plan for Housing — Again

The Williamsburg Houses (1938) still provides 1,630 homes for 3,121 New Yorkers. (nycarchitecture)

The Williamsburg Houses (1938) still provides 1,630 homes for 3,121 New Yorkers. (nycarchitecture)

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.

Why Tenants Everywhere Should be Excited About the California Housing Proposal

The status quo must change, and maybe it is (mercurynews)

The status quo must change, and maybe it is (mercurynews)

Recently, Scott Weiner, a California state senator from San Francisco, proposed several truly radical housing bills. One would remove local land-use controls and establish density minimums around transit, one would create more worker-specific housing, and another would reshape how local data gets used to determine housing allocations. All three would basically do the opposite of what California has done over the last half century and represents a truly exciting reboot for housing policy with implications beyond the state.

Of course, radical change brings lots of resistance, especially from homeowners. Without being familiar with California politics, I can’t speak to the chances of these bills passing, but in a very important way, it doesn’t matter. At this stage in the affordable housing crisis, the fact that such a radical bill has entered the discussion in California should have tenants everywhere excited.

That’s because the most important part about these bill proposals is how radical they are. Housing advocates need to reject the housing policy status quo. Namely, we must evolve away from deferring to the market worship that frames every discussion (which needlessly creates economic and political winners and losers that harm the public interest) and instead embrace larger principles like housing as a right, which creates a shared vision that strengthens the public interest.

You do this by actually proposing huge, far-reaching visions for housing and outlining simple, clear goals that can achieve them. Senator Weiner has made an important contribution to this effort and, perhaps, has shown the way for more state leaders to follow. Here are three key ideas:

  1. Rolling back the power of homeowners

The first bill, SB-827, would supersede any local development restrictions about height and density close to public transportation centers. I’ll talk about the transit next, but the most important aspect of this bill is creating the precedent to override the power of local homeowners to block development in their cities or towns in the interest of creating more affordable housing.

I’ve written a ton about how policies favoring homeownership have been adisaster for the US. They were demonstrably based on racism; they created shocking economic and social inequalities; and they have caused lasting environmental damage that has also paralyzed our built environment.

All of these problems have manifested into the repressive, anti-democratic power that homeowners have to prevent development near them, which hurts all non-homeowners (and some less connected homeowners). Nowhere has this been worse than in California, where low-density single-family housing still dominates most of the state, especially in economically productive places like Silicon Valley.

Because we treat housing more like an asset than a consumable good, homeowners are incentivized to protect/promote the value of their property. This almost always means restricting what gets built around them out of fear that it would lower property values. And this almost always means passing highly-restrictive land-use policies that go far beyond their original intent of protecting people from pollution, noise, or other nuisances.

These policies typically favor ownership over renting, low-density over high-density, and restricted development rights over as-of-right development. Often they are presented as benign intentions towards preserving the character of the neighborhood, controlling traffic and road safety, or maintaining neighborhood control. But, at its core, they are about protecting or enhancing the wealth of a few incumbent property owners.

The end result is homeowners, through pliable or aligned local governments, are allowed to veto development (public or private) and to block other people from living in their communities. Especially in places like Silicon Valley, thiskills the economic and social mobility that has defined American opportunity in previous generations.

SB-829 will be the biggest political fight of the three bills because it attacks the largely-accepted concept that homeowners have the divine right to dictate development in their towns or cities. But overcoming this misguided and abused view is the first dragon that must be slain to change the housing debate in the US.

2. Combining housing policy with transportation policy

In addition to overriding local land-use control, SB-827 creates a proper incentive (indeed, a mandate) to build close to public transportation. Under the proposal, developers can build tall buildings, denser streetscapes, and fewer parking options as-of-right within 1/2 mile of transit stations or 1/3 mile of frequent bus routes. In fact, the proposal has mandatory minimums for heights and density in these zones.

This has an obvious virtuous cycle. Public transportation is designed to support high-density populations. The more you can build around it, the more people will use it, and the more an area will prosper (see NYC). This creates a more diverse housing stock which allows a more diverse group of people and businesses to cluster in more parts of the state. It’s estimated that the proposal could create an additional 3 million units in these zones across the state. That would almost single-handedly solve the affordable housing crisis in California.

As much as California is portrayed as a car-crazy, traffic-inundated dystopia, this bill rightfully recognizes that many major urban centers already have extensive transit systems or at least the foundation for them. However, ridership on the Metro, BART, and Caltrain, are all declining. This is because the lack of density near lines and stations severely limits these systems’ viability for many residents. If you have to drive to a transit station, you might as well just keep driving to your destination.

With this bill, more people could live closer to these already-functioning stations. Increased ridership and development would create more incentive to invest in and expand these systems across the state. The environmental and social benefits of reduced car dependency would have its own virtuous cycle.

The importance of thinking about housing policy and transportation policy together is the larger principle articulated in this bill and it should be central to all housing advocates’ arguments. Whether you are making a moral argument or an economic argument for housing, transportation should be central to it.

3. Helping every type of tenant and holding every type of town accountable

SB-827 is getting a lot of attention, but the other two bills both have far reaching implications for building more housing for more types of tenants. SB-829 allows farmers to use parts of their land to develop worker housing as-a-right. SB-828, changes the standards for how each city/town collects data required for affordable housing allotment. In both cases, this shows that a comprehensive housing vision can help all constituencies, especially under-represented tenants.

Agriculture makes up a huge part of the California economy. (It shouldn’t, but this isn’t the time/place for that argument, see Cadillac Desert). This requires a considerable amount of low-income, seasonal labor that falls on immigrant (and in some cases, illegal) working populations that deserve, safe, affordable housing too. Many rural communities resist worker-housing for the same NIBMYist reasons (and in some cases, racist reasons) that bigger cities resist density. Senator Weiner is showing a crucial, broad commitment to higher principles of affordable housing that aims to reach all tenants.

SB-828 goes a step even further by changing how housing goals are determined for each city and town through the Regional Housing Needs Assessment (RHNA). Currently, this system is easily gamed by many wealthier towns that get lower allotments while poorer, less connected cities or towns get a higher allotment. This allows some towns to escape development, while raising displacement pressure on others.

The bill would create a streamlined, consistent data collection and analysis process that would create more equity in development across the state. Development can’t just happen near transit centers and can’t just happen near easily-displaced populations. It must be spread across all communities, especially in wealthier ones.

I hope that these bills get serious consideration in Sacramento. There are many reasons to support them and many allies in the state to help do so. Even if they fall short right now (which is no sure thing) they have begun the bigger process of reframing the housing debate in the state that might be suffering the worst from the affordable housing crisis. The rest of us should take noticeand start forming similar plans in our own backyards.

The Coming Budget Will be a Disaster for Housing, but Housers Are Part of the Problem

"The Marriage of Real Estate and Money" (Tom Otterness, 1996)

"The Marriage of Real Estate and Money" (Tom Otterness, 1996)

Republican-controlled Congress passed a major hurdle in their plan to radically reshape the nation’s tax code last week by narrowly passing a budget for 2018 in a close 216-212 vote.  The narrow spread included 20 Republican defections, which is a clear signal of the considerable challenges that lay ahead.  Regardless, this process will be a disaster for housing policy – affordable housing or otherwise.  The fact that this process is proceeding in rapid, secretive, and reckless fashion barely registers anymore shows how far our legislative process has come apart. It also shows how little the housing community can do to prevent this damage and how little it understands the changing landscape of national politics.

I have written extensively about three major threads since the beginning of the Trump Era (although they originate well before) that continue to dominate housing policy discussions. This budget (which is not law yet and is still largely unknown as policy) reflects these trends. The response the housing community has to each also shows how much it needs to change its approach and fight for a simple, clear cause: housing as a right.

1. Down with Public Housing

First, President Trump, despite his incoherencies, has been steadfast in his utter indifference to affordable housing, especially public housing. Given other mounting evidence, it seems more likely that he holds the people (or those people, more aptly) that rely on it in contempt. 

Appointing Secretary Carson has worked out exactly as the President had hoped and as housing advocates had feared.  HUD will face devastating cuts whether the Secretary understands them or not. The 13% across-the-board cuts long-promised by the administration are starting to take form and no one suffers more than the poor Americans who rely on housing vouchers, community block grants, and of course, public housing. 

Public housing authorities across the country will be further starved of funding and will likely turn increasingly to measures such as the Obama-era program Rental Assistance Demonstration (RAD) that provides upfront funding by turning public housing into privately-leased Section 8 units.  Seen as a necessity, or even as a progressive fail-safe by many housers, this program will only weaken cash-strapped public housing authorities and undermine their broader mission. Housers who support RAD will live to regret those decisions instead of rallying around a robust defense of public housing on its merits.

Saying Secretary Carson is unqualified or simply dumb doesn't change the narrative on public housing.  Saying the President doesn't support or respect poor Americans' struggles won't change the support most Americans have for public housing.  Making the case that public housing - and greater federal involvement in affordable rental housing - is good for the country and good for everyone - city or suburb - is the only way to effectively fight the Trump administration.  Right now, the playbook is wracking up losses. It's time to change it.

2. Up With LIHTC

Second, Congress continues to gaslight the housing community about the effectiveness of the main national affordable housing policy – the Low-Income Housing Tax Credit (LIHTC).  Enacted after the last major tax overall in 1986, it has created over 3 million housing units representing 90% of all affordable units built during the period.

That’s seen as a success by many well-meaning actors in housing despite the fact that it is has demonstrably failed to provide the volume of units our country needs.  99% of US counties are in an affordable housing crisis. When the only policy explicitly designed to address affordable housing is failing that broadly, it is irresponsible to defend the status quo. But that is largely what is happening at the moment.

The legitimate fear from this proposed tax cut plan - I won't pretend it's some nebulous "tax reform" - is that lower corporate rates will dramatically weaken the incentive to partake in the LIHTC program. What will be left unsaid is that relying on the private sector to build affordable housing through tax incentives is inherently and obviously flawed.

Instead of arguing for a larger policy shift, many housers will try to defend LIHTC and, by extension, the status quo of federal housing priorities. When, inevitably, both parties do offer some type of carve out for LIHTC to remain attractive, this will be hailed as a victory. We should know better by now. We should be arguing for more policies like community land trusts that offer the same type of decentralized, local control that many communities want, while rejecting the speculative component that largely dictates development today.

3. Upside Down on Homeownership

Third, we have learned nothing from the 2008 mortgage crisis.  Not only have we failed to address the dangers of increased financialization of the housing market, or the more fundamental challenges of slow wage-growth, rising debt, and geographic inequality that is crushing the housing market, but we have never rectified that promoting homeownership for 80 years has been a disaster for our country.

Homeownership has undoubtedly pushed millions of Americans into the middle class but it has also prevented millions more from doing so.  Wealth inequality across racial lines has increased in recent decades.  Racial segregation has increased in recent decades.  The environmental and social costs of single-family suburban sprawl will only get worse as a generation of baby boomers age and realize no one is coming to buy their homes at what they think they are worth.  Nobel-prize winning economist Robert Schiller has long debunked that houses automatically appreciate in the US. In fact, on average, they haven't at all since the 1940s. That's only going to get worse in many parts of the country.

