❝ The U.S. has two big housing affordability problems. They’re related — and solving the first would go some way toward solving the second. But they’re not the same, and it’s important to understand that.
❝ The first problem is that some coastal metropolitan areas in the U.S. are generating lots of good jobs but aren’t building enough housing to keep up with employment growth. The main barrier to housing construction in these places is local regulation — zoning ordinances, environmental requirements, even affordable-housing rules….
❝ The second housing affordability problem is less geographically limited, and more chronic: Millions of Americans can’t afford even the cheapest housing. Here’s Jason DeParle in the New York Review of Books:
The big problem is that it costs more to build even modest housing than millions of households can pay, whether the builder is greedy or not…it’s mostly because of the inherent cost of the basics: land, interest, materials, utilities. As a rule of thumb nationwide, even an efficient nonprofit developer can’t build an apartment affordable to a household making less than about $32,000 a year. That leaves out nearly a third of American households…
❝ In the United States, we have almost never built new market-rate housing for low-income households. New housing — rental and owner-occupied — overwhelmingly tends to get built for middle- and upper-income households. So how do affordable market-rate housing units get created? As new housing ages, it depreciates, and prices and rents decline, relative to newer houses.
If we built lots of new housing that poor people can’t afford, the thinking goes — and there’s economic evidence to back it up — that will make existing housing cheaper, and some of it will fall into a price range where some households making less than $32,000 a year can afford it. That’s how solving the first affordability problem can help solve the second one…
❝ As a nation, we appear to have upgraded our notions of what constitutes acceptable housing without figuring out how to make this housing affordable to poor people. In 1970…there were 6.5 million low-cost…rental units and 6.2 million low-income…renters. By 1995 it was 6.1 million low-cost rental units and 10.5 million low-income renters. I couldn’t find exactly comparable data for today, but in 2013, according to the National Low Income Housing Coalition, there were 10.3 million households classified as “extremely low income”…and 5.8 million rental units they could afford…
❝ What’s the solution? Renewed large-scale construction of tar-paper shacks doesn’t really seem to be an option, and it really shouldn’t be in a nation as wealthy as the U.S. More construction of housing, period, would certainly help. But I can’t help but think that this is a case where we may need both less government – in the form of a rollback of zoning and other housing regulations – and more government – in the form of housing subsidies for the poor…Uniting a political coalition behind those two objectives doesn’t sound easy — which I guess is why it hasn’t happened yet.
Politically, it isn’t necessary to fight for both sides of Fox’s proposed solution. Fighting for one of these pretty much guarantees the “reasonable alternative” wing of do-nothing politicians will offer up the other half of this pallid dialectic. For one reason or another.
We can be assured by recent history that conservative politicians will have nothing to offer but opposition. Opposition to low-cost housing, opposition to low-income housing. In general they think like bankers. Nothing should be made available except to people who already can afford better. In time, possibly as a reaction to the grassroots swell of support for candidates like Bernie Sanders, the Democrats will manage to agree on programmatic offerings if for no other reason than to head off a class-based third party.
Future politics aside, families in that <$32K income tract had better plan to avoid prior claims on income. You don't need a snazzy SUV if you need a car at all. You needn't have a habit of committing to recreational travel. Want kids? Wait till you get the house, first. You have to be able to save the down payment – and pay for what follows.
Pick your priorities.