High housing costs? Yuck. New idea? Yea!
November 10, 2016 10:55 AM Subscribe
Homeownership Rates Drop to Historic Lows; Middle Class Feels the Strain of Rising Rents The fledgling U.S. housing recovery lost momentum last year as homeownership rates continued to fall, single-family construction remained near historic lows, and existing home sales cooled, concludes The State of the Nation’s Housing report released today by the Joint Center for Housing Studies of Harvard University. In contrast, rental markets continued to grow, fueled by another year of large increases in the numbers of renter households. However, with rents rising and incomes well below pre-recession levels, the U.S. is also seeing record numbers of cost-burdened renters, including more renter households higher up the income scale.
And an interesting solution (from the left).....How Bernie Sanders Made Burlington Affordable
And an interesting solution (from the left).....How Bernie Sanders Made Burlington Affordable
I have to report from Burlington that we are most definitely not affordable. Our housing costs may not seem extraordinary to those in hot urban markets, but the median city resident is paying 44% of wages for housing - which is not what I would call an affordable ratio.
CLT is a good organization and a great solution for a part of the problem, but the real issue is the difficulty of convincing cities to relax zoning and allow for denser development in hot markets. As alluded to in the article, even the affordable housing advocates are having trouble getting that permission to build enough units, despite having the land and cash for construction.
In Burlington (and this heads into the "in my educated opinion" realm) a huge impediment to housing construction for some time has been affordable housing mandates put in place by the same progressive coalition that swept into the city government behind Bernie several decades ago. Because of these mandates 20% of the housing units on a property must be significantly subsidized by the developer, which means the project only gets built if the developer can find a way to make the remaining units generate enough additional revenue to offset this. As an architect I have worked on enough projects where the idea was good but the financials just didn't quite make sense, and so it isn't built. Inevitably the additional uncertainty of adding density and the inevitable NIMBY challenge also comes into play.
In any case, the long term result is that a city of over 40,000 people built an average of less than one new market rate housing unit within the city limits over the course of more than a decade in the early 2000's. All development was only "affordable" housing (which is not accessible to those making a solid middle class wage) or out in the peripheral suburbs.
Finally our zoning restrictions are relaxing, so I am hopeful for improvement, but construction is expensive and any successful affordable housing program needs to structure who will underwrite that cost in a way that doesn't discourage overall investment.
posted by meinvt at 1:40 PM on November 10, 2016 [10 favorites]
CLT is a good organization and a great solution for a part of the problem, but the real issue is the difficulty of convincing cities to relax zoning and allow for denser development in hot markets. As alluded to in the article, even the affordable housing advocates are having trouble getting that permission to build enough units, despite having the land and cash for construction.
In Burlington (and this heads into the "in my educated opinion" realm) a huge impediment to housing construction for some time has been affordable housing mandates put in place by the same progressive coalition that swept into the city government behind Bernie several decades ago. Because of these mandates 20% of the housing units on a property must be significantly subsidized by the developer, which means the project only gets built if the developer can find a way to make the remaining units generate enough additional revenue to offset this. As an architect I have worked on enough projects where the idea was good but the financials just didn't quite make sense, and so it isn't built. Inevitably the additional uncertainty of adding density and the inevitable NIMBY challenge also comes into play.
In any case, the long term result is that a city of over 40,000 people built an average of less than one new market rate housing unit within the city limits over the course of more than a decade in the early 2000's. All development was only "affordable" housing (which is not accessible to those making a solid middle class wage) or out in the peripheral suburbs.
Finally our zoning restrictions are relaxing, so I am hopeful for improvement, but construction is expensive and any successful affordable housing program needs to structure who will underwrite that cost in a way that doesn't discourage overall investment.
posted by meinvt at 1:40 PM on November 10, 2016 [10 favorites]
Charles Mudede today on Seattle's housing crisis:
"The solution? Permit inclusionary zoning that exchanges development rights for affordable housing. Though it sounds like a great idea, a win-win, a solid middle-finger to NIMBYs, there is one big problem: You will not find a moment in the economic history of housing that has the poor benefiting from a deal struck between the public and the market. "
posted by Mei's lost sandal at 1:51 PM on November 10, 2016 [5 favorites]
"The solution? Permit inclusionary zoning that exchanges development rights for affordable housing. Though it sounds like a great idea, a win-win, a solid middle-finger to NIMBYs, there is one big problem: You will not find a moment in the economic history of housing that has the poor benefiting from a deal struck between the public and the market. "
posted by Mei's lost sandal at 1:51 PM on November 10, 2016 [5 favorites]
Single family zoning is the worst. I would love to see, in any and every city, blanket changes to zoning allowing up to, say, 4 units by right on any residential-zoned property, with relaxed parking and setback requirements. Allow construction of the missing middle. NIMBYs are super impressive in their ability to hate literally everything though.
posted by ghharr at 1:52 PM on November 10, 2016 [14 favorites]
posted by ghharr at 1:52 PM on November 10, 2016 [14 favorites]
My silver lining to this current shitcloud is that when Trump collapses the economy and the housing market crashes again, the house I'm renting might finally fall back down to prices that I might be able to afford.
posted by FatherDagon at 2:26 PM on November 10, 2016 [1 favorite]
posted by FatherDagon at 2:26 PM on November 10, 2016 [1 favorite]
@ needled
more current report
The State of the Nation’s Housing 2016
--Homeownership
--Rental Housing
--Housing Challenges
posted by strelitzia at 3:02 PM on November 10, 2016
more current report
The State of the Nation’s Housing 2016
--Homeownership
--Rental Housing
--Housing Challenges
posted by strelitzia at 3:02 PM on November 10, 2016
Interesting article about such a large-scale land trust. Cool!
