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China’s President Xi pledges $60 BILLION for Africa’s development over the next three years

Don’t call it colonialism: African leaders welcome China’s $60BILLION investment and President Xi tells conference ‘there are no strings’ – despite warnings Beijing is burying continent’s countries in debt to control them

  • Development aid was announced at a two-day China-Africa Cooperation summit
  • Xi said the investments on the continent have ‘no political strings attached’ 
  • Beijing has been increasingly criticised over its debt-heavy projects overseas 

Africa’s leaders have denied that a Chinese investment package is ‘a new form of colonialism’ after Xi Jinping pledged $60 billion worth of funding to several nations on Monday.

Xi told African leaders at a summit that China’s investments on the continent have ‘no political strings attached’, even as Beijing is increasingly criticised over its debt-heavy projects abroad.

Following Xi’s pledge, South African President Cyril Ramaphosa delivered a stinging rebuttal to criticism of China’s development aid in Africa.

Ramaphosa defended China’s involvement, saying that the meeting ‘refutes the view that a new colonialism is taking hold in Africa as our detractors would have us believe’.

Rwandan President Paul Kagame, current chairman of the African Union, also rallied behind China’s involvement in Africa.

‘Africa is not a zero sum game. Our growing ties with China do not come at anyone’s expense,’ he told the summit.

Xi offered the funding at the start of a two-day China-Africa summit that focused on his cherished Belt and Road initiative. The money – to be spent over the next three years – comes on top of US$60 billion Beijing offered in 2015.

The figure includes US$15 billion in grants, interest-free loans and concessional loans, US$20 billion in credit lines, US$10 billion for ‘development financing’ and US$5 billion to buy imports from Africa.

In addition, Xi said China will encourage companies to invest at least US$10 billion in Africa over the next three years.

The massive scheme is aimed at improving Chinese access to foreign markets and resources, and boosting Beijing’s influence abroad.

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It has already seen China loan billions of dollars to countries in Asia and Africa for roads, railways, ports and other major infrastructure projects.

But critics warn that the Chinese leader’s pet project is burying some countries under massive debt.

‘China’s investment in Africa comes with no political strings attached,’ Xi told a high-level dialogue with African leaders and business representatives ahead of the summit.

‘China’s cooperation with Africa is clearly targeted at the major bottlenecks to development. Resources for our cooperation are not to be spent on any vanity projects, but in places where they count the most.’

But Xi admitted there was a need to look at the commercial viability of projects and make sure preparations are made to lower investment risks and make cooperation ‘more sustainable’.

Belt and Road, Xi said, ‘is not a scheme to form an exclusive club or bloc against others. Rather it is about greater openness, sharing and mutual benefit.’

Later, at the start of the Forum on China-Africa Cooperation (FOCAC), Xi announced US$60 billion in funds for eight initiatives over the next three years, in areas ranging from industrial promotion, infrastructure construction and scholarships for young Africans.

He added that Africa’s least developed, heavily indebted and poor countries will be exempt from debt they have incurred in the form of interest-free Chinese loans due to mature by the end of 2018.

A study by the Center for Global Development, a US think-tank, found ‘serious concerns’ about the sustainability of sovereign debt in eight Asian, European and African countries receiving Belt and Road funds.

During a visit to China last month, Malaysian prime minister Mahathir Mohamed warned against ‘a new version of colonialism,’ as he cancelled a series of Chinese-backed infrastructure projects worth US$22 billion.

Ahead of FOCAC, Rwandan President Paul Kagame, currently the chair of the African Union, also dismissed the concerns, telling the official Xinhua news agency talk of ‘debt traps’ were attempts to discourage African-Chinese interactions.

At the last three-yearly gathering in Johannesburg in 2015, Xi announced US$60 billion of assistance and loans for Africa.

Nations across Africa are hoping that China’s enthusiasm for infrastructure investment will help promote industrialisation on the continent.

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Nigerian President Muhammadu Buhari will oversee the signing of a telecommunication infrastructure deal backed by a US$328-million loan facility from China’s Exim bank during his visit, his office said.

Xi said Belt and Road complies with international norms, and China ‘welcomes the participation of other capable and willing countries for mutually beneficial third-party cooperation’.

China has provided aid to Africa since the Cold War, but Beijing’s presence in the region has grown exponentially with its emergence as a global trading power.

