I started thinking about the whole affordable-housing issue again because of a Chicago Tribune article in yesterday’s paper on a new affordable housing initiative; rather than the city itself managing a building, they will pay a private developer/landlord to provide reduced-rent units.
I’ve said in the past that I have an issue with the way existing government programs aimed at providing affordable housing work. The huge waiting lists for Section 8 vouchers and government-run subsidized housing buildings (in those cities where the wait lists are even open to new families) mean that there’s a great deal of inequity: the majority of the poor struggle to pay their rent, while a lucky few hit the lottery. See my December post where I describe these waiting lists, and where I state my belief that, for the majority of people who say they can’t make their food stamp benefits stretch the whole month, and depend on food pantries, are the working poor, whose benefits are calculated on the assumption that the food stamps are only supplementing their grocery budgets, but, in practice, other expenses, especially housing costs, so overwhelm their budgets that they try to make the food stamps/food pantry cover their entire needs. Hence, food stamps are really an affordable housing issue.
As you might imagine, I don’t believe that rent control is a reasonable approach either. It is just as unfair, with the lucky ones (rich or poor) benefitting greatly, and the unlucky ones not at all (if not seeing higher rents than otherwise). Even the “lucky” ones are trapped in the same apartment – and I would assume that the fictional Monica Gellar isn’t the only one who’s living in an apartment with someone else’s (in this case, her grandmother’s) name on the lease.
There are various other solutions out there which aim to increase housing supply (eliminate zoning and other artificial restrictions to development, and high-density development specifically; Reihan Salam has written about this at Slate.com, if I remember correctly), decrease demand (both the artificial demand of perpetually chasing the “Good School District” – there was a book about this a while back, in my pre-blogging days – and the willingness of consumers to pay higher prices than they otherwise would do to the mortgage interest deduction), or reduce other expenses associated with housing (tax reform to fund schools via income or sales taxes rather than property tax, for instance).
But there’s one further, more fundamental, problem, when we speak not just of “housing affordability” in nice middle-class terms of “can an average family afford a nice suburban 4-bedroom home with enough backyard for a swingset?” but “can the poor among us manage to find a place to live that doesn’t suck up their entire take-home pay?”
Consider SROs – single-room occupancy hotels, the form of housing which is often the only option short of a homeless shelter, for poor single men, often struggling with mental illness or addiction. The decline of the SRO in Chicago has been in the news periodically, most recently in the form of a proposed ordinance that would put a moratorium on the conversion of SROs into more upscale housing.
And part of me says: what stands in the way of a developer building new SRO housing? In the suburbs, the answer is likely, in part, at least, zoning restrictions. Perhaps, too, the existence of subsidized housing, however long the wait list may be, has a crowding-out effect as people think of an SRO (which I understand to be characterized by dormitory-style spartan furnished single rooms, with shared baths and other common rooms, for cooking and socializing) as substandard, because subsidized housing provides for a one-bedroom or true studio apartment even for singles.
But it occurs to me — and here’s my key point, cleverly buried — that there’s a way in which no entity, be it a developer, a government body, or a non-profit, can really create market-rate, unsubsidized low-cost housing. What makes low-cost housing low-cost isn’t just that the furnishings are spartan and room sizes small, but that it’s built to standards that, let’s face it, no builder would follow now. Existing SROs are probably not fully up to code, in some way or another, and are grandfathered in, and, beyond that, are just missing a lot of things that a builder, even a builder of low-cost housing would take for granted in 2014: they probably have radiator heat and, at most, a window air conditioning unit; might have, at best, a retrofitted elevator; have cinderblock walls and linoleum floors. Other sorts of low-cost housing – well, the word dilapidated is probably not inappropriate, and, as you can imagine, no one is going to build new dilapidated housing!
Which means that, even if all the artificial ways in which the cost of land is higher than it could be, were removed, the simple cost of construction would stand in the way of housing that’s affordable for the very low income, and a new SRO simply built to code and up to basic 2014 standards, and priced to provide a reasonable profit margin for the developer, would be more expensive than an existing building.
So then I thought about the issue of government subsidies. Would it be the right thing to do to simply take existing money spent on Section 8 and public housing, and reallocate as an entitlement program, to everyone with financial need, with everyone receiving a reduced amount rather than some receiving a lot of subsidy and most nothing at all? Or would the sums be deemed to be a pittance? Should this all be rolled up into existing welfare programs, the EITC, etc.?
And here’s the other question: is there a risk that, if all qualifying low-income families are getting vouchers, the cost of housing will climb accordingly, so that no one is better off except the landlords, in the same way as financial aid is said to drive tuition increases rather than succeed in making college more affordable?
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