The only minutely (unintentionally) progressive element of the tax cut plan currently under consideration is reducing the mortgage interest deduction, which disproportionately benefits wealthier Americans. This is being met with fierce resistance by the housing industry. It's not hard to see why homeowners and housing developers wouldn't want to support massive tax cuts for corporations and the top percent of earners.  Reducing the MID to pay for tax cuts isn't what many housing reformers had in mind, but it shows how hard it will be to try such a thing under any circumstances.

This is because treating housing as a tool of wealth creation as opposed to one for shelter provision is the definitive policy choice of 20th century America.  We have built a nation on this principle (along with car ownership, which of course is directly tied to housing.)  There are many ills facing our society today and our housing policy explains a lot of them.

To truly change this, we must first accept a blatantly obvious reality: treating housing like an asset has failed.  We have commodified it, securitized it, and speculated on it like it’s something less important than a basic human right.  Many elements of our country have profited handsomely from this.  Indeed, go to any real estate conference now and there will be a technocratic consensus that “the market is doing well” while ignoring the larger truth: our society is not doing well.

Housers must recognize the opportunity that we have to dramatically change the discussion on housing by rejecting the 20th century concept of housing.  Millions of Americans are hurting and are angry.  Ideas that might have once been considered 'radical' by some people - even many housing advocates - are now entering the conversation and public policy. Most Americans recognize that the old way we constructed our politics isn't working. 

We must extend that realization to the built environment and offer a positive, actionable vision for a better future.  Housers have to stop accepting a failed premise and fight to establish a new one. It starts with saying simply, proudly, and forcefully that housing is a right. 

Bipartisan Support for LIHTC Doesn't Mean Either Party Really Cares About Affordable Housing

The consensus is: ¯\_(ツ)_/¯(cnbc)

The consensus is: ¯\_(ツ)_/¯(cnbc)

Last week the Senate Finance Committee held a hearing on a proposal to “improve” the Low-Income Housing Tax Credit (LIHTC), which is the only federal program expressly dedicated to the construction of affordable housing. The program has funded 90%  (around 3 million units) of any such projects over the last 30 years. Part of its touted success is how it has maintained broad bipartisan support in Congress over that period, which is also true of the bill being considered at the moment.  In an era where “bipartisan support” is a seen as a bad thing in many circles if it’s seen at all, this is no small feat. However, don’t confuse support for LIHTC with support for affordable housing.  Both parties are failing to address the affordable housing crisis.

I want to be clear, despite my many concerns with it, the LIHTC is mostly a fine program for what it is designed to do – encourage construction of new low-income housing by subsidizing developers’ costs.  The proposals to update the program, made more urgent by the potential for large tax reform that could undermine the program, are also fine, as far as they go.

The bigger problem is that LIHTC is basically the only federal affordable housing policy (Section 8 vouchers is a much smaller program), which is very bad.  99.9% US counties don’t have enough affordable housing. 11.4 million Americans are severely rent burdened.  75% of Americans who qualify for housing assistance don’t receive any.  Several million Americans are housing insecure or homeless.  The drain on our economy and the stress on our society are staggering.

 If LIHTC has been the only program at the federal level that addresses affordable housing construction, and we’re in the midst of a crippling nation-wide affordable housing crisis, then the program is obviously failing by a wide margin. That shouldn’t be a controversial statement.

But no one is saying it.  The testimony at the Senate Finance Committee was from a wide range of developers, advocates, and policy wonks.  They all spoke passionately and knowledgeably about the affordable housing crisis and about how important LIHTC is to addressing it. I don’t doubt the sincerity and expertise of anyone involved in the process. But the narrow focus of this hearing ignores the larger questions that we should be asking these experts and advocates.

There is a slow moving unnatural disaster in our country and our bipartisan answer is not actually an answer.  Even if the new proposal is enacted, it is estimated that it will create about 1.3 million units over 10 years (an addition of 400,000 units).  We need 7.4 million units just for extremely low-income Americans.  How does anyone think LIHTC is working if that’s the known and accepted gap?

What else could we be doing? Could we suggest radically expanding LIHTC or radically redesigning it? Could we be radically expand and rethink Section 8 vouchers or mandate that they must be accepted everywhere? Could we also expand public housing funding rather than keep undermining it? Could we be introducing alternative models like community land trusts and SROs at the national level?

The urgency and relentlessness of the crisis demands bold thinking and honest self-assessment.  Accepting the premise that LIHTC is the best answer that only needs a few marginal tweaks is a failure of public duty and intellectual honesty.  Our representatives need to represent all ideas that could help the affordable housing crisis. Housing experts and advocates need to take advantage of a rare opportunity like a Senate hearing to challenge every premise and assumption. That wasn’t what happened this week.

It is a simple truism in politics that when both parties own an issue, no one owns it.  By creating a large program like LIHTC that accepts basic market-principles but has an ostensibly low-income focus, both parties can sign off on it comfortably.  When housing comes up as a political issue, which is rare, both parties can point to their support of LIHTC to show that they are “good on housing” even though the program falls well short in practice.

This political reality is why no one challenges the premise that LIHTC is a great policy tool or that it can address the affordable housing crisis alone.  The truth is, neither party has an answer for the affordable housing crisis. Instead, they both have accepted the same flawed market premises about housing as an asset rather than a basic right. 

Both have also so thoroughly bought into the myth of promoting homeownership that neither has a policy infrastructure or donor constituency outside of that (it will be fascinating to see if rumors of reducing the Mortgage Interest Deduction will actually materialize during the tax reform debate).  It is much easier to hold up the LIHTC to show that you are doing something and shrug about how it’s the best you can do under the circumstances.  It is much harder to admit that LIHTC is not working and that he accepted policy framework on housing is not enough.

On that last point, I’ve had conversations with folks that defend the program by saying it’s not intended to be the only solution.  But again, where are the other solutions? The oxygen in housing policy gets sucked up by LIHTC and until that changes, we’ll keep accepting that this is the best we can do.  We’ll keep allowing both parties to point to an obviously inadequate policy and let them off the hook. We’ll keep boiling in the affordable housing crisis by accepting a deeply flawed premise about the nature and purpose of housing.  This is not good enough.

4 Reasons To Be Excited for Community Land Trusts in NYC

Cooper Square CLT shows they already work in NYC (urbanomnibus)

Cooper Square CLT shows they already work in NYC (urbanomnibus)

This past week marked an exciting development in affordable housing policy in NYC.  HPD has announced that it will give $1.65m through a grant program from Enterprise Community Partners to four groups to develop or expand community land trusts around the city.  Though it is a small amount of money, it is a giant step for the city and could serve as a larger evolutionary step in housing policy.  What happens next with these groups will be important, but undeniably a new policy tool has entered into the housing debate.  There are many reasons to celebrate this and I’ll outline four today.

A Community Land Trust is an alternative form of ownership that separates the value of land from the value of the shelter on it. It does this by placing the land in a community-controlled trust that removes it from the private market permanently.  This separation removes the speculative nature of real estate from the cost of shelter, maintaining a consistent level of affordability. 

CLTs have been around, notably in Burlington, Vermont, for decades, but have had limited support and awareness in NYC.  One of the groups receiving funding is Cooper Square, the only current CLT in the city.  Its success over several decades has played a considerable role in getting the city to believe in the model.

Along with Cooper Square, the other three groups are Interboro CLT, a new partnership of organizations, East Harlem/El Barrio, a brand new tenant CLT, and the NYC Community Land Initiative, the long-running regional group dedicated to helping groups form CLTs.  These groups, along with the New Economy Project, have been working on getting to this point for years.

I’ve always believed CLTs could work in NYC (and worked with NEP back in 2012 on a CLT project) because there are so many opportunities with the right combination for success: organized community groups and lots and lots of small, existing properties.  Given how the Mayor has put such a priority on affordable housing and has tried to frame it as a vehicle for community control and inclusive growth, community land trusts are a no brainer. Let’s turn to why.

1. They are Really Cheap

As an affordable housing tool, CLTs are really inexpensive because they rely on existing housing stock (but can still create new development), which is always going to be cheaper than new construction.   The basic model would include a single, upfront subsidy provided through an agency like HPD, or potentially a non-profit like ECP, to purchase a parcel or parcels of land to turn over to a CLT.  After that contribution, CLTs are effectively self-sustaining. (There are legitimate questions about how much subsidy is needed in addition to land costs to make individual units even more affordable, but these are best left to individual cases.)

Compare this model with our current reliance on market-based solutions that cost hundreds of thousands of dollars per unit.  As I mentioned in last week’s blog, the mayor’s plan relies on tax incentives that make each new “affordable housing unit” come in at between $400,000-$600,000.  Spending billions of dollars on building new units at that cost just doesn’t make sense and will never produce the number of units the city needs.

So much focus has been put on new development and the need to create more density that we forget that preserving existing units in many neighborhoods accomplishes the same affordability goals for a lot less money and in a shorter time frame.  It’s estimated that over the next few years, 100,000 affordable housing units will be lost to deregulation and vacancy decontrol.  Think of what a difference putting those units into CLTs would make for overall affordability and think about how quickly and cheaply that could be accomplished. It is stunning.

2. They Prevent Displacement

Another complimentary feature of CLTs in NYC is that they are likely going to be most effective in neighborhoods that are on the brink of gentrification but haven’t seen new development or upzoning yet.  The land will still be affordable in most cases, keeping the subsidy cost low.

More importantly, establishing a CLT will allow existing residents to remain in their communities.  The logistics of converting a market-rate, or even rent-stabilized building, into a CLT is seamless and doesn’t involve tenants moving. 

New construction generally means displacement when an old building is torn down, with very little likelihood of those tenants returning. New construction also begets more new construction, which drives the speculative nature of real estate into new neighborhoods. Very few existing residents benefit under this dynamic (although its complicated.) Even building on empty lots under the current model makes it difficult for existing tenants to have access to new “affordable” units. 

By allowing existing residents to remain in their homes, especially renters who don’t have the benefit of equity gains as neighborhoods gentrify, even low-income residents have the opportunity to benefit from the positive aspects of growth and new development.  Rather than continue with a generally zero-sum development pattern, CLTs allow neighborhoods to have more inclusive growth.

3. They Provide Community Control

Along those lines, CLTs are the ultimate tool for community control.  They allow residents to have a larger say in their neighborhoods through the voice of the CLT.  Renters in particular are generally underrepresented as stakeholders in an area, but as members of a CLT, they become more powerful advocates.

To be clear, I don’t see this as a NIMBY/YIMBY issue.  Community control doesn’t mean community resistance to change.  The dynamic now, and why so many neighborhood groups do resist any change (although with limited success in reality), is that development doesn’t help existing residents.  Who would want to allow massive disruption in their neighborhood that will probably result in having to move at the end of it?

