Our Morally Indefensible Affordable-Housing Crisis
Shouldn’t being able to live in an affordable, safe and sanitary home be considered a human right? There are several ways local leaders could attack the problem.
Increasing numbers of residents in the U.S. must spend upward of 50 percent of their net income on housing. Nearly 600,000 Americans are homeless every night. Given the reality of income inequality, this is morally indefensible. To make matters worse, there is the nation’s continuing shortage of housing: Since the Great Recession over a decade ago, construction of single-family homes has lagged, leaving a gap of more than five million units between the number being built and those needed to keep up with family formation. Meanwhile, millennials, the nation’s largest living generation, are reaching homebuying age, and this will only deepen the crisis.
I have experienced the problems of both housing availability and affordability in helping my two daughters find places to live. The first encounter involved helping my younger daughter find a rental apartment. She faced upfront costs that would have deterred most apartment-seekers, including first month’s rent, a security deposit of the same amount and a pet fee. If she were to end her lease early, she would have to pay a draconian penalty. Then she faced an annual escalation in rent of as much as 20 percent. My daughter was fortunate because she had parents who could have assisted her if needed (thankfully she didn’t need our help). But the average renter would find it difficult to come up with the upfront costs of upward of $4,000 for the 600-square-foot apartment she ended up renting.
What my daughter faced is typical of what other renters face each day, but public officials should look closer at what they could do to help constituents of lesser means. Maybe they could offer down-payment assistance to renters, like some jurisdictions do for potential homebuyers. Going further, perhaps they could abate taxes for property owners who are willing to peg their rental increases to the consumer price index instead of whatever the market will bear.
As much as the rental market is wrought with unfortunate circumstances that favor landlords, helping my other daughter purchase a home in Washington Park, the historic Black neighborhood in Atlanta where she grew up, brought even greater problems. First, she encountered a very low inventory of housing. Once she did find a house, it usually had multiple offers from purchasers who had submitted bids of $5,000 to $20,000 over the asking price. The biggest competition came from investors who made cash offers, bypassed inspections and promised to close within a week or two. Many offers we contended with were from out-of-state investors who never bothered to even come look at the houses.
As a traditional homebuyer, my daughter was at a distinct disadvantage, even though she had been pre-approved for a 30-year conventional mortgage, had saved enough money for a down payment and closing costs, and had a stellar credit rating. But many sellers today have come to expect, and prefer, all-cash offers. I recall our real estate agent saying to us, “Go big or go home.” So we tapped into our retirement savings and lent our daughter enough money to pay cash for a 1,200-square-foot home. In the end she had to pay $14,000 over the asking price to win a bidding war, and before she could move in she had to put in another six figures in repairs and upgrades to make the home habitable.
A Fundamental Question for Society
It goes without saying by the time the work on the house was completed, and with all the cash she had to put into it, it was no longer affordable. The average resident would not have had the resources to deal with what she encountered. Her home has appreciated by 125 percent since she bought it in 2018, and the median cost of a home rose by 28 percent nationally between 2019 and 2021. She has no intention of selling her home — and adding to the area’s housing inflation rate — and from a merely capitalistic perspective, the home she purchased was a great investment. But it was terrible for affordable housing.
These experiences raise a fundamental question that society must come to grips with: Should being able to live in an affordable, safe and sanitary home be considered a human right, not subject to the ebb and flow of the so-called free market?
The situations my daughters faced are playing out all over the country, particularly in Sun Belt cities like Atlanta, Austin, Charlotte, Jacksonville and Phoenix. Recently 60 Minutes did a feature on corporate landlords — companies that buy up starter homes in the $300,000 range and then offer them at astronomically high rents. These giant companies, such as Tricon Residential, Invitation Homes and American Homes 4 Rent, make billions in profits and often raise rents by as much as 30 to 40 percent annually. Wall Street is getting in on the action too, with firms like Blackstone, Goldman Sachs and JPMorgan Chase backing some of the larger home investors.
The New York Times recently reported on how this trend is even impacting a part of the housing market that has traditionally provided more-affordable housing: mobile home parks. This practice involves corporate investors buying trailer parks and then raising the rents sometimes as much as 100 percent, which of course makes these homes no longer affordable. All of this is legal under our economic system, but is it right?
Challenges for Local Leaders
Despite the ambiguities in law and the rules of laissez-faire capitalism, I recommend that public officials attack the problem of housing affordability on several fronts.
First, they should strengthen legislation that encourages the building of more affordable housing. For example, they should look closely at the promise of inclusionary zoning, particularly along tracts where there are huge public investments. Then they should think about zoning changes that might permit denser, and usually more affordable, developments in some neighborhoods along major thoroughfares. They might also investigate targeted zonings that will allow for accessory housing — “mother-in-law”-type apartments or houses detached from primary residences. Then public officials should consider legislation that will explore the frontiers of urban and suburban living — innovations such as “tiny-home” communities. Clarkston, Ga., public officials have enacted micro-housing ordinances that allow, incentivize and encourage the development of communities with homes of up to 500 square feet.
As with all legislation, there is no one-size-fits-all, so officials should listen to residents who will be affected by these changes and factor in their concerns prior to moving forward. But at the end of the day, local leaders must decide what they believe is in the best interest of everyone — not just the current property owners.
Finally, public officials should do more to partner with nonprofit and faith-based housing developers to build on public land and land owned by faith communities. These promising collaborations, along with more traditional strategies like partnering with landbank authorities, community development corporations and community banks, all have proven to work well.
The most important work that local elected officials can do today, besides keeping us safe, is to advance policies that result in housing for those who are shelter-fragile. The knowledge of how to accomplish this moral imperative is available, but the consensus that human beings are entitled to it does not presently exist. Public officials must ask, why not?
Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.