Chinese state-owned companies have aggressively pursued large investments in Africa, whose vast resources have helped fuel China’s transformation into an economic powerhouse.

While relations between China and African nations are broadly positive, concerns have intensified about the impact of some of China’s deals in the region.

Djibouti has become heavily dependent on Chinese financing after China opened its first overseas military base in the Horn of Africa country last year, a powerful signal of the continent’s strategic importance to Beijing.

Locals in other countries have complained about the practice of using Chinese labour for building projects and what are perceived as sweetheart deals for Chinese companies.

The concerns are likely to grow as countries in other parts of the world — especially Southeast Asia — begin to question whether Chinese aid comes at too high a price.

‘Time has come for African leaders to critically interrogate their relationship with China,’ an editorial in Kenya’s Daily Nation said Monday.

African leaders, ‘should use the summit to ask tough questions. What are the benefits in this relationship? Is China unfairly exploiting Africa like the others before it?’

KELSEY CHENG and GEORGE MARTIN

China struggles to heed Xi’s call to develop rental housing

China’s drive to develop a well-functioning rental housing market as an antidote to sky-high property prices is foundering, as rental agencies resort to debt-fuelled expansion amid weak profitability.

President Xi Jinping’s frequent refrain that “houses are for living in, not for speculation” has been seen as a call to increase the supply of rental housing and discourage investors from holding flats empty. Beijing, Shanghai and Shenzhen are among the world’s most expensive places as measured by the ratio of house price to median income.

At the country’s yearly economic planning meeting in December, leaders pledged to promote rental housing and “support the development of professional and institutional housing rental enterprises”. But that effort is off to a bumpy start.

Since the beginning of 2017, at least eight operators of long-term rental housing have failed, according to the China Real Estate Information Corporation, a research group, and analysts say a sustainable business model for rental housing remains elusive. “I don’t advise you to do long-term rental apartments,” Pan Shiyi, chairman of Soho China, a major property developer, told a forum in August. “It’s a lossmaking business.” Mr Pan estimated that buying flats would require bank loans with an interest rate of at least 5-6 per cent, while rental yields were only 1 per cent.

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This month, Dwell You, an operator based in the prosperous east coastal city of Hangzhou, announced on August 20 that it was ceasing operations, leaving 1,700 tenants and their landlords scrambling. Dwell You and other rental operators obtained “rental loans” in tenants’ names from banks or online lenders, sometimes without their knowledge. The tenant’s monthly “rent” payments were, in fact, loan repayments. “If I knew it was a rental loan, I would never have signed the contract.

After all, it will affect my credit score,” said Lei Wenqi, a 24-year-old product manager at an internet company in Beijing who rented a flat from Danke, an operator with rental properties in nine cities. “Since the loan is applied in my name, why is the money not given to me but given to Danke directly?” asked Mr Lei. Operators received a year of rent from the loan, while paying landlords only monthly.

This maturity mismatch allowed the operators to use the excess cash to seek new rental flats and expand their business. And because tenants, not landlords, were paying loan interest, this growth capital was essentially free for the operators. Danke raised $100m in February from a consortium of Chinese and foreign VC groups including the Asia private equity arm of German media group Bertelsmann.

Danke did not answer a request for comment. “This shows yet again that as soon as rental apartments groups verge into finance, it creates all kinds of new problems,” said Yan Yuejin, research director of E-House China R&D Institute in Shanghai.  Despite doubts over profitability, venture capital has flooded into the sector on expectations of policy support and growth. China’s rental market housed 190m people last year and generated Rmb1.3tn ($190bn) in revenue.

Those figures will rise to 270m people and Rmb4.2tn by 2030, according to Oriental Securities. Financial regulators are also working on policies to encourage the creation of real estate investment trusts — portfolios of rental property that trade like a stock. Tax breaks for such structures would increase their profitability.  “Right now everyone is rushing to scale up by gobbling up housing resources.

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The logic of the industry is ‘whoever rules housing inventories rules heaven and earth’,” said Hu Jinghui, chairman of the China Alliance of Real Estate Agencies, an industry association. “A lot of companies have very high costs, but they’re more focused on impressing VCs than serving customers.”

Financial Times

What Will Lower Housing Prices?

In late 2017, Congress and the President wanted to make the $1.5 trillion plus cuts in corporate and other taxes not look so big. So they raised taxes for some people by drastically limiting the deductions for state and local property and income taxes (SALT), capping the deductability of mortgage interest, and increasing the standard deduction (which makes itemizing less valuable).