When long-term residents have the ability to be part of the long-term change in their neighborhood, when they can rightfully envision their futures’ there, then it becomes less about resisting and more about shaping.  The end result is a more economically, socially, and politically dynamic neighborhood which is what the whole city should look like.

4. They Compliment Private Development

A big point of supporting CLTs that I want to make clear is that they are a complimentary piece in a larger policy toolkit.  I don’t think they are a panacea or even appropriate in every instance.  But having them as a pillar or at least an option creates more space in housing policy for community control and non-market solutions.  This can eventually allow more resources to go into new construction of private or public housing with government assistance.  It’s all connected.

If we can create a policy frame work for CLTs that allows a significant number of units to be preserved at a very low cost, that leaves more room and potentially more money to drive new development in more targeted ways.

I’d rather see some of those billions of dollars the Mayor has allotted to subsidize private development used to improve the subways and buses.  A better transportation network extends the housing options for all New Yorkers.  I’d rather see it go towards supporting NYCHA, which houses over 400,000 New Yorkers. Pubic housing has been a vastly successful government program that should continue to be a priority. Finally, I’d rather see our public funds going towards building working class and middle-class housing where it is needed rather than subsidizing luxury construction in glitzy parts of Manhattan.

The total amount is modest and the details of how the model could work in NYC still need time to develop, but trying community land trusts in NYC should excite everyone concerned about affordable housing and the future of NYC.  Provided with the right support and deployed in the right areas, CLTs could be a major evolutionary step for the city as it struggles to solve the affordability and homelessness crises.

5 Arguments to Help Change the Debate on Public Housing

A beautiful day at Mill Brook Houses (homebody)

A beautiful day at Mill Brook Houses (homebody)

Despite the unprecedented affordable housing crisis across the country, there is seemingly no popular support for more public housing. President Trump instead reflects the general sentiment in Congress by outlining a budget that would cut billions of dollars from housing assistance for millions of low-income Americans. Though many residents, housing groups, and elected officials are speaking out against these cuts, they are hobbled by a lack of national attention. Frankly, I believe it’s because their message “#nocuts” is hardly a battle cry, as important as it is.

If we are to prevent these draconian cuts from becoming law this year, we must put as much pressure on Congress as we can. It’s likely that some of these programs will be saved if we do. But simply reducing the cuts or saving certain programs is not enough to help the millions of Americans struggling to find affordable shelter.

We must fundamentally transform the discussion about housing in the US and we must once again create a national effort to support, build, and maintain public housing on a significant scale. In the spirit of “#nocuts” I have outlined 5 hashtags that describe where I believe we can succeed in doing so.

1. #HousingIsARight and Denying it is a Crime

We live in a deeply segregated country. This is not an accident. This was not an organic result of natural clustering or preferences. As Richard Rothstein has pointed out in detail in his book The Color of Law, it was the result of direct, explicit federal and local policy decisions to favor white Americans over all other types of Americans. The US Government made housing a de facto right for white people and denied it to black people and other minorities. The consequences have been devastating.

A lot of people, including the Supreme Court, do not know or accept this. This can no longer be tolerated. Just as we are finally taking down statuescelebrating an armed insurgency based on white supremacy and slavery, we must also face the blatant suppression that has been staring us in the face for generations every time we drive from a suburb to an inner-city core. The geography of our built environment must finally be accounted for with proper historic context.

Only by recognizing that housing is a basic human right and a basic obligation of our government, will we ever truly reconcile with and change the accepted narrative that downplays the scale of suppression. The God’s honest truth can tear down more than just statues in this country.

2. #RealTakers and Subsidizing Wealthy Homeownership

Once we accept how awful our housing policy was in the 20th century, we can then take a critical eye to how terrible our current housing policy is in the 21st. The specter of racism undoubtedly hangs over our current policies by the sheer scale of previous decades. However, today the true outrage is more about class.

As Matthew Desmond, author of Evicted, has recently written about, the federal government spends $134 billion a year — more than the entire budget of the Education, Justice, and Energy Departments combined — subsidizing homeownership, particularly through the Mortgage Interest Deduction. About 60% of that money goes to wealthy homeowners. The 7 million households that make over $200,000/year receive a larger share of that savings than the 50 million households who earn less than $50,000/year.

This is far from “free market” principles and in fact inflates the housing market to the benefit of wealthy homeowners. It’s estimated that removing such programs could reduce housing prices across the country by 13–17%, making it far easier for many people to purchase a home if they chose.

When a record number of Americans are rent burdened, and over 600,000 Americans are homeless, the fact that we subsidize these homes is a national disgrace. By placing a hand on the scale (again, for explicitly racist purposes) the housing market has exacerbated the economic inequality ravaging all quarters of the country.

Let’s start calling these households what they actually are: takers. Let’s remove the moralizing and euphemisms around how some politicians use that term currently and instead, by placing basic logic and fairness on it, aim it towards those who are actually taking the most from all of us.

3. #PublicHousingWorks and Has Always Worked

Despite decades of discriminatory policies favoring white homeownership (and now more general wealthy homeownership) and systemic neglect against everyone else, we can still point to an obvious truth: public housing works.

During the brief period when there was popular support for public housing and federal intervention in general, the US government built thousands of units. Though some, like Pruitt-Igoe, became shorthand for crime and neglect, the larger truth is that many more continue to be wonderful homes. And the complexed that did fail, failed because the federal government let them fail due to systemic neglect and more racial discrimination.

NYCHA is by far the largest public housing authority in the country, housing nearly 400,000 people across thousands of units. It is a bigger city than Miami and Las Vegas. Despite a rapid retreat of federal funding and larger demographic shifts that decimated NYC in the 1960s and 1970s, NYCHA has endured. Even today, as it faces billions in capital budget gaps and millions more in potential cuts in Trump’s Budget, residents are happy with their communities and the agency. And only 13% of residents receive public assistance.

The idea that Public Housing is a wasteland where people want to get out of, or where they should be encouraged to get out of, has never been true. As Affordable Housing in New York shows repeatedly, even in the hardest times when crime was high and many facilities were in poor shape, these communities survived and in some cases thrived.

NYCHA residents should be proud of where they live. Employees of the agency, past and present, should be proud of the work they did and continue to do to keep it going when no one could or would help.

Public housing residents shouldn’t be pitied or demonized and they don’t need to be romanticized either. They are normal Americans who happen to be part of something bigger than any one person or one building. Their experiences represent just how much the republic can achieve if it follows its values and how many it can fail when it abandons them. We should be telling this story everywhere to everyone.

4. The #FutureOfPublicHousing Will Not Look like the Past

There were many flaws in the design and support of public housing in the US during the 20th century that caused many complexes to fail outright or fail for a period of time. Early generations of complexes were sterile and anti-social. Many of the funding sources were fleeting and easily diverted. Sociological assumptions in design were flawed and discriminatory.

No one is suggesting that we go back and do this over again. Throw out the idea that public housing means tall brick towers isolated from neighborhoods. Instead, we should articulate a new vision for the 21st century that reflects lessons learned from the past and a broader mission for the future.

Instead of building new residential towers on superblocks, repurpose older infrastructure and combine multi-use functionality within existing city and town fabrics.

Instead of designing uniform apartments or complexes with rigid specifications, allow for innovative construction techniques like pre-fab units, modern SROs or shared living arrangements that strive for different, locally desired outcomes.

Instead of subsidizing homeownership (especially for wealthy Americans), invest those resources in community land trusts and land banks to give local communities more agency and sustainability. Take the speculation out of (at least parts) of the housing market by tipping the scale towards affordability.

We should simplify yet broaden HUD’s mission based on housing as a right. Set its goals and budget around lowering the cost of shelter across the country in whatever forms that shelter is needed for local conditions. Make HUD about providing Public Housing whether it’s apartments or a single-family home.

The possibilities of future Public Housing are almost endless when you shed the vision of the past. Let’s start showing the country what the future could look like and how it could help everyone, whether you live in a city, a suburb, or the country.

5. #RebootTheUS Can Start With Public Housing

The polarization of our politics has increasingly bled into all corners of our public policy discussions, crippling our ability to address the challenges facing our rapidly changing nation and planet. The polarization of our economics, in the form of runaway income inequality, has also poisoned our broader civic life and national identity. We were in crisis long before President Trump and will remain so long after him unless we can do what America has always done best — reinvent itself.

As when the Gilded Age spawned the Progressive Era and the Great Depression spawned the New Deal, we must lay the seeds now for a great rebirth of national promise and purpose. We must embrace the core values and aspirations of our republic — freedom, justice, and the public interest — and shed the rot of late capitalist values of commodification, exploitation, and greed. In the digital age, no term better represents what I think we need than a great “reboot.”

And there’s no better place to start than with public housing. Committing again to a massive nation-wide effort to provide affordable housing in many forms not only addresses the moral urgency of our current situation, but it also addresses the economic urgency as well.

Public Housing is infrastructure. Its creation means jobs and economic activity on a scale unseen in decades. Its existence means more take-home income for millions of Americans who are rent burdened or underwater in their mortgages. Its location means more mobility for families and individuals in economically productive regions.

What other effort could so thoroughly demonstrate the power of a great national reboot to inject economic and civic purpose into a country that should never have to sacrifice either. We don’t need to abandon the experiment of national government to do so. We need to reinvigorate our civic intellect as well as our institutions. We start by showing how a focused federal effort in housing can promote our values, help our citizens, and share our prosperity.

None of these ideas are new or radical. They reflect an obvious truth about contemporary America: what we have now is not working. We are ultimately presented with two options. First, we can continue on with our late capitalistic doctrine that we are all consumers on our own or, second, we could revitalize our identity as citizens and recognize that we are in this together. One leads to a brutal, empty society. The other leads to something much stronger and fulfilling.

In Debt We Trust

Going in the wrong direction (privatedebtproject)

Going in the wrong direction (privatedebtproject)

As Slate writer Henry Grabar pointed out this week, the US reached a symbolic (but, admittedly, arbitrary) milestone in March when the total amount of household debt measured by the Federal Reserve reached $12.73 trillion, surpassing the previous high in 2008.  There’s nothing inherently wrong with holding debt - capitalism can’t function without it - but the type of debt that Americans now hold has changed considerably, especially in the last ten years, and the trend is troubling.  This change is inescapably linked to the affordable housing crisis and the larger crisis of late capitalism that we are slowly waking up to. 

Home mortgages make up the vast majority of household debt ($8.63 trillion, 68%), which is to be expected, but student loans ($1.34 trillion, 11%) and car loans ($1.17 trillion, 9%) have risen as a share of total debt to a remarkable degree just in ten years (from 5% and 6%, respectively).  Credit card debt ($764 billion, 6%) and home equity credit ($456 billion, 4%) are the other large debt categories, but like mortgage debt, their relative share of total debt are about the same over 10 years.

I pointed out earlier that the milestone of $12.73t is basically arbitrary because it’s not adjusted for inflation and doesn’t contextualize the overall growth of the economy.  Relative to the size of the economy, this level of debt is 67% of GDP, down from 85% of GDP in 2008 at the height of the crash.  You could argue that this shows we are in better shape than 10 years ago, which is true, but it also shows that even “better shape” is not very good.

