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Two particular problems