Of course, these tax hikes affect people with houses and mortgages, especially those living in states with high real estate and income taxes.  Before this change, they could write off those SALT taxes when they paid federal income tax. The National Association of Realtors (NAR) led the scare, predicting house values would generally fall, and especially in California, New York, Massachusetts, and New Jersey.

But housing prices generally have not fallen.  In the first half of 2018, the Federal Housing Finance Agency’s house price index rose by 3.8 percent.  Even in California, housing demand is strong.  The chief economist for the Relators  said, “We thought there would be some impact…but the market is saying, so far, there is not an impact.”

But don’t tax deductions affect housing values? Generally, economists would not expect the change in the tax deductibility to have a major impact on house prices because several other factors have larger effects on home values than government tax breaks. Of course, those tax breaks can be a factor in buying a home or willingness to bid up the price–they just aren’t the biggest factor.

Let’s look at the big picture. We might want to say good riddance to special deductions for owning a home. Mortgage deductions and other tax subsidies for home ownership may in fact be bad policy.  They tell society that the government wants you to own a single-family house. But home ownership could be bad for you financially and inefficient for the larger economy.  Not only is renting a perfectly decent decision but housing tax breaks may steer too much investment capital into housing debt and away from productive investments and diversified household portfolios.

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Harvard economist Edward Glaeser has argued that tax subsidies and related policies result in “the government…essentially bribing Americans to live in suburban, detached homes.”  And the 2007 financial and economic crash was caused in significant part by too much housing debt, especially for lower and middle income households.  That rise in debt, amplified significantly by risky Wall Street financial manipulation, ended up putting the entire economy at risk.

So why aren’t the loss of the SALT deductions for some taxpayers and the mortgage deduction cap suppressing housing prices?

First, the tax bill also contained a large increase in the standard deduction, which is a significant gain for most households.  Using the standard deduction means less itemizing overall, so the value of the mortgage and tax deductions fell for many taxpayers.  Relatively few taxpayers will be deducting their state and local property taxes so they are untouched–in fact, they are probably a bit better off.  So they may want to buy a house, pushing up demand and keeping prices high.  Only high tax payers in states with both high income and property taxes may feel a pinch from losing the SALT and mortgage deductions.

Second, housing prices are what economists describe as “sticky downwards.”  Homeowners are notoriously prone to overvalue their house and reluctant to lower the asking price until faced with continuing bad news – and, of course, no offers.

Third, buyers, especially higher-income consumers, are wealthier because of the legislation’s other windfall tax breaks, especially lower rates. And they feel wealthier because of the run-up in the stock market.  The psychological effect of both may be bidding up the price of the better houses they want to buy.

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Does this mean we shouldn’t worry about house prices?  No.  Prices could fall as the Federal Reserve continues to raise interest rates, although some fear that could tip the economy into recession which of course would lower house prices.  And there are some signs of weakness in housing markets.  For example, new private housing starts have barely reached the levels of just before the 2007 economic collapse.  There seems to be some slowing of price increases in places where the tax bill has its largest negative impacts. And slow income growth for many American households means that buying a house is moving beyond their reach.  A recent report concluded that in twenty large metropolitan areas, middle-class families are increasingly unable to afford a house.

Like many other aspects of today’s economy, we may see housing prices favoring the rich over the middle class and below. House prices for higher income families may be rising, which might in turn nudge more and more middle-class families with stagnant incomes out of the housing market and also put upward pressure on rents.  If that megatrend continues, it may swamp whatever effects the tax legislation is having and housing prices will fall.

Teresa Ghilarducci

A new U.S. city tops the list as hottest housing market

Las Vegas is the hottest housing market in the country.

The monthly Case-Shiller home price index released on Tuesday showed Las Vegas overtook Seattle to become the hottest housing market in the nation.

Las Vegas had a 13 percent increase in single-family home prices in June compared to last year.

“Population and employment growth often drive homes prices,” David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said in a release. “Las Vegas is among the fastest growing U.S. cities based on both employment and population, with its unemployment rate dropping below the national average in the last year.”

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Seattle, which was dethroned, saw a 12.8 percent increase, according to The Seattle Times.

“The Case-Shiller numbers don’t reflect the full scope of the slowdown yet: Partially because it includes a three-month moving average through June (things have cooled even more since then), and also because it reflects the entire metro area,” according to The Seattle Times.