So what does this all mean? And how does this inform the affordable housing crisis?

Basically, all of these numbers reinforce the narrative that Americans, particularly of the younger and poorer variety, are struggling to gain security in today’s economy at an unprecedented scale – even as the economy continues to grow and corporate profits continue to increase.

Having a degree, having a car, and having a house used to be affordable ways to gain entry into the middle class.  But these assets are exponentially more expensive today than 30 years ago and we are going into greater debt to get them.  What's worse, they aren’t the guarantees of security they used to be.  That’s not a sign of a healthy economy or society.

There is one simple explanation for why this is happening: workers are not getting paid enough.  Since 1973 the average economic output per worker has grown by 72%.  That’s a steady clip of increased productivity (though it has slowed down) and is partly the result of the Information Technology revolution in the work place.

However, during that same period, average wages have only gone up by 9%.  Since 2000, this gap has gotten even bigger. Productivity has increased by 21% but wages have only increased by 2%.

As the Economic Policy Institute points out in a 2015 report, this was no accident. The explosion of compensation at the top end of the pay scale and the concentration of profit at the shareholder level (as opposed to labor) are the direct results of 30 years of federal regulatory, trade, and tax policies.  We live in a deeply unequal period as a result of a particular form of government intervention.

(As the recent American Airlines effort to raise wages shows, even corporations that try to buck this trend are punished in the market.)

It’s no surprise that by the late 1970s household debt started rising rapidly while personal savings decreased rapidly. By the early 1990s, the average Americans household had more debt than savings (as the picture at the top of this article shows). This trend has only gotten worse, despite a slight dip during the Great Recession. 

Our consumer culture didn’t adjust to a decrease in wages (or even put political pressure on increasing wages.)  It simply created new financial tools to allow us to keep spending.

There has long been the basic idea that there is “good debt” and “bad debt.”  Good debt is an investment in the future, like taking out a loan to build a bigger factory, which pays for itself in the long run. Bad debt is borrowing from the future to cover today, like a pay-day loan or covering operating costs with capital budgets. That rarely works out.

The problem today is that it’s no longer clear what debt is good and bad.  Student loans were generally seen as good debt - an investment in acquiring skills that will pay off in the long run in a higher salary - but its unclear what skills will be valued and at what salary in the near or long term economy.  The cost of undergraduate and graduate degrees have also increased dramatically as we have placed more importance on them as a society – all while their value has become more uncertain.

Nowhere is this debt doubt more apparent than homeownership. Even though homeownership rates are at the lowest they have been in 50 years, 64% of Americans still own their home. This represents the bulk of American households’ wealth and financial security.

As I’ve written before, that’s no accident or organic market outcome either.  It has been a concentrated policy effort at the federal level for 80 years.  We spend $134 billion a year subsidizing homeownership in this country – more than the entire budget of the Dept. of Justice, Education, and Energy combined.

The thinking was (and still is for the most part) that homeownership drives economic growth nationally and economic security personally.  (We really don’t know if that’s the case objectively because our society has been built around subsidizing this theory.) But, despite all of this intervention, these two basic conceits are not holding up in the modern economy. 

First, the idea that homes are guaranteed financial security is largely not true over the long run.  Robert Schiller has written often about how, despite the hype of house flipping or the recent bubble, home values on the national level haven’t increased at all.  For every hot real estate market like Las Vegas, there is a dying one in Youngstown, Ohio. 

Additionally, the foreclosure crisis never really ended.  There are still 3 million Americans underwater in their mortgages and many millions more that are dangerously close.  There has been a steady, if slow, increase in foreclosures in several markets.  Another downturn and we could see another spike.

Finally, and perhaps most troubling, there is an entire generation of suburban homeowners in certain markets (the Northeast and Midwest in particular) retiring whose wealth is tied up in homes that no one wants to buy.  The paper wealth associated with a home is only real if someone buys it at that price.  Long term demographics and economic development trends should cast serious doubt on the value of many of these homes in the near future.  

Second, the emphasis on homeownership (particularly in far-flung suburbs) is terrible for the national economy’s future.  All signs point to millennials wanting to own homes just like any other generation, but that doesn’t mean they will want to live where cheap single-family homes are available, because those areas don’t generally have a concentration of accessible, high-paying jobs.

On the flip side, high-paying jobs are increasingly concentrated in cities with highly regulated land use and, not surprisingly, housing prices have skyrocketed.  The economic benefit of high wages are largely gobbled up by big down payments and expensive mortgages, which limits the ability for a household to invest in other purchases.  

The federal government has consciously created the affordable housing crisis through debt on two fronts.  On the one hand, they have spent decades, along with billions of dollars, encouraging suburban homeownership through subsidizing mortgages among other policies, which has counter-intuitively created an asset class that has little re-adaptability as the economy changes along with demographics. Millions of Americans have wealth tied up in their homes that might simply vanish in the coming decades.

And on the other hand, they have instituted 40 years of economic policy that has frozen wages for the majority of Americans while lavishing profits on the top individuals and biggest corporations.  They have allowed increasingly exotic and pernicious financial tools to mask this scandal by allowing people to build massive amounts of personal debt.  Only after the crash did they properly regulate the mortgage market (now 60% of mortgages go to individuals with high credit scores, double from a decade ago) while other debt markets (particularly car loans) are largely under-regulated. 

Because there is no such thing as the free market without government intervention, we must re-examine what economy we want our government to create.  Do we want a debt-riddled society that is financially vulnerable at a near-permanent level? Do we want a society that politically and financially rewards a tiny percentage of the population at the expense of the rest?

Our government has created a homeownership society that is increasingly based on higher levels of debt. It has the power to create an affordable housing society that doesn’t rely on debt.  It’s up to us to make it do so.

Frontline Doc on Housing Crisis Sidesteps Larger Problem

Is that light at the end of the tunnel? (pbs/frontline)

Is that light at the end of the tunnel? (pbs/frontline)

 

This week, Frontline  released a documentary focusing on the affordable housing crisis. Specifically, reporter Laura Sullivan examined Section 8 and the Low Income Housing Tax Credit (LIHTC) - the two main federal policy tools tasked with providing affordable housing - to see why these programs are not making an impact on the crisis. The doc suggests the reason is a combination of local resistance, lack of oversight, and outright fraud. Though these do play a role and must be addressed, the larger issue is that the US does not see housing as a right. Without focusing federal policy around this principle, the current, weak federal intervention in rental housing will never solve the affordable housing crisis.

The documentary is at once heartbreaking and hopeful. We see individuals and families that are trapped in a cycle of poverty utterly beyond their control. But we see individuals who have benefited from low-income housing programs, who now have a stable home for the first time in their lives. Though the documentary does not make a value claim, it shows how decisive an affordable home is in the outcomes of Americans, and how important it is that we provide one as a society.

As the doc points out, however, only 1 in 4 Americans who qualify for housing assistance receive any. That there are so many Americans who need housing assistance (approx. 12 million) and that they do not receive it are equally scathing indictments on our nation’s priorities.

The Americans that do receive aid do so mostly through Section 8 vouchers, which allow an individual to rent a home (that accepts the program and has a certain cap) and to pay no more than 30% of their monthly income for it. The federal government, administered through the states, covers the difference. The program costs about $30 billion a year (less than half the cost of the annual mortgage interest deduction) and houses 2.1 million Americans . It was started in 1974 as a correction to the mistakes of concentrating large public housing blocks in poor urban neighborhoods, but more on that later.

Part in parcel with Section 8 is housing built through the LIHTC that generally requires a percentage of units be put aside for residents with those vouchers. As I explained here, LIHTC was part of the landmark 1986 tax reform and created tax incentives for affordable housing construction. The idea was/is to create affordable housing by allowing developers to sell IRS-issued tax credits to private investors for cash towards their projects. A given community gets nice new affordable housing, the investors (usually banks) get a significant tax credit, and the developers make a small profit.

It’s the ultimate public-private partnership and a lot of people across the political spectrum support this premise. LIHTC has built 2.7 million affordable housing units over 30 years and represents 90% of all affordable housing construction in the country.

To recap, the federal government’s answer to the affordable housing crisis is to incentivize the private sector to create affordable housing and to then help subsidize some residents into those units. But as Frontline shows, this premise is deeply flawed at almost every point in this cycle because the federal government is basically absent.

Beyond the fact that so few receive Section 8 vouchers, those that do often face incredible odds against finding a home anyway. Many landlords simply refuse to rent to people with Section 8 vouchers. Few wealthy communities, which are closer to better jobs and schools, offer Section 8 housing at all. And, as witnessed in the doc and elsewhere, those individuals that get a home in those communities often face a disgusting level of communal and institutional discrimination.

Section 8 was not designed with enough understanding or acknowledgement of how race and class define that geography of our nation and how that geography provides opportunity. As a result, the program is incapable of overcoming this aforementioned type of local resistance and discrimination. “Section 8” is often a shorthand for a racial slur in many places and existing residents don’t want them in their communities.

Luckily for those residents, cities and towns have many ways around providing Section 8 housing, whether explicitly through zoning or implicitly through delay tactics, as the doc points out. Even though the Supreme Court has intervened to acknowledge and try to prevent this, decades of institutional discrimination have limited the ability of any current federal programs to overcome local governments. Additionally, the current administration is unlikely to enforce any real changes at the local level.

As for the other end of the cycle, the LIHTC is a deeply flawed policy tool. I have discussed why it only works in relation to other bad tax policy that might not last, why its focus on market principles limits individual developments’ effectiveness in size and location, and why its complexity actually drives up the cost per unit.

However, Frontline focused on two elements that I did not cover: corruption and lack of oversight. Because LIHTC funds are administered by the states and cities have significant local discretion on development, there is a lot of ambiguity to how developers proceed through this regulatory complexity. The result, at least in some cases, has been kickbacks or pay-to-play schemes that have led to several high-profile federal corruption convictions.

Any big dollar programs are going to attract bad actors and I’m not convinced that fraud is a systemic issue with LIHTC, but the point is, we really don’t know. There is basically no federal auditing. Most state housing agencies simply don’t have the resources to audit the program either. In many cases compliance and cost estimates are done pro forma which means, outside of the small sample of investigations, it’s difficult to tell if there is a bigger problem at hand. However, given the widespread corruption in the mortgage industry leading to the crash in 2008, it’s not hard to imagine that a lot of federal tax dollars are getting sucked out of affordable housing.

Section 8 and LIHTC were programs that evolved after the New Deal/Great Society eras of mass public housing development funded by the federal government. The popular consensus is that those years were a failure of public policy. No doubt many Jacobisan neighborhoods were destroyed by Urban Renewal projects and in their wake highways and lifeless towers concentrated poverty around isolated pockets of cities. Public housing became synonymous with crime and anti-social behavior that crippled those communities for decades. There were absolutely many terrible failures with this approach.

