How Do We Make Affordable Housing?
"Affordable" housing is defined as housing that costs 30% or less of your total income. That is becoming an increasing rarity in America's cities. How do we fix that? It's more complicated than it sounds.
The New York Times surveyed rents across the country, and turned up 90 cities where average rents exceeded "affordable" limits. Which is a lot of cities. Particularly if you live in one of them. The scope of the problem is nationwide, and it is real: "Nationally, half of all renters are now spending more than 30 percent of their income on housing, according to a comprehensive Harvard study, up from 38 percent of renters in 2000."
Rents are still rising significantly each year, along with demand. As the economy continues its post-recession recovery, more people are striking out in search of apartments, driving up prices. So shouldn't the free market take care of this? Shouldn't developers build tons of new apartments to soak up the increasing demand, thereby preventing huge rent increases like we're seeing now?
Well, kind of. As the Times points out, "as long as there are plenty of upper-income renters looking for apartments, there is little incentive to build anything other than expensive units." Increasing prosperity is driving demand at the high end of economic spectrum, and builders are focusing their efforts there. Hell, look around at any city undergoing a building boom—forests of new condo buildings. How many of those do you think are targeted to the bottom half of earners? Not any more than the developer has to include in order to get their permits. New construction is not easing demand where most people need it: at the lower half of the rent spectrum.
High demand. Rising rents. And a development industry without any real incentives to address the problem. So where, pray tell, is affordable housing supposed to come from? I do not know the answer to this question. Right now, it comes from a messy mix of local, state, and federal tax credits and incentives and private nonprofit incentives and building projects. And public housing. No one of these things represents a comprehensive affordable housing policy. And even the combination of all of them does not add up to a comprehensive affordable housing policy, judging by the nationwide affordable housing crisis.
What to do? Yes, you can mandate that developers include a certain percentage of affordable units in their projects. But you can't extend that to the point that it knocks profit margins down too far, or they'll stop building. Yes, you can have the government directly build affordable housing. But is that economically feasible, considering land prices in cities with high demand? We want to avoid isolating all the lower class renters in one far-flung place. We want to create neighborhoods that are a mix of incomes. But we need a lot of affordable housing units. Is there room in the private profit margin for much larger numbers of mandated affordable units? Is it possible to build enough public affordable housing units without resorting to warehousing poor people in shitty buildings in shitty areas? Is there another, more creative solution to this—one that will actually solve the problem, rather than nibbling at it around the edges? Housing, like health care, is a basic need that is too important to be left completely at the whims of the free market. But an enormous new government housing bureaucracy does not seem like a desirable solution.
If anyone knows the answer, I would like to hear it.