Meanwhile, San Francisco, which landed as the third-highest price gain, saw a 10.7 percent increase, according to King5 News.

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Before the recent turn of events, Seattle topped the country for 21 months straight, which was the second-longest streak in the report’s 31-year history.

Portland, Oregon, topped the list for 23 months in the early ‘90s.

Herb Scribner

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Nigeria: Real Estate Sector to Retain Position As Africa’s 5th Largest Contributor to GDP 

A foremost Nigerian online real estate firm, PropertyPro.ng (formerly ToLet.com.ng), has released a report of the Nigerian real estate sector for the first quarter of 2018 which focused on the trends of the Nigerian real estate market in the year 2017 and the first quarter of 2018, saying that the real estate sector is experiencing a significant growth to retain its position as the 5th biggest contributor to the GDP of Africa’s largest economy.

The study analysed how impactful the economic recession was in the real estate market. It also looked at trends and going prices for property within the residential and commercial umbrellas of the real estate market.

According to the CEO, Fikayo Ogundipe, “a lot is happening in the real estate sector, especially in Nigeria, and we feel it is something worth talking about. With this report, everyone interested in the real estate sector in Nigeria will be able to understand the current trends of the Nigerian real estate sector.

“The report has been influenced by the rate at which property are searched online by Nigerians and this explains the interest of house hunters in 2017 and the first quarter of the year 2018. We monitored the most searched types of property by Nigerians along with the price range that fell with the interest of online real estate end users”, said Ayeni, the Chief Technical Officer, PropertPro.ng

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As noted by the Chief Operating Officer and co-founder, Oladapo Eludire: “Real estate investment always require lots of funding and when dealing in such high-risk investment, gut-feeling isn’t enough in making the best decisions. Such decision needs to be backed up by data. PropertyPro.ng being the most used online real estate platform with the largest listing database across the country, has given us insight into the Nigerian real estate market on a micro and macro level.”

Sulaiman Balogun, Chief Business Officer and co-founder, stated that the statistical side of the report makes it evident that the real estate sector is experiencing a significant growth to retain its position as the 5th biggest contributor Nigeria’s GDP.

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This report by PropertyPro.ng has detailed study of the real estate economy in the economic overview column while the property trend explains the current trend of the Nigerian real estate market in terms of residential and commercial property, and the current trend in the prices of property for sale and for rent in various locations across the country. Contained in this report is the Land Use act thoroughly explained. This real estate report by PropertyPro.ng also featured studies of emerging real estate market in Nigeria as a whole, highlighting activity and performance.

Kingsley Adegboye

Jimmy Carter says the Trump administration is ignoring the affordable-housing shortage crisis 

 

  • Former President Jimmy Carter told CNBC that the Trump administration is ignoring a national housing crisis, and he urged voters to support candidates who promote affordable housing.
  • Carter also called for broad reform of the U.S. Department of Housing and Urban Development. He said this fall’s elections offer voters a chance to support an issue that has been widely overlooked by candidates in this year’s midterm election cycle.
  • “Low-income housing needs to be raised much higher as a priority for our country,” Carter said in a phone interview. “That’s the first step toward making people who are now dependent on government assistance, on welfare rolls, to get a good job and have a chance to raise their families and put their kids through school.”

Former US president Jimmy Carter helps build a house as he visits the construction site of houses being built by Carter’s Habitat for Humanity foundation for victims of the earthquake in Leogane, Haiti in 2012.

Former President Jimmy Carter told CNBC this week that the Trump administration is ignoring a national housing crisis, and he urged voters to support candidates who promote affordable housing.

“Low-income housing needs to be raised much higher as a priority for our country,” Carter said in a phone interview. “That’s the first step toward making people who are now dependent on government assistance, on welfare rolls, to get a good job and have a chance to raise their families and put their kids through school.”

Carter, a Nobel Peace Prize winner who turns 94 in October, also called for broad reform for the U.S. Department of Housing and Urban Development. He said this fall’s elections offer voters a chance to support an issue that has been widely overlooked by candidates in this year’s midterm election cycle.

In response to a request for comment, a HUD spokesman referred CNBC to the department’s website but did not answer specific questions.

Since the 2008 financial crisis, the housing market has broadly recovered overall. But many Americans have been left behind. Millions of low-income Americans are paying 70 percent or more of their incomes on housing and face a shortage of available affordable rental apartments.

