May 8, 2018

A new approach to public housing

Popular Resistance -Many American cities face a severe shortage of affordable housing — and not just for the poor, but well up into the upper-middle class. A recent report from Harvard’s Joint Center for Housing Studies concluded: “The rental market thus appears to be settling into a new normal where nearly half of renter households are cost burdened,” or paying more than 30 percent of their income in rent.

What these cities need is a dramatic increase in the number of mid-range and affordable dwellings to ease the price pressure on their rental markets. They should address the problem directly: by constructing a large number of government-owned municipal housing developments. Unlike traditional American public housing, all city residents will be eligible to live there.

There are two major benefits to this approach. First, it adds new rental capacity in the housing market directly where it is needed. By greatly expanding the supply of mid-range and affordable units, it will both accommodate more residents and make existing privately-owned apartments cheaper. (New developments should never destroy existing functional housing through “slum clearance,” instead the objective should be to expand supply by building on existing city-owned land.)

Second, by allowing people of all incomes to apply to live in these new developments, local governments will be able to charge higher rents to higher-income residents, and thus capture a great deal of capital income. Instead of being a large budgetary burden on cities and the federal government, they could be mostly self-sustaining. (Indeed, in very expensive cities they could become a significant revenue source.) Poorer residents could be subsidized to some extent by the “solidarity rents” of the middle-class residents — who would still be paying less than they do now. Ultimately, this will enable the creation of many more deeply affordable units than a strictly means-tested approach would allow.

1 comment:

greg gerritt said...

Cities should also understand that a growing population will not help them economically.