I think more people should consider looking at the housing crisis as simply another effect of income inequality. High rental costs correlate with high salaries. There are concrete policies that could reduce income inequality: Raise taxes, raise the minimum wage, reduce hidden expenses for the middle class (health care is the biggy, even if it's paid by the employer, it's driving down your wages) and socialize that expense through the increased taxes, and the housing crisis will decrease.
I do think we also need new construction, increased density, mass inclusionary zoning, dedicated subsidized housing, and innovative home ownership programs (including more land trusts), but with such stark income inequality, some people will not be able to afford homes.
posted by latkes at 4:46 PM on November 10, 2016 [5 favorites]
I think more people should consider looking at the housing crisis as simply another effect of income inequality. High rental costs correlate with high salaries. There are concrete policies that could reduce income inequality: Raise taxes, raise the minimum wage, reduce hidden expenses for the middle class (health care is the biggy, even if it's paid by the employer, it's driving down your wages) and socialize that expense through the increased taxes, and the housing crisis will decrease.
I do think we also need new construction, increased density, mass inclusionary zoning, dedicated subsidized housing, and innovative home ownership programs (including more land trusts), but with such stark income inequality, some people will not be able to afford homes.
posted by latkes at 4:46 PM on November 10, 2016 [5 favorites]
rent is a tax that goes to one person
posted by brainimplant at 4:57 PM on November 10, 2016 [4 favorites]
posted by brainimplant at 4:57 PM on November 10, 2016 [4 favorites]
I do hope causes housing markets to collapse, FatherDagon, but even if he does it could take longer than his two terms.
posted by jeffburdges at 5:32 PM on November 10, 2016
posted by jeffburdges at 5:32 PM on November 10, 2016
like the electoral college destroying real democracy, 'welcome to the UK', where maybe one in ten votes actually counts and homes (and land - land costs more than with a house on, this 'tiny homes' thing is no solution here) well rent can be 95% of income but mortgages require long-term full-time work contract - or two, a single person without a high-paying job has a low chance of getting any mortgage (hypotheque in usa?)
posted by maiamaia at 1:39 PM on November 13, 2016
posted by maiamaia at 1:39 PM on November 13, 2016
Great_radio, indeed! Per year. There was a time period for which the official market rate increase I've seen was 12. That doesn't count new units made through (sometimes unpermitted) subdivision of existing structures into more internal apartments. And there were a couple hundred affordable units built. But, bottom line was that despite rising rents, the various zoning requirements made projects not viable. Small lots, state and fire marshal access rules (stretcher sized elevator requirements), large and unremarkable historic neighborhood designations, required non-residential use for 50% of the structure and minimum parking requirements all also were routine factors to make it more sane to leave a property as a surface parking lot than to put a small "missing middle" apartment on it. Some things are changing, but construction costs are also currently well outpacing inflation. It took two decades to dig the hole, so likely that long to fill it.
posted by meinvt at 8:37 PM on November 13, 2016
posted by meinvt at 8:37 PM on November 13, 2016
Interestingly, the article's housing plan reminds me of land value taxes where you tax only the unimproved land value, not the buildings on it, as in property taxes.
I'd think transitioning from residential property taxes to land values taxes would largely defeat the NIMBYism everyone dislikes. You could keep property taxes on top of the land value taxes for commercial real estate of course. You could even tax low occupancy in extreme situations like nearby SF suburbs, so say land owners pay extra taxes for buildings that provide less than five stories worth of housing.
There would be NIMBYs who oppose such taxation changes, but you can always bundle taxation changes in with necessary things. And it's even progressive to tax low occupancy as that taxes big houses over apartment buildings. After the tax laws change, you'll find some NIMBYs becoming more inclined to changing their views.
Also, I'd love to see cities provided a framework of low interest loans for home owners wishing to convert their property into apartments, but that ties the low interest rate to the owners continuing to live there. In this way, the buildings end up owned by locals, not developers, and the neighborhood composition does not change too radically.
posted by jeffburdges at 3:00 AM on November 15, 2016
I'd think transitioning from residential property taxes to land values taxes would largely defeat the NIMBYism everyone dislikes. You could keep property taxes on top of the land value taxes for commercial real estate of course. You could even tax low occupancy in extreme situations like nearby SF suburbs, so say land owners pay extra taxes for buildings that provide less than five stories worth of housing.
There would be NIMBYs who oppose such taxation changes, but you can always bundle taxation changes in with necessary things. And it's even progressive to tax low occupancy as that taxes big houses over apartment buildings. After the tax laws change, you'll find some NIMBYs becoming more inclined to changing their views.
Also, I'd love to see cities provided a framework of low interest loans for home owners wishing to convert their property into apartments, but that ties the low interest rate to the owners continuing to live there. In this way, the buildings end up owned by locals, not developers, and the neighborhood composition does not change too radically.
posted by jeffburdges at 3:00 AM on November 15, 2016
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posted by needled at 1:26 PM on November 10, 2016