But the truth is more complex and more sinister. The failures with the era’s specific approach to public housing undermined the premise of public intervention in housing overall. Public housing was neglected almost as quickly as it was built, while the federal government intervened massively to create suburban America and its twin pillars of car ownership and home ownership. It wasn’t that the premise of public housing failed, it was the commitment to it that failed. Intentionally.

By the 1970s, the idea that the federal government can, let alone should, intervene in the rental housing market died along with the liberal consensus that controlled domestic politics for 40 years. But the problem of providing affordable housing didn’t go away. Section 8 and LIHTC were follow up neoliberal admissions that the affordable housing problem could not be fixed by the market alone.

However, they were built on a flawed premise that failed to acknowledge how much the federal government intervened in homeownership and how much that intervention fell along racial lines. Under that premise, there is no way these programs could possibly tackle the structures that created the affordable housing crisis to begin with.

In fact, they have made the crisis worse by calcifying the national policy conversation on housing. Both parties (for the most part) continue to point to the two programs as evidence that the federal government is doing all that it can — and that it’s working. This is a politically convenient fantasy for both sides.

The death of public housing as national policy after the 1960s proves two related points: first, the federal government can decide how it wants to house Americans and, second, it can make it a reality. The US decided that post-war economic growth would be based on cars and homes and built policies to guarantee that outcome. It worked.

If the federal government (or more accountably, we as Americans) wants to end the affordable housing crisis, we can. It will never end through Section 8 or LIHTC. It will never end by addressing the flaws in those programs raised by the Frontline documentary. It will never end by subsiding homeownership. It will only end if we commit to the simple concept that housing is a right and start re-imaging our country from there.

5 Reasons We Need More Federal Intervention in Housing

The United Cities of America (wired via garrettdashnelson)

The United Cities of America (wired via garrettdashnelson)

This past week, Urban Institute released a report on the dire state of the affordable housing crisis.  Put simply, every county in the country has a significant shortage of affordable rental housing.  Every. Single. County. This report focuses on extremely low-income (ELI) households (which make 30% of average median income) and shows that there are only 21 market-rate units for every 100 ELI renter households. The number climbs to 46 units with federal programs.  On it’s own, this report shows why federal intervention in housing is so important to this population, but taken in a broader context, it shows why we need to re-embrace the type of large-scale federal intervention that we saw from the 1930s-1960s. Here are five reasons.

1. Localism Makes Things Worse

“Localism” is a call for more local autonomy that acknowledges the deep geographical divisions that have paralyzed our federal government. Frenemies Richard Florida and Joel Kotkin have come together to make a compelling argument for why the only way to overcome this is to essentially admit defeat, avoid relying on the federal government, and let local preferences control tax dollars/policy. 

As I explained in last week’s blog, though both scholars, coming from different ideological perspectives, present solid reasons for supporting this idea, there are two practical problems that would potentially make the housing crisis worse.

First, we already have localism and it stinks.  As Matthew Yglesias pointed out recently about Palo Alto, localized planning policy has skewed political outcomes for one constituency – the connected present – at the expense of the non-connected present (and the future). These local groups in these select economic areas are suffocating the entire national economy. Right now.

Second, the history of NYC before the dawn of federal intervention in the 1930s shows that in many cases, even at the local level, the interests of “financial power” and “voting power” rarely align and at best create a corrupt status quo that serves only the leaders of each faction.  We wouldn’t likely see a return to political machines, but can we assume that contemporary “financial power” and “voting power” have similar political goals? Or can they find political strategies that both sides buy into?

Whether its local planning policies that prevent growth or deeply divided local political interests, our current reliance on localism is counterproductive. Removing the small federal power that exists now would only make these issues worse. We need to supersede these local interests as a nation.

2. Regionalism Has Too Many Boundaries

A counter-argument presented to localism is regionalism.  Amy Liu wrote about several areas – Chicago, Denver, and Seattle – where local municipalities are working together, across city-lines, to create equitable development.  Though these examples are encouraging, they show the larger political conundrum of planning this way.

Regions, let alone cities, are not recognized in the Constitution, which poses fundamental challenges to cooperation and coordination at the sub-state level. You only need to look at the dysfunction in North Carolina over Charlotte’s bathroom policy to show that the partisan divisions at the federal level are just as toxic, if not more so, at the state level. Cities and regions are not powerful enough to overcome bad state-level planning.

Even worse, NYC shows the challenge of interstate coordination.  Hundreds of thousands of commuters are stuck in perma-hell over the deteriorating train tunnels under the Hudson River, partly because NY and NJ have bickered about who pays for what. Forget Bridgegate, Governor Chris Christie's legacy will be scandalized for canceling ARC.

State boundaries in many cases do not reflect the larger economic and political cohesion of a commuter-shed and instead have the affect of pitting residents of the same region against each other or putting residents in one state under the whims of politicians in another. The only recognized power to overcome these obstacles – to get cities, states, and regions to work together - is the federal government.

3. There Already is Intervention - Just the Wrong Kind

The US is a majority suburban, majority homeowner society.  Why? Because the government decided that we should be. More specifically, the US federal government decided to promote white homeownership and car ownership as the bedrocks of the post-war American economy by building free highways, underwriting mortgages, and segregating neighborhoods.

There is nothing organic or market-driven about how our communities are organized in America.  These were political choices that tipped the scales decidedly towards certain outcomes that were not pre-destined and were certainly not universally accessible.

Over the last 80 years, the US government has spent trillions of dollars subsidizing the suburban expansion of our country.  Even today, 60% of government spending on housing (over $100b) goes to subsidizing homes for wealthy Americans.  We don’t think of this as a ‘handout’ in the classic sense, but it absolutely is and it has had immeasurable consequences to our society.

If we acknowledge that the federal government has always played a central role in our economy, we can get over the childish ideologies that continue to harm our country.  Instead, we can focus on how we want the government to intervene.

Do we really want to spend billions of dollars subsiding the homes of wealthy Americans when we can spend a fraction of that on providing guaranteed, affordable housing to all vulnerable citizens? This isn’t a crazy, ideological question.  It’s a value judgment first and foremost, but it also makes more economic sense on top of that.

If the economy is moving towards innovative jobs clustered in urban areas, we need to build more housing in those communities to encourage spillover affects for all workers. The federal government has picked housing winners for 80 years - we just need it to pick different ones now.

4. Late Capitalism is Eroding Our Civil Society

Late capitalism is an increasingly mainstream term to describe the inevitability of the economic and political malaise we have been in (depending on how you measure it) for decades.  We are in a sustained period of inequality, inopportunity, and insecurity that shows, demonstrably, that something is deeply wrong with our economy and the politics organizing it. The person who ignores this is a fool and the person who defends it is a villain.

Just as I outlined in the previous section, this is no accident.  The federal government over the last 40 years has tilted the economic playing field towards stateless globalization, corporatist monopoly, and sanctioned corruption. The logical conclusion of this unabated trend is social collapse. Maybe that sounds hyperbolic, but the populism seen on both ends of the political spectrum in the US and across much of the western world is a direct response to late capitalism and another step towards this frightening possibility. How (and if) this anger can be channeled constructively is the great political question of our time.

However, as we’ve seen during other eras of extreme political and financial inequality, that anger can be channeled positively at the federal level.  The legislation passed during the Progressive Era, the New Deal, and the Great Society were all far-reaching attempts to address massive, system-level problems (obviously with uneven results.)  Just as federal policies are the cause of many of these current problems, they can and must be the solution too.

5. It’s the Environment, Stupid

All of this comes back to the ghost at the feast: climate change.  Sorry Bret Stephens, but there is no debate about the danger this poses to our society.  Sure, scientists don’t know exactly how, where, or when these changes will manifest as an existential threat, but it’s not an academic question.  We are experiencing this all over the world right now.

The simple, unsexy truth is that our development history – sprawl – has been terrible for the environment overall and terrible for the health of many people specifically.  (One area where HUD Secretary Ben Carson has shown some potential is this connection between housing and health.)

Creating denser communities where housing and jobs are walkable and connected to public transit isn’t some liberal fantasy for its own sake.  It’s a proven form of addressing inequalities and inefficiencies harming our environment and our collective health. 

Localism and regionalism can’t address the dangers of climate change if some localities “want” to maintain sprawl.  Decades of federal intervention in homeownership and car ownership that cause climate change can’t naturally be reversed. The ills of late capitalism that have damaged the physical and political health of our society won’t fix themselves.

The federal government is the only entity strong enough and ultimately legitimate enough to adequately address all of these problems.  Giving up on this idea, as academics or advocates, is giving up on the American experiment itself.

Rather than abandon the idea that the federal government can help, we must commit ourselves to a national “reboot” of political, economic, and social priorities.

Starting with housing seems like the logical place to begin this process.  The moral urgency of the housing crisis calls for big, bold national ideas.  The economic and social benefits of committing the nation to housing-as-a-right are self-evident.  Where and how we build that housing may just be the difference between a sustainable future or something far darker.

3 Reasons Why Affordable Housing Isn't Affordable

Via Verde (2012) in South Bronx is beautiful, but 800 families wanted spots for just 151 rental units. Is this a successful model? (inhabitatnyc)

Via Verde (2012) in South Bronx is beautiful, but 800 families wanted spots for just 151 rental units. Is this a successful model? (inhabitatnyc)

There is a crippling lack of affordable housing in the US. That statement is no surprise for anyone who follows this issue (or reads this blog.) Trying to figure out why and how to fix this problem is incredibly complicated, which is also no surprise. This week Joe Cortright had a good article on why affordable housing isn’t that affordable, focusing on the flawed micro-level issues of subsidizing market-rate housing construction.

Though this is fair criticism, I think it fails to address the larger structural flaws of the democratic capitalist model that we’ve relied on for so long. Challenging at least some aspects of this model remains outside of mainstream housing policy discussions, so I’ll focus on three today (though there are absolutely more that can/should be considered). Until we can reframe the debate around these larger philosophical questions, we are simply not going to solve the crisis.

1. Relying on the Private Market is Bonkers

Matthew Desmond just won the Pulitzer Prize for his sensational book, Evicted, which follows the heartbreaking story of scores of residents struggling to get by in Milwaukee. And it is heartbreaking. But Mr. Desmond’s book most importantly calls into question two deeply flawed pillars of our national housing policy (which altogether lacks a focus on renting): 1. We do not consider housing a basic right 2. We rely on the private rental market to house poor Americans.

We have collectively deemed certain government services worthy of being guaranteed to all citizens or as need-based. But, as opposed to social security or food stamps (or even slightly more abstract “default entitlements” like the mortgage interest deduction), housing is not a guaranteed or need-based government service at any level. This means that only 1 out of 4 Americans that need housing assistance receive any. That’s crazy.

Instead, we have collectively placed the small landlord on the frontline of housing the poor. As Mr. Desmond points out, we can’t reasonably rely on these individuals to handle such an overwhelming burden. Yes, there are some villainous landlords, but many more, as demonstrated in Evicted, are trying to do the right thing by tenants, trying to be fair, and trying to survive themselves.

