The surest way to bring down costs is to build more. Lots of people won’t like that.
Many people recently made fun of a photo posted on Twitter taken in a prosperous neighborhood in Washington. In front of a house were signs supporting various progressive causes, and one declaring that “No matter where you are from, we’re glad you’re our neighbor.”
Beside these was a sign opposing the construction of a new apartment building in the neighborhood. Apparently the residents’ enthusiasm for their neighbors did not extend to potential new ones.
This humorous juxtaposition illustrates just how hard it will be to solve the U.S. housing crisis. Across the country, rents have risen faster than incomes:
In cities such as Washington, which are increasingly important hubs for upper-middle-class knowledge workers, the rise has been even larger.
One obvious response would be to build more housing. Progressives often advocate for a return to government-constructed public housing, or for government-subsidized apartments, while decrying the construction of market-rate units. But evidence shows that even luxury housing can help alleviate the burden on lower-income renters, since it draws high-income occupants who would otherwise gentrify existing communities.
In any case, many cities and neighborhoods are having none of it — whether a new development is public, subsidized or market-rate, existing homeowners tend to oppose it, for a variety reasons that range from the innocuous to the unsavory. Local homeowners tend to wield disproportionate political power, while prospective new residents outside of a community don’t get any vote at all. Thus, the political system is strongly stacked against action on housing at the local level.
The obvious solution is to go over the heads of local governments, and force action at the state level. But even there, progress has been stymied by the power of politicians whose communities don’t want more construction. A recent poll of Californians found that 62 percent favored requiring areas near transit hubs to allow multifamily construction. But a bill in the state legislature that would have implemented exactly this policy ran into opposition and was shelved. Housing advocates will continue trying to implement pro-density policies in California, but they will be fighting an uphill battle.
But state governments don’t have the final say over housing policy; that belongs to the federal government. A national movement is slowly building to use federal power to reward communities that allow greater housing density, and punish those that forbid it. One surprising voice in favor of federal action has been Housing and Urban Development Secretary Ben Carson. But the forces gathering on the left of the political spectrum may turn out to be much more important.
Presidential candidate Elizabeth Warren, famous for detailed policy ideas, released a plan in March designed to tackle the housing crisis. In characteristic fashion, Warren’s American Housing and Economic Mobility Act marries smart deregulation with increased government spending targeted at the poor. It would create a new federal grant program that would only go to regions that change their zoning rules to allow increased density.
it would invest about $50 billion a year in housing for the poor, through agencies called the Housing Trust Fund and Capital Magnet Funds, which also would seek to leverage additional private investment. The plan would also help poor and black homebuyers with down payments, crack down on racial housing discrimination and curb the ability of large financial companies to own concentrations of rental properties.
These are all good policies and I’ve called for some form of all of them in the past. Another plan, by the think tank Data for Progress, includes many of these elements but would go even further, making transportation funding contingent on making zoning practices more inclusionary, limiting tax deductions for landowners, taxing empty homes and exploring land value taxes. These are all solid ideas, and they probably influenced later iterations of Warren’s plan.
Data for Progress’s plan also includes some elements that should be approached with caution: a major expansion of public housing and strict rent-control measures. Government-run public housing has a spotty record, and public housing has been blamed for concentrating poverty, increasing crime and reducing economic opportunity.
There are encouraging signs that public housing can be redesigned to reduce some of these problems, but it would be wise to make sure these work at scale before committing the entire nation to such a program. Meanwhile, rent control is a mixed bag, helping some low-income people at the expense of others, so there are reasons to go slow there as well.
Many of these plans are a move in the right direction. They represent a multipronged attack on one of the country’s most urgent and intractable problems, and incorporate smart ideas that urbanists have long advocated. If local and state governments can’t make the rent go down, then the biggest government of them all might need to step in.