Carter said the gap between rich and poor has reached unprecedented levels as land becomes scarce and the cost of homebuilding rises.

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Meanwhile, HUD Secretary Ben Carson has proposed tripling the minimum rent paid by the poorest public-housing tenants and rolling back rent restrictions on 4.5 million households that participate in public housing programs, according to HUD data.

The White House’s fiscal year 2019 budget proposal also slashes funding for HUD by $8.8 billion and calls for work requirements for those who receive public housing subsidies. The administration has also proposed raising the minimum rent for the poorest families to about $150 a month — three times the current minimum.

Carson has said the goal is to reduce assistance to the poor to combat what he sees as a cycle of dependency. Proponents of this approach argue that while safety-net programs are important, low-income renters and homeowners who rely on too much federal assistance will become stuck in dependent situations.

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But Carter, who has helped renovate 4,300 homes in 14 countries for Habitat for Humanity, said the policy is misguided. Rather than becoming more dependent on government, he said, the people who move into Habitat homes and receive public assistance are “hardworking” and become productive citizens and taxpayers.

“I don’t think that making people self-sufficient who are already in desperate need and who have never had a decent place to live is a good approach to low-income housing,” he said. “You can make people suffer longer by depriving them of adequate help.”

Facing increased demand and rising land prices, Habitat housing has become more expensive. The cost of building a home 35 years ago was roughly $20,000 to $25,000 and has since more than quadrupled, Carter said.

“The main thing that we have failed to do is to let people in general join in with Habitat and emphasize the need for low-income housing,” he said.

Emma Newburger

Workers spared housing levy MPs reject Treasury’s proposal

Workers have been spared a pay cut of up to Sh5,000 after MPs shot down a Treasury’s proposal to create a fund to finance a new low-cost housing fund.

The Treasury had set the low-cost housing deduction at 0.5 per cent of the gross pay per month as long as the contribution does not exceed Sh5,000.

Employers were to match the employees’ contribution.

The MPs said the move would cause significant cost burden to companies while hurting workers.

The State Department of Housing announced two months ago that it was finalising regulations to operationalise the housing development fund, whose finer details are yet to be released.

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This was the first time that the Housing ministry was establishing the fund that had been lying dormant under the Housing Act for decades.

Its implementation meant an employee earning Sh100,000 would contribute Sh500 every month to the fund – up to the maximum Sh5,000 for those earning Sh1 million and above.

The creation of the fund was meant to help the government realise the goal of delivering half a million affordable housing units in five years.

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However, the provision faced hostility from unions and employers who consider the tax burden already too heavy on them.

Four pillars

Affordable housing is one of the four pillars of President Uhuru Kenyatta’s agenda for the next four years.

Treasury defended introduction of yet another payroll levy on people in formal employment, who are already burdened by multiple levies, saying that it would help the government realise the goal of affordable housing.

The Finance Bill has also introduced amendments to the Central Bank of Kenya Act to include regulation of mortgage refinance companies.

The move paves the way for the establishment of state-backed Kenya Mortgage Refinancing Company meant to address the demand side of the housing market by offering liquidity to the mortgage industry.

Treasury did not offer details on how the fund will be managed.

Business Daily

Record London Rents Lure Overseas Landlords to Housing Market

The U.K.’s struggle to secure a favorable Brexit deal may be giving Prime Minister Theresa May a headache, but it’s making London’s battered buy-to-let market attractive overseas again.

Foreign-based landlords owned 12 percent of the homes rented out in the capital at the end of the first half, up from 7 percent last year, according to Hamptons International, which measured a subset of the London’s housing market. A falling pound has made it cheaper for overseas investors to buy homes using their local currencies, and many have been lured by a red-hot rental market that’s still at record levels because of tenant demand.

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“I was convinced rents would drop as people fled the U.K. after the Brexit vote — in fact, everyone was expecting Armageddon,” said Agus Marcos Blanco, a 39-year-old pharmacist in Barcelona, who shelved plans to purchase a London property immediately after the June 2016 vote to leave the European Union. Now, with rents having stayed buoyant, he’s looking for a buy-to-let investment in the U.K. capital.

The jump in foreign interest is a boon for London’s real estate market, where property values have cooled in recent months as many domestic buyers are priced out. This, together with a series of tax changes has sent sales down to levels not seen since the financial crisis and threatened a market that’s the preferred way of investing for many Britons.

