Housing crisis

Photo by Alisa Anton on Unsplash

As wages stagnate and housing costs climb, more than half of Americans are now struggling to afford their homes. Local governments, meanwhile, are wrestling with a chronic housing shortage and a crumbling stock of publicly owned units. With housing becoming increasingly difficult to attain, many U.S. cities appear to be inching ever closer to a full-blown affordability crisis.

The question of how to address rising demand for quality, affordable housing is, of course, not a uniquely American problem. But, elsewhere in the world, governments have found solutions rooted in very different philosophies on how societies should build, finance, distribute and maintain housing. A few have even succeeded in avoiding the social and racial segregation plaguing many American cities through policies intended to build diverse, cohesive communities.

In Austria, policymakers have relied on an approach that embraces, at its core, the belief that society should provide every citizen with decent and affordable housing. With the help of heavy federal spending, the government has developed an expansive housing stock and some 60 percent of Vienna’s citizens — including much of its middle class — now live in subsidized homes.

The neat buildings often boast leafy common spaces meant to encourage interaction among neighbors, while swimming pools, saunas and childcare facilities are also common sights. In Austria, city governments regulate rents and households spend on average about 21 percent of their income on housing. By contrast, the average American family spends 37 percent on housing every month, with the figure approaching a staggering 60 percent in places like New York City.

Vienna’s housing model also involves strategic measures meant to cultivate social cohesion. Through land use planning, the city ensures that communities are home to a mix of residents from varying social and demographic groups. “They (the state) do it because they want balance in the community — that’s part of their aim,” says William Menking, a professor at the Pratt Institute and co-author of a book about the city’s housing model.

In Singapore, government policies that envisioned housing for all citizens have helped millions buy their own homes with the state’s help. With the aim of creating a “homeowner society,” Singapore built more than a million apartment units, while turning the national pension scheme into a fund that Singaporeans could draw on to buy these homes.

In just half a century since independence, the scheme has allowed the city-state to solve a spiraling homelessness crisis by placing high-quality publicly developed housing at the center of its agenda. Now, 81 percent of Singapore’s residents live in government-built high-rise apartment blocks and the vast majority own their homes. By contrast, in 1960, almost 70 percent of Singapore’s population was made up of squatters and slum dwellers. Strategic land-use planning and ethnic quotas regulating the resale of government units are used to ensure communities remain diverse and inclusive.

Finland, meanwhile, has become the only country in Europe to see a decline in homelessness thanks to a national program that provides subsidized homes to vulnerable people without requiring them to first get sober or meet other housing-readiness requirements. At the heart of the program is the Housing First philosophy that many social and health problems faced by homeless populations can be resolved by providing immediate and unconditional access to housing. As a result, the number of homeless people has fallen from a peak of 18,000 in the late 1980s to 5,482 at the end of 2018.

How local land-use policy shaped U.S. housing markets

In the U.S., housing policy has evolved in a different direction. While the federal government has exercised influence over housing funding and policy for nearly a century, the focus has mostly been on facilitating homeownership of single-family dwellings and financing low-income housing for society’s most vulnerable citizens. Notably, unlike in Finland or Austria, local governments in the U.S. control a key factor in  housing — land use. Instead of expanding access to housing, American cities have exercised that control to implement policies that perpetuate segregation, deep inequalities, and sprawl. Even though many of these challenges are created or exacerbated by governments, municipalities typically look to private developers to address the resulting market imbalances.

Housing policy in most U.S. cities is rooted in the belief that the solution to chronic housing shortages, skyrocketing rents, deep inequality and dilapidated social housing lies primarily with the private market. A number of cities, including New York, have used incentives in the form of tax breaks and waivers on density restrictions to nudge developers to build more housing and reserve some of it for low-income residents.

The rationale behind this is that increasing the overall housing stock through private development will ease some of the pressure on availability and affordability, leading to a natural correction in the housing market. Meanwhile, by encouraging mixed-income developments through inclusionary zoning, American cities are hoping to avoid creating more of the urban ghettos often associated with the public housing projects of the past.

Yet this strategy has had only mixed success so far. In New York City, demand still far outstrips the supply of affordable housing being built by private developers. De Blasio’s flagship initiative — announced in 2014 and later expanded — aims to build 300,000 affordable housing units by 2026. As of June 2019, developers had started on 43,930 new units. But the odds of securing an affordable unit through the city’s lottery system are slim: More than 4.6 million applications were submitted for just 7,857 units allocated in 2018.

Much of the housing developed under this model is also geared toward middle-income residents and does little to help the poorest segments of the population: A Brooklyn development made headlines last year with requirements that applicants vying for its affordable units earn between $67,000 and $150,000.

What can the U.S. learn from cities abroad?

Complex local land use policies in the U.S. also mean that the private market often winds up building housing that favors high-income, white families. Residential zoning codes often set a minimum size for dwellings and the lots they sit on, restrict how many families can live in one home, cap the number of stories that can be built, or require parking spaces for every unit. All of these requirements ultimately push up the price of developing housing, which developers pass on to tenants or buyers. 

Most cities also reserve vast swaths of urban land for single-family homes and restrict multifamily housing to areas near industrial zones or otherwise undesirable tracts of land, further limiting development possibilities. In the San Francisco Bay Area, for example, 75 percent of all residential land is zoned single family. This is not unusual in America. All of these factors make housing unnecessarily scarce and expensive in the U.S.

“We’ve run into a planning system where building anything becomes fantastically complicated and expensive,” says Alain Bertaud, a senior research scholar at NYU’s Marron Institute and author of Order Without Design: How Markets Shape Cities. “And so you end up building only expensive things.”

But, while successful models used elsewhere may provide a helpful roadmap for U.S. cities, their success is linked to a complex mix of factors that makes them potentially difficult to replicate. For one, many of these cities are far smaller — and growing at a much slower rate — than their U.S. counterparts, making it easier for governments to address housing demand. Helsinki grew at just 0.7 percent in 2018 and Vienna marked growth of 1.1 percent. By contrast, New York City’s population expanded by 2.7 percent in the same year.

Government land ownership has also played a significant role. Following independence, Singapore enacted a law that gave government agencies powers to acquire vast amounts of private land at below-market rates, displacing millions of people and allowing the state to kick-start its public housing scheme.

Vienna also owns a large chunk of the land its building on, much of it taken over from the aristocracy when democracy was achieved. However, Menking notes that cities like Vienna have made a strategic decision to hang onto public land instead of selling it off as many U.S. cities have done. “They made a choice to build housing there,” he says. “We’ve made a different choice here.”

In Finland, meanwhile, a much more ethnically homogenous population has also meant that building inclusive communities and avoiding segregation has been far less challenging for the government.

But what American cities can learn from other models is that there must first be a shift away from viewing housing as solely the responsibility of the private market, says Rodrigo Faria Gonçalves Iacovini, a researcher at Brazil’s Polis Institute and part of the Global Platform for the Right to the City.

“We need to start framing the idea of housing not as a commodity,” he says, “but as a right.”

##

This post is part of our Fall 2019 editorial series on land use and housing policy challenges and solutions. Take a look at the other articles in the series:

 

Ana Ionova

ABOUT THE AUTHOR

Ana Ionova

Ana Ionova is a freelance multimedia journalist in Latin America, with a focus on human rights, politics, migration and environment. She is currently based in Brazil and has previously reported

See what readers said