They stand-in as convenient sin-eaters for the rest of us — politicians, advocates, activists — while the reliance on the private market goes unchallenged at the state or federal level. We can’t honestly address the affordability crisis without challenging this basic assumption. This should be easy since it is clearly failing on such a large scale.

The answer is a concentrated public effort to house the poor. I’ve been a big defender of public housing in this blog and it still shocks me how little traction the idea of returning to large public intervention gets, even from housing advocates.

Yes, there were ample flaws in the New Deal and Great Society approaches to public housing. But we can have the same scale of political and social commitment of those past interventions without the same physical and cultural destruction.

Building on examples like the New York City Housing Authority (NYCHA), where nearly 600,000 (1 in 8 New Yorkers) live in public housing of some kind, we can easily show that the model has quietly been working for 80 years despite systemic neglect and stigmatism. We should be championing NYCHA because it is and always has been a major success.

We have models to work with, we have local stakeholders to lead with — we just need the will to act. There is clearly a groundswell for this type of political realignment. If we finally recognize how much private market fetishization has failed, we can strike a better public-private balance that can affirm the public commitment to housing as a right.

2. Housing is Too Much About Land

Relying on the market also means purchasing land at market rates. Given the fact that most affordable housing is targeted in dense urban centers where land costs are prohibitive, this means that the cost per unit before construction is already an albatross for many developers.

Building farther out from city centers has long been the tried/true answer for affordable housing, and certainly lowers the land cost, but it puts those residents at a severe disadvantage geographically. This system simply can’t work alone.

There are models, like community land trusts, that remove this obstacle. After an initial subsidy to purchase land, it enters a trust that removes it from the market — and from the speculation that can raise its value regardless of the structure on it. The result is permanently affordable housing that doesn’t eat up additional tax dollars annually. This has worked in many areas, even NYC, for decades.

NYC is (sort of) examining the CLT model but has it backwards. NYC Housing Preservation and Development (HPD) is looking for proposals from non-profits that are interested in forming a CLT, but most of these groups can’t realistically afford the land cost and most are on scattered-sites that make them hard to rationalize as a cohesive entity. The city also doesn’t have the funding to help with land acquisition for these groups even if they get that far.

However, NYC does own hundreds of vacant lots that it could easily convert to a city-owned CLT. Mayor de Blasio has recently championed cleaning up the 500th vacant lot as part of OneNYC — but then turns them over to private or non-profit developers (though many of these projects are positive developments). Combining city-owned land — small, scattered sites mostly — into a single CLT would be transformative policy shift with far-reaching implications for other cities.

Every city has similar vacant assets already on the books and, even a decade after the Great Recession (caused in part by real estate speculation), many have foreclosed properties that they are still trying to unload. Stop it! Keep those properties out of the market and create cheap, sustainable housing with them. The net benefit of increased affordable housing supply will offset any property tax losses.

3. We Got Rid of Great Affordable Housing Options

I have a lot to say about the flawed regulatory jumble that has created our failing housing status quo, and, unfortunately, there is a lot of blame to go around by a lot of mostly well-meaning folks. Richard Florida has dubbed some of these actors as the “New Urban Luddites.” But the regulations that have raised the cost of housing the most for certain renters are also the quickest and cheapest to change. They are perhaps the least appreciated — occupancy laws.

NYC, under pressure from neighborhood groups and homeowners, has regulated away thousands of affordable housing units over decades by outlawing single room occupancy, outlawing basement/garage apartments, and over-regulating occupancy laws (like square footage and types of amenities) within apartments.

Most of these regulations were done in the name of public health, but many had more nefarious, even racial motivations. The result is not just a loss of hundreds of thousands of affordable rental units but also the total disappearance of an entire flexible, affordable style of living.

These types of units used to house young singles, seasonal laborers, older family members, and extended family that were willing to sacrifice certain amenities for cheaper lodging. Most of the time these were short-term arrangements as these individuals saved money for more permanent housing.

Particularly in NYC, where many single working people live alone or with roommates, and the overall population is aging, reintroducing this type of housing flexibility would quickly address a lot of housing needs without a huge effort, or a large financial commitment, from the city.

By easing the pressure on the housing market for these types of renters, this could free up units for middle-class or working-class families with children — a portion of the population that the private market (or, frankly, a lot of affordable housing development) is simply ignoring with new construction.

There are many other reasons why affordable housing isn’t affordable, but I chose these three examples to show why it is so important for us to challenge the philosophical and cultural assumptions baked into our market + localized approach to housing policy. Of course the biggest assumption that needs to be challenged is the idea that homeownership should be our national housing policy. We can’t realistically address these other issues without first reviewing the costs and benefits to our society of thinking this way. But even if we determine this is still the best course of action, figuring out how to help people towards that goal will require addressing the affordable housing crisis for renters first.

Yes, Save LIHTC, But It's Not That Great

Not much in common (newsmax)

Not much in common (newsmax)

The big news this week is obviously centered on the American Health Care Act, but whether it passes or fails in the House, it has massive implications for affordable housing.  That’s because, as President Trump has made clear recently, the real focus of this administration is tax cuts, which will be on the agenda one-way or the other. As it stands, the proposed level of tax cuts would likely kill the Low-Income Housing Tax Credit (LIHTC) program, which has been the most successful vehicle for construction of affordable housing since it passed in 1986 by President Reagan.  That’s a bigger problem and these potential cuts prove why.

The LIHTC was a bi-partisan amendment, basically an afterthought, added to the overall Tax Reform Act of 1986 and was intended to create incentives for building multi-family rental housing.  The original tax reform kept with the long-standing bi-partisan support for homeownership that has wasted billions of taxpayer dollars on subsidizing middle-class and wealthy homeowners.  Rather than tackle this larger problem, LIHTC was designed to share some of the wealth with low-income Americans who were (and are) more likely to live in rental housing.

So perhaps it wasn’t the product of the most rational political landscape, but it has undoubtedly worked at building affordable housing.  A report last year for the 30th anniversary stated that over 2.7 million homes have been built (including over 100,000 units in New York over the last 10 years) which is an average of 90,000-95,000 units a year.  $100 billion of private capital has been allocated through the tax credit.  90% of federally identified “affordable housing” has been created by it over the last 30 years.

The LIHTC program works by pairing investors with affordable housing developers to offset some of the cost of new construction or rehabilitation. An affordable housing developer can find investors directly or, more commonly, through a broker that syndicates different projects into a single equity fund to spread the risk of individual projects.  This funding is usually a precursor to the developer securing traditional loans in the private market.

Tax credits are a pretty sweet deal for participants because, as opposed to a tax deduction, the credit is a dollar-for-dollar trade. This makes them really attractive, particularly to institutional investors.  Of that $100 billion invested, less than 10% came from individual investors.

Now you can see where a drastic reduction in corporate tax rates could kill this vehicle for affordable housing.  If the rates drop from 35% to 15% as the president has proposed, there will be a lot less incentive to park money in affordable housing construction.  There is already a notable decline in projects as firms wait to see what happens on the hill.  There is considerable doubt that the equity value of LIHTC will be worth it after these cuts.

This is, of course, assuming that the LIHTC survives to begin with – something that no one can really say.   Aside from the President’s proposed cuts to HUD in his “skinny budget,” the administration hasn’t been on record with any policy view towards LIHTC.  

It’s quite possible that the Trump Administration supports the idea of LIHTC, it is after all an immensely popular bi-partisan program, but could still manage to undermine it without making necessary improvements to maintain its investment incentive. There is already a bi-partisan plan floating around in Congress to strengthen the LIHTC, but it can’t account for the larger tax reform agenda and won’t move until that agenda takes shape.

Hanging in the balance is the $10 billion ‘affordable housing industry’ and millions of low-income Americans struggling to find or keep their homes.  We simply have no alternative policy tools at scale to impact affordable housing construction anywhere in the country.  Without more clarity on LIHTC, there is no national affordable housing policy.

The fact that we are currently in a crippling affordable housing crisis makes this lack of policy clarity nearly a criminal act.  Rents as a percentage of household income are at their highest levels since the 1960s.  Nearly 50% of Americans who rent are rent burdened – which means spending more than 30% of monthly income on housing.  Housing costs in our most productive urban centers are skyrocketing which is killing economic growth and mobility.  It’s estimated that the lack of affordable housing costs the American economy $1.6 trillion a year.

This shows that relying exclusively on the LIHTC to drive affordable housing policy is a catastrophic mistake for us as a society.  As successful as it has been in many regards, it has also failed in many more.

First, relying on tax policy to drive development policy is inherently unstable, as we’re currently seeing.  Too many variables can impact the relative value of a LIHTC fund to make this a long-term strategy in today’s political climate.  It only works as a policy in relation to other bad tax policy.

Second, relying on private market principles means developments are typically located where land is cheaper, which is rarely where affordable housing is most needed – whether in the local or regional sense.  It also relies on complicated AMI (average medium income) metrics that rarely create enough affordable housing for extremely low-income households.  Though the program’s output is impressive on first glance, these numbers have only made a small dent in the larger crisis as a result.

Third, the complexity of the LIHTC itself, coupled with other state-level requirements, drives up the overall cost of affordable housing relative to private development.  Some estimates suggest that it adds an additional 13% per unit on some projects.  This system counter-intuitively makes itself more expensive.

Many of these issues are by-products of other flawed policies or even good policies working against each other.  They are also the product of a flawed understanding of housing policy in general and what affordable housing is specifically.

Thoughtful people can disagree on how much the federal government should intervene in the housing market, and the LIHTC has in many ways been a rare success in bi-partisan policy making.  But the federal government already has a massive role in housing in the form of subsidizing homeownership to the tune of $135 billion a year.  We don’t really call it “intervention” or “subsidy” but that’s what our current policies do on a massive scale.  It’s so big we don’t notice it.

If we’re honest about how much we already subsidize homeownership as taxpayers, we can start to be more open to direct involvement in affordable rental housing.  Rather than asking the private market to jump through so many hoops, just to produce middling results, we should consider creating a direct federal program to construct affordable housing on the scale that we used to see during the Great Depression. 

That period saw direct investments in public housing with private sector help, which succeeded in building millions of units of housing in major urban areas. I’m not suggesting we repeat the mistakes of that period, but the commitment to building affordable public housing worked in doing so. As much as NYCHA, by far the largest public housing agency in the country, gets a bad rap, much of their portfolio exists as a result of these programs from 70 years ago. That’s a remarkable achievement.

It might seem radical to suggest creating a vast public market for affordable housing in today’s age, but it shouldn’t be.  It makes a lot more sense than quietly subsidizing millions of homeowners while driving up the cost of a flawed affordable housing strategy all in the midst of an unprecedented crisis. The status quo is obviously not working.  We need to think big again in this country.

30 years of some success through the LIHTC program hasn’t adequately addressed the affordable housing crisis philosophically or practically.  Maybe it’s time to dust off policies and thinking that has quietly been working for more than 70 years.