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The imbalance between supply and demand in London has pushed average rents to 1,615 pounds ($2,100) a month, according to Homelet, the U.K.’s largest tenant referencing company. That’s the highest since it began collating the data in 2011 and 72 percent above the country-wide average of 937 pounds per month.

Juan Guerrero, head of foreign-exchange trading at Banca March SA in Madrid, estimates the pound could bounce back as much as 15 percent against the euro if the U.K. negotiates a successful EU divorce deal. A home worth the London average of 483,000 pounds costs a European buyer 537,500 euros at the current exchange rate, and would be worth around 70,000 euros more after such a rebound.

Yet it’s not an entirely rosy picture for foreign landlords. By some measures, growth in the rental market has cooled. And while the pound has rallied in recent days as the prospect of a no-deal Brexit was seen to have diminished, some forecasts have the U.K. currency sliding toward levels versus the euro last seen in 2009. That would mean rental returns would be worth less when converted back to a landlord’s own currency.

Marcos Blanco, who has bid an undisclosed amount for a two-bedroom apartment in Bow, East London, is undeterred by the prospect of a further drop in sterling. “I think all the negative news has been factored in, and the only way is up,” he said. “Time will tell.”

Sharon R Smyth

 

Housing Market

The U.S. housing market is a major indicator of the strength of the economy. When the economy is strong and people are confident about the future, they are more inclined to buy houses, upgrade their current homes or buy larger houses.

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When they are more concerned about the economy, new home construction, remodeling, median prices and housing sales are all depressed. For years, real estate was considered a reliable way to increase personal wealth because the cost of property and housing consistently increased over time.

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However, the housing bubble of 2006 that led to a steep decline in housing prices was the primary cause of the Great Recession in the U.S., destroying the credit of millions of people who were suddenly underwater in their mortgages and impacting the housing market for the greater part of a decade.

Government regulations have since tightened mortgage requirements for many buyers, and they have greatly impacted the subprime mortgage industry that collapsed during the Great Recession.

U.S News

Big City Housing Doesn’t Have to Be So Expensive

Bringing down prices requires a combination of affordable homes and upzoning.

The one-story house for sale on Oak Court in Menlo Park, Calif., is 88 years old and 830 square feet, with two bedrooms, one bathroom, a detached one-car garage, and no air conditioning. Almost anywhere else it would be the startiest of starter homes. But because it’s in Silicon Valley, where the supply of housing is far short of the demand, the bungalow was listed in mid-August for $1.575 million.

Imagine if ants put up barriers that stopped other ants in their colony from getting to a sugar cube. That’s what Americans are doing to one another by making housing impossibly expensive in the very places, such as Silicon Valley, that most need fresh talent.

Housing prices needn’t be high just because an area is hemmed in by water or mountains, as Silicon Valley is at the end of San Francisco Bay. After all, you can always build upward without wiping out green spaces and historical treasures. Rather, high housing prices are the outcome of a strategy by incumbent homeowners to keep a lid on construction. Keeping cities frozen in time, only more expensive, is great for homeowners and bad for just about everyone else, including local employers and the people who would come to work for them but can’t. While the problem is most pronounced in Silicon Valley, it exists in San Francisco, London, New York, Tel Aviv, Tokyo—name your global hot spot.

Affordability matters because cities have never been economically more important. Biotech companies choose to cram together in San Diego and Cambridge, Mass.; cybersecurity firms are cheek by jowl in Israel’s Silicon Wadi; consumer-electronics companies want to be near one another in the former fishing village of Shenzhen, China.

Constraints on housing prevent people from joining, and contributing to, clusters of innovation. A new paper by economists Chang-Tai Hsieh of the University of Chicago Booth School of Business and Enrico Moretti of the University of California at Berkeley found that restrictive zoning in Silicon Valley, San Francisco, and New York “lowered aggregate U.S. growth by 36 percent from 1964 to 2009.”

Thirty-six percent is kind of a big number. Says Hsieh: “If you compare it to all the things our political system talks about, this is just huge relative to everything else.”

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The good news is that cities don’t have to be prohibitively expensive. The trick is to form a broad coalition for what pro-housing activists call Yimby (yes in my backyard) by ensuring that the benefits will be enjoyed by all, or almost all. More housing can help wealthy landlords, who benefit from the right to put more housing units on a given block, as well as low- and moderate-income families, whose rents come down when the supply of rental housing goes up.

