Affordable Housing

A downside of high housing prices - unaffordable housing for low and middle class families:

The Housing Crisis Goes Suburban, by Michael Grunwald, Washington Post: ...Seventy years after President Franklin D. Roosevelt declared that the Depression had left one-third of the American people "ill-housed, ill-clothed and ill-nourished," Americans are well-clothed and increasingly overnourished. But the scarcity of affordable housing is a deepening national crisis, and not just for inner-city families on welfare. The problem has climbed the income ladder and moved to the suburbs, where service workers cram their families into overcrowded apartments, college graduates have to crash with their parents, and firefighters, police officers and teachers can't afford to live in the communities they serve.

Homeownership is near an all-time high, but the gap is growing between the Owns and the Own-Nots -- as well as the Owns and the Own-80-Miles-From-Works. One-third of Americans now spend at least 30 percent of their income on housing, the federal definition of an "unaffordable" burden, and half the working poor spend at least 50 percent of their income on rent, a "critical" burden. The real estate boom of the past decade has produced windfalls for Americans who owned before it began, but affordable housing is now a serious problem for more low- and moderate-income Americans... Yet nobody in national politics is doing anything about it -- or even talking about it.

For most of the past 70 years, housing was a bipartisan issue. In recent decades, its association with urban poverty made it more of a Democratic issue. But now it is simply a nonissue. The current crunch falls hardest on renters in Democratic-leaning cities and metropolitan areas, but Democrats have ignored the issue as resolutely as Republicans. ...

"Even 10 years ago, that would have been unimaginable," says Ron Utt of the conservative Heritage Foundation. "But now the problems are so much worse, and nobody cares. . . . I find myself on panels where I'm the token conservative, and I'm the one asking: Doesn't anyone care about affordable housing?" ...

Overall, the number of households receiving federal aid has flatlined since the early 1990s, despite an expanding population and a ballooning budget. ... Today, for every one of the 4.5 million low-income families that receive federal housing assistance, there are three eligible families without it. ... It sounds odd, but the victims of today's housing crisis are not people living in "the projects," but people who aren't even that lucky. ...

The root of the problem is the striking mismatch between the demand for and the supply of affordable housing -- or, more accurately, affordable housing near jobs. ... [W]orkers are enduring increasingly long commutes from less expensive communities, a phenomenon known as "driving to qualify."... This creates all kinds of lousy outcomes -- children who don't get to see their parents, workers who can't make ends meet when gas prices soar, exurban sprawl, roads clogged with long-distance commuters emitting greenhouse gases. ...

Moderate-income families aren't able to buy Lamborghinis or Armani, but they can buy cars and clothes. So while it's obvious why they can't afford McMansions, it's not so obvious why they can't afford decent housing. They demand it. Shouldn't the market supply it?

The answer is yes. But in many communities, local regulations have stifled multifamily housing and even modest single-family housing. Minimum lot requirements, minimum parking requirements, density restrictions and other controls go well beyond the traditional mission of the building code and end up artificially reducing the development of safe, affordable housing.

The unfashionable but accurate term for these restrictions is "snob zoning." Suburbanites use them to boost property values by keeping out riffraff -- even the riffraff who teach their kids, police their streets and extinguish their fires. Urbanites are susceptible to the same NIMBY impulses, often couched as opposition to "traffic congestion" or "overdevelopment" or protection of the neighborhood's "character." It's easy to support affordable housing in someone else's neighborhood...

Los Angeles is considering a bond issue that would create 1,000 units of affordable housing -- small comfort to those 620,000 families in overcrowded apartments. Economist Christopher Thornberg notes that California's private market added 120,000 urban rental units in 1987; in the first half of 2006, the total was just 232. The main obstacle, Thornberg concludes, is "the intransigence of local zoning boards."

In other words, the best thing local officials can do to promote affordable housing is to get out of the way -- stop requiring one-acre lots and two-car garages, and stop blocking low-income and high-density projects.

Washington politicians ... have the federal budget at their disposal. But Congress hasn't supported new construction since the Low-Income Housing Tax Credit of 1986, which creates nearly 100,000 units of affordable housing a year, enough to replace half the units that are torn down or converted to market rents. Bush proposed a home-ownership tax credit during his 2000 and 2004 campaigns, but it turned out to be the rare tax cut he didn't pursue. ... The only affordability ideas with any traction at the national level are not really housing ideas; for example, one way to make housing more affordable to workers would be to raise their incomes -- through higher minimum wages, lower payroll taxes or an expanded Earned Income Tax Credit. ...

Eventually, politicians may rediscover housing -- not as an urban poverty issue, but as a middle-class quality-of-life issue, like gas prices or health care. Homeownership is often described as the American dream, but these days many workers would settle for a decent rental that won't bankrupt their families.