Unoccupy Occupancy Laws

The future returns (pinterest)

The future returns (pinterest)

NYC Housing Policy Tools Series

Over the next few weeks, as we prepare for the Trump Era, I will spend time on various housing policies in NYC in order to help frame the the affordable housing crisis.  I have picked four topics related to NYC housing laws: rent regulation, zoning, occupancy, and property taxes.  I concede that there are other policy tools that could be included (particularly around financing) but these four tend to have an immediate impact on the most people.  The hope for this blog series is to explain the current policy tool kit in New York, but also to show why questioning the underlying assumptions about housing policy might be able to expand it. 

Part 3 of 4: Unoccupy Occupancy Laws

No good deed goes unpunished and I submit NYC’s occupancy laws as a good example.  Before we get to that, it’s important to know how miserable live in New York actually was less than 100 years ago – loud, dirty elevated trains; waste-ravaged streets; overcrowded, dank tenements.  Urban life for most people would look positively barbaric to New Yorkers today.  Improved technology, greater public health awareness, and socio-economic shifts radically changed the built environment of NYC, but that all happened because of active governance.

Occupancy laws - a blanket statement for multiple-dwelling law and housing maintenance law - from the first several decades of the 20th century reshaped how New Yorkers lived for the better.  The famous tenements of the Lower East Side made it one of the densest habitats on the earth, ripe with disease, malnutrition, and other physical dangers.  The city simply couldn’t sustain such a careless and inhumane growth trajectory.  

Progressives of the time created our modern occupancy laws to protect individuals and families from economic and environmental exploitation while protecting the broader public body from gross health and safety risks.  They did this by passing laws requiring basic amenities like natural light and windows, guaranteed heat and water, sanitary bathrooms, fire escapes, and other things we take for granted today.

Modern urban life would be intolerable, even impossible, without these types of far-reaching policies.  We are so accustomed to certain benefits of government intervention like this that we forget how necessary it was – and is.  Our private lives are vastly improved by sound public policy.

However, a byproduct of that amnesia is the slow, deliberate shift in our public policy from inclusive public good to exclusive private gain.  Here’s where the good deed of occupancy laws gets punished.  

NYC used to have a staggering variety of housing options.  Single residency occupants (SROs), boarding houses, and long-term hotels, private room rentals – all allowed residents across any income spectrum options to live affordably, if not luxuriously. These types of housing also fostered a deep, shared connection and sense of community, particularly among immigrant populations and transient workers.  This type of social capital was the bedrock of American society and kindled its economic progress.

Starting in the late 1950s, and especially in the 1960s and 1970s - when the city faced the crippling social and economic effects of deindustrialization – incumbent residents organized against these types of housing.  Some of this trend is an understandable, if ultimately uncompassionate, response to increased drug and criminal activity.  Neighborhoods didn’t like having SROs and boarding houses around because they were housing-as-last-resort for many disabled or addicted New Yorkers.  The corresponding social problems could have an economic cost to property values (though there isn’t much evidence of this.)

These residents responded by advocating for and succeeding in changing occupancy laws.  Most SROs and boarding houses were officially outlawed and have utterly disappeared over the following decades.  Renting out private dwellings – like basements and attics - was radically cracked down on.  Minimum room sizes and unit sizes were enacted. And finally, in 1987, apartments were no longer allowed to be constructed without full kitchens, bathrooms, and at least 400 sq. feet of space.

I’ve already discussed how rent laws and zoning laws have empowered the housing crisis, but occupancy laws are just as important.  When the city began its steady rebound by the 1990s, it didn’t have the housing flexibility it used to have during previous boom periods and we have all suffered as a result.  I believe the current and future demographics of NYC strongly indicate that an economic incentive does exist for amending our occupancy laws.  There are two broad trends that support this. 

First, a lot of New Yorkers live alone.  In 1960, 185,000 New Yorkers lived alone - today it is 1.8 million.  The housing stock is simply not designed for that type of isolated living.  We often lament the fact that too many commuters drive alone to and from work, clogging the roads and polluting our environment. I would argue that one person taking up so much space and resources is a similar economic and environmental ill (not to mention the impact of social isolation and loss of social capital).

Second, New Yorkers (like the rest of America) are aging.  1 in 5 Americans will be 65+ in twenty years and already 20% of New Yorkers are - up from 12% in 2000.  The cost of supporting an older population in isolated, dispensed homes is already causing panic in many health policy circles.  NYC is not prepared for this at all.

I should speak for a second on two related trends – Airbnb and shared housing.  Airbnb has gotten into trouble for violating many occupancy laws, but the primary one is having a non-resident live for less than 30 days in an apartment. They grossly overplayed their hand and have eaten crow in NYC (and other cities) but the basic problem for them is that their model turns a residency into a hotel. I don’t think amending occupancy laws should support this model at all.

Shared housing is sort of a niche millennial market at the moment with some notable big players toying with it.  It’s a sound concept and one in sync with many of the principles we share at homeBody.  The problem with shared housing in its current iteration is its limited reach and appeal.  It is prohibitively expensive to join one of these living arrangements.  Part of that is simple economics - marketing to a well-identified audience - younger, wealthier tech savvy workers who are more open to shared living experiences. But part of it is also practical reality – they have to work within a narrow lane of occupancy laws. 

This is also true of micro-apartments, an en vogue idea that has some sound concepts but relies, fatally in my opinion, on the status quo of occupancy laws.  To date, I don’t know of any efforts of these organizations to lobby for changing occupancy laws, but they would be strong partners to help.

I believe we should amend occupancy laws to encourage a return to more flexibility in the housing market.  Shared housing, micro-apartments, SROs, senior housing, combined-housing (different non-related demographics sharing) are all ideas that have succeeded in the past and are currently succeeding in small amounts in NYC and elsewhere. 

If someone new to the city/country wants to live closer to a job downtown cheaply and doesn’t mind sharing a bathroom and kitchen, why not? If a student wants a cheap (or even free) place near school that includes living with senior citizens, why not? If several families want to pool resources and share space, why not?

Experimenting with occupancy seems to me like a cheaper public policy tool than tax incentives (which we’ll cover next week) and a more equitable policy tool than current rent laws. This is not to say the basic public good initially ensured through occupancy laws should be relaxed – healthy and safety standards can be protected while still introducing more innovation.  This is a vastly under-explored topic that should get a fair shake in public policy discussions. Remembering why these types of laws were passed originally is a good start.

What Trump Means for Housing

How should I know? (rollingstone)

How should I know? (rollingstone)

Before I jump into the question of housing over the next 2-4 years, I want to talk about normalizing.  There is a very real concern that our media and political structures that were incapable of checking Mr. Trump’s unprecedented bad behavior as a candidate risk normalizing very dangerous rhetoric, policy proposals, and potential threats to our institutions once he assumes office.  I share those concerns.  I have found much of Mr. Trump’s rhetoric, temperament, and personal history to be disqualifying full stop.  I have found his lack of policy detail and evident lack of interest in policy detail to be confounding.   I have also found his contempt for many of our civic institutions and cultural norms to be alarming. 

Our system of government is built on a competition of ideas during the election, and on compromise and restraint during the session.  I hope that the ugliness of this election season can be cured throughout the next congressional session, but it won’t be unless we address that ugliness and remain vigilant for and protective of the larger principles that our republic are built on.  It will be a very dark period for our country and the world if we fail those principles. We cannot allow the actions of Mr. Trump as a candidate to become normal when he becomes President Trump.

A number of articles have come out about what the election of Donald Trump could mean for cities in general and they all basically say the same thing: nobody knows.  This is true for two reasons. First, Donald Trump has risen to power without outlining specific policy proposals on most subjects, while outlining flawed policy proposals on some, and dangerous proposals on a few.  How sincere he is on any of these remains to be seen.  We don’t know what “Trumpism” as an ideology means or if it even exists. 

Second, we also don’t really know what kind of Republican Party Mr. Trump has brought to power with him.  He blew through the primary and general election on a wave of vague populism but the deep divisions in the Republican Party didn’t go anywhere. Far from mending the divisions between ‘the establishment’ and the ‘drain the swamp’ crowd, it already looks like the Trump Administration will be the frontline in a bitter fight between the two. 

Could President Trump turn into a more or less generic Republican and isolate the more fringe elements of his base or emerge as a distinct nationalist wiping out the establishment?  Given what we’re seeing in the transition team, it could also be a disorganized, muddled grab bag with no centralizing rationale other than the personal mood of the president. That’s not a formula for coherent executive action.

It’s also entirely plausible that Mr. Trump will continue to show little interest in policy details and the drudgery of the office, conceding actual governing power to the Republican majority in Congress. Speaker Ryan has been chomping at the bit for this scenario and has a conservative agenda waiting in the wings that would reshape American domestic policy in ways that would likely shock many Trump voters (particularly older ones).  

It isn’t clear that Mr. Trump agrees with this message (he certainly campaigned against it) but, come January, if only one body of government is ready to govern, it isn’t hard to see him going along with it. It is clear that Mr. Trump wouldn’t allow for the perception that he isn’t in control, but reality is a very different matter for him.

All of this is to say that, although we don’t really know what cities should expect in terms of housing policy, there isn’t a lot to be optimistic about in the immediate future.  Best-case scenario, President Trump emerges as a slightly more populist Republican with a predictable agenda that does little for affordable housing.  Worst-case scenario, he emerges as a vindictive nationalist that harms cities economically and socially (intentionally or unintentionally) by continuing to ‘other’ the types of people and ideas that congregate in them, largely in rental housing.  How our other civic institutions respond to him will determine how far to one or the other we drift.

I spent much of the campaign season lamenting how little housing came up as an issue, despite how important it is.  Let me quickly restate why:

-       Half of American renters are rent-burdened (30% or more of their income goes to renting - and a quarter of those pay over 50%.)

-       Millions of homes are still underwater 8 years after the mortgage crisis “ended.”

-       As a nation, our productivity as dropped for the first time in 30 years because economic output is concentrated in dense coastal cities where housing costs/policies are eating income gains or blocking more people from being able to move to those opportunities.

The scale of the problem is staggering for renters and homeowners (and renters wishing to be homeowners).  Our economic output is concentrating in fewer places where it is prohibitively expensive to live in.  This puts huge pressure on all income levels and drains the future earning and savings potential of everyone.  It is outrageous that this isn’t a bigger issue in the media and in political circles.  It clearly is for most Americans.

Mr. Trump has said little about housing, despite his background in the industry. That background is worth revisiting because it tells us two things that will probably define his approach to housing.

First, that the private sector should lead the process, but with massive government handouts for developers.  Mr. Trump’s ability to squeeze out decades worth of tax breaks for his developments is well documented. It’s one of the rationales for his ‘business genius.’  But this philosophy has proven to be a terrible deal for the public.  Hundreds of millions of tax dollars were ‘spent’ on developments that produced a vanishingly small amount of affordable housing units.  Having built a fortune over 40 years based on these policy assumptions, it’s hard to picture President Trump entertaining alternative methods of creating more housing, which is exactly what we need to do.