To be clear, not every city with a housing shortage is economically thriving. Delhi, Jakarta, Lagos, Manila, and other megacities have different issues to deal with, including an influx of desperate people from rural poverty. We’re talking about First World problems here: how to cope with the complications of prosperity.

One recent success story is Mountain View, Calif., the home of Google parent Alphabet Inc. In December the City Council approved a plan for the area around the Googleplex that allows for construction of almost 10,000 homes, up from zero in the original proposals. Leonard Siegel, who was vice mayor then and is mayor now, says the city is locating homes near office space rather than trying to jam them into older neighborhoods. “Many people are perfectly happy for us to build housing near Google, because it’s not in their backyard,” he says.

Mountain View officials insisted that developers make 15 percent of the homes affordable, and they’re charging them fees to cover the cost of new public infrastructure such as transportation and sewer lines. “The way I told one developer, ‘We’ll find out if we piled on too much,’ ” Siegel says. “ ‘I want to load your back with straw, and when it starts to break, pull one straw off.’ They said, ‘I understand.’ ”

Some market purists argue that building affordable housing is unnecessary. Filtering theory says that even the construction of luxury housing will ultimately benefit the poor because the rich will move into the new units, freeing up their old dwellings, which will be occupied by the middle class, who in turn will make their old homes available to the poor.

Filtering really is a thing, and it works in the aggregate. But in any given neighborhood, lower-income renters are right to fear that gentrification will price them out of their home. So they oppose new construction, which only exacerbates the citywide shortage. Case in point: A California Senate bill to allow for denser construction along transportation corridors, backed by the Yimby movement, failed earlier this year over concerns about displacement of the poor.

That’s why making sure everyone benefits is essential. Rent control is anathema to most economists, but if applied only to existing housing, not new units, it can tamp down political opposition to fresh development without discouraging construction. Another effective approach is inclusionary zoning, which guarantees that a certain share of development will be affordable. The trick is not to lay so many requirements on developers that they back out and nothing gets built; not every mayor can afford to be as demanding as Mountain View’s.

Finally, outright construction of public housing can make sense. Does that sound socialist? Consider that more than 80 percent of residents in Singapore, the free-market city-state, live in government-built housing. This year the World Bank praised the food courts in Singaporean housing, known as hawker centers, “where all income classes and ethnicities meet, socialize, play, and dine together.” At least two hawker centers, it said, have a Michelin star.

U.S. Department of Housing and Urban Development Secretary Ben Carson has one good idea: to use the lure of HUD dollars to get cities to ease zoning rules and permit more construction. But Carson hasn’t earned the support of advocates for low-income housing because he also wants to scale back an Obama-era rule requiring cities to work toward desegregation, which he once decried as “social engineering.”

Ydanis Rodriguez, 53, can identify with both sides of the Nimby struggle. He was born and raised in the Dominican Republic and moved as a teenager to Inwood, a neighborhood at the northern tip of Manhattan. He became a leader of 2011’s Occupy Wall Street movement. Now a New York City councilman, Rodriguez is a fierce advocate for his low-income constituents, many of whom are fellow Dominicans. When the city announced a plan to upzone Inwood, allowing for taller buildings and more market-rate housing, many of his constituents opposed it, fearing that gentrification would force them out. Rodriguez, controversially, came out in favor of the plan. He argued that it would keep low-income people in Inwood by constructing thousands of units of subsidized housing in addition to market-rate buildings.

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“It hurt,” Rodriguez says of the accusations that he was selling out his own people. But when the upzoning passed the City Council on Aug. 8, he says, “I went to sleep in peace that night.”

The upzoning of New York under a succession of mayors, including Michael Bloomberg (founder and majority owner of Bloomberg LP, which owns Bloomberg Businessweek) and Bill de Blasio, is evi­dence that a big city can burst the bonds that limit growth. For more evidence, see La Défense in Paris, Canary Wharf in London, Pudong in Shanghai. Growth can be messy, but it’s better than stasis, which pretty much assures that supercities will fall short of their potential. “Arguably,” Harvard economist Edward Glaeser wrote in a Brookings Institution paper last year, “land use controls have a more widespread impact on the lives of ordinary Americans than any other regulation.” The most important policy for cities is to let them grow.

Peter Coy

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