Second, Mr. Trump burst out on to the national scene for being sued by the federal government for racially discriminating against potential tenants in his father’s complexes. Despite settling for millions of dollars based on an abundance of evidence, Mr. Trump never admitted to any wrongdoing.  Perhaps he can claim that as a victory, but it has made Mr. Trump’s racial rhetoric difficult to dismiss.  Politicians, particularly Republicans starting with President Nixon, have exploited racial anxieties around housing policies to electoral success for decades.  Clearly Mr. Trump is not above this tactic, and given the connection most Americans make between affordable/fair housing policies and minorities, what type of attention, if any, will be given to this issue?

We don’t have much to go on yet.  Early rumors about who will be the HUD Director center around Westchester Country Executive Rob Astorino. He has been extremely hostile to affordable housing and fair housing policies and comes from a region with a long history of hostility to it.  If Mr. Trump does choose Mr. Astorino, we can start to picture a policy agenda that might confirm the lessons Mr. Trump has learned over his career.  This could lead to more ill-advised efforts to promote homeownership against prevailing economic trends.  It could mean less federal money for housing-assistance programs.  It could mean less focus on desegregating communities that lock many people into cycles of poverty and isolation. This could be a disaster for housing and for the country.

Housing advocates have a long road ahead.  The first job to do is to hold the media accountable for ignoring affordable housing on the campaign trail despite the enormity of the problem.  The second is framing the issue as one that affects all Americans – whether renters or homeowners, middle-class or poor, suburban or urban.  The third is to offer far-reaching policy proposals that can capture the national conversation and perhaps finally make housing as central an issue as it needs to be.

The stakes are high.  Our economy can’t grow and our country can’t heal with these types of pressures on housing remaining in place.  The cost of inaction extends to our environment as well.  We must find better ways to organize ourselves and to power our economy.  These are not normal problems facing a normal president, so they require abnormal means to address them.

Trulia Report Claims to Say the Young and Poor Can't Afford to Live in Cities, Unaccountably Fails

Leaving the neighborhood or leaving town? (urbanedgeny)

Leaving the neighborhood or leaving town? (urbanedgeny)

Real Estate website Trulia released a report yesterday claiming to show how much rising rents are squeezing out the poor and young by showing how many of them are moving out of the 10 major US metros. Anyone who follows this blog (Hi, Mom) will know that I agree with the basic premise that housing is too expensive and it is having a major impact on urban demographics, but I don't think Trulia actually proved how many people are moving or that they are moving because of higher rent. To be fair, I have found previous Trulia reports to be well constructed and useful and don't mean to dump on them too much.  They have an enviable amount of data (and 'data scientists') at their disposal and I can appreciate wanting to merchandise that as much as possible, but I think the report actually does a disservice to the greater discussion of affordability.

I have two problems with the report.  The first is the methodology used to calculate their thesis (it almost seems like they had a conclusion in search of a thesis) and the second is how, given the title they chose for the report, they didn't come close to addressing the full scope of the problem of affordability in these major cities.

Are they young moving away more now than they normally do? (trulia)

Are they young moving away more now than they normally do? (trulia)

Let's start with the data.  The authors of the report claim that the young (millennials 18-34) and the poor (less than $30k annual income) are being priced out of the 10 major metros and they prove this by showing how many of them are moving away.   They come up with the term "move-away rates relative to expectation" to show how these two cohorts are leaving these cities at higher rates than their relative population shares would suggest.  They even explain their reasoning by saying that if 60% of people in a city have brown eyes, you would expect that 60% of people moving away would have brown eyes.

I'm not even sure this assumption fits the cliche "correlation is not causation" but it certainly doesn't make much sense when you look at it in detail.  Why is there any reason to assume that move-away rates should correspond directly with a selected cohorts relative population share of a city? Why would you expect 60% of people moving away to be brown-eyed if they are 60% of the population? Maybe there is statistical evidence that would suggest this, but the report doesn't offer any to compare their assumptions to.

More likely, they drew data from a single time period (the 2014 ACS) that showed significant differences between the young and poor moving away compared to other age/income groups and thought that not only was this significant, but it strongly represented being 'priced-out."  The "compared to what" that is so important to data analysis is therefore grossly lacking here.

Wait, what does this even tell me? (trulia)

Wait, what does this even tell me? (trulia)

It's not actually interesting to compare move-away rates between the young and old or the rich and poor in the context of their report - a report claiming to show the young and poor being priced out by rising housing costs. It would be much more insightful to compare their current numbers with historical numbers of the young and poor's moving trends to see if there really is a dramatic difference. If this were true, then we could start to consider why this is the case now. But they don't actually prove that this is the case.

Just to focus on the young in more detail as an example, as this recent US Census report shows, they already move much more often than other age groups as they go to school, find/change jobs, or start a family. There also doesn't appear to be any significant change over the last ten years in these trends, even accounting for the dip during the recession. In fact, going back a few decades, the mobility rates have continued to decrease across age and income.  The US Census makes the further distinction between 18-24 year olds, who move more than other age groups and people in their late 20s, who move the most of any, but the Trulia report does not, which makes it harder to determine what they are trying to prove.  Basically, Trulia might be correct that the young/poor are moving more than other age/income groups right now, but they don't make the case that they are moving more than their specific demographic data trends would suggest.

Even if they were able to prove that more young/poor are moving today than previous times, they don't show that rent prices are the reason.  In these 10 US metros, the 'out-migration' of the young represented in the report (it appears that the report does not address net out-migration, which would presumably complicate their the argument further) could easily be explained by job changes, moves to the suburbs, or any other factor that may or may not be linked to housing costs in these metros.  They don't make any attempt to link their data analysis to these explanations or any explanation (nor do they attempt to explain where they are moving to, which would be insightful).  Again, this is not to say that housing costs are not causing some young people to leave these cities, but the report don't make this argument despite its title.

The young and poor don't face the same employment challenges let alone housing challenges (trulia)

The young and poor don't face the same employment challenges let alone housing challenges (trulia)

The second problem with the report is how it misrepresents the crisis of affordability in these 10 metros and incorrectly lumps the housing challenges facing the young and the poor together. This is partly a problem of their broad definitions of young and poor but more so it is a problem of relying on the idea that each group has a Tiebout 'vote with your feet' type-agency to move when it becomes too expensive.

There is no doubt that some younger people and poorer people are leaving these cities because they can't afford to stay in them.  Again, I don't disagree with this premise generally.  But the larger truth is that rising housing costs aren't leading most of these people to leave cities, instead the poor are concentrating in poorer neighborhoods and the young and poor are both absorbing the higher rent burdens while forgoing other purchases.

It is therefore much more accurate to stay most of the poor and some of the young are being squeezed-in rather than squeezed-out.  The truth is, gentrification does exist, but how much it displaces people (the young, poor, or otherwise) is much harder to determine and there is simply not enough evidence to say that it's causing people to leave a city altogether.

Even in the context of the report, the data shows the huge difference between young people moving and poor people moving.  Again, this makes sense. The young move for many reasons but can generally absorb the financial cost of moving (let alone the social cost) more than the poor can.  The young also have vastly different employment opportunities than the poor have, which creates more mobility options.  They are also less likely to have children or family ties to a specific area.  It is simply not helpful to compare the two groups' moving trends to make a claim about prices squeezing people out. 

Regardless of their differences, in many cases, accepting a greater rent burden is still the better financial decision than moving for young and poor alike. Therefore determining the percentage of these people moving to other neighborhoods in the same city or accepting a higher rent burden compared to those moving away would much more illustrative to public policy discussions. That data already exists, so incorporating it would have been relatively easy.

Trulia shouldn't be faulted for raising issues of affordability in major cities but, even though their reports fall into a broader marketing and engagement strategy rather than policy prescriptions, I am surprised about how poorly executed this was.  This report missed an opportunity to leverage their resources to introduce insightful data to a much needed public discussion.

The Senior Housing Crisis is Already Here

Mayor de Blasio discussing his plans for senior housing (mayor's office)

Mayor de Blasio discussing his plans for senior housing (mayor's office)

At the risk of beginning to sound like a broken record, this post will examine another clear and present danger within the affordable housing crisis: the lack of senior housing.  As the Baby Boomer generation passes 60 and begins to retire en masse, the numbers of seniors on fixed incomes will begin to rise dramatically and will put even greater pressure on housing needs across the nation.  With the increase in life expectancy (for some Americans anyway) this means that a lot of older people with specific housing needs will need them soon and for a very long time into the future. As is the case across the board, we are simply not creating enough housing to manage this issue.

The numbers in New York City are illustrative of the current problem and of the problems to come.  New Yorkers over 60 represent the fastest growing demographic in the city, at nearly 20% of the population - up from 12% in 2000.  Vicki Been, Mayor de Blasio's housing commissioner, told the City Council in February that the numbers of seniors in NYC could reach 1.8 million by 2040, which would double the number in 2000.

The big secondary problem with these numbers is the fact that 20% of current seniors in NYC,  including 40% of NYCHA residents, live in poverty ($11,170 a year). Of renter households headed by older residents, half are rent burdened, meaning they pay over a third of their monthly income on rent. And according to LiveOn NY, a senior citizen advocacy group, over 100,000 pay over 50% of their income to rent.  This makes older residents the most rent burdened demographic in the city and puts many at risk of losing their homes if costs keep climbing across the board.

For whom the bell tolls (nytimes/uni. of minnesota)

For whom the bell tolls (nytimes/uni. of minnesota)

Mayor de Blasio's housing plan, which is expected to pass the City Council soon, has been the most comprehensive attempt to address the crisis to date and has a number of good ideas. Specifically, his Zoning for Quality and Affordability proposal would allow taller and larger buildings with less parking closer to transit centers and reduce parking requirements for senior housing sites. This would allow more land and capital to go to building more units.

The housing plan would also increase the funding and support for the Senior Citizens Rent Increase Exemption (SCRIE) which currently freezes the rent for 53,000 seniors in NYC and covers the difference in cost for the landlord. The plan would try to cover the estimated 80,000 other seniors who qualify but are not currently enrolled.  This is a type of program that could spiral out of control if other measures are not taken to address housing costs, but it is working right now and needs to be expanded to the many seniors who can't enroll.

Finally, the plan indirectly attempts to support "aging in place" that allows seniors to remain in their homes for as long as possible and to maintain their dignity and quality of life.  The plan calls for a number of measure to preserve the existing stock of affordable housing including rent controlled and rent-stabilized apartments.  These measures have a significant impact on this issue because  65% of older New Yorkers live in these types of apartments.  Whether these residents are self-sustaining or paying through government programs, policies in Albany will have a major say in how long they are able to stay in their homes.

No plan is perfect and there are concerns that the measures won't do enough, for senior housing or for the overall affordability of the city. However, most of the outspoken critics, including Real Affordability for All,  have now endorsed the plan and it should become law.  

This type of buy-in important going forward because the plan will surely have to evolve as needs change and the proposals begin to show returns one way or the other.  Having as many stakeholders as possible involved in this process is the only way to ensure that we can make the types of policies that have a lasting affect - because many of us hope to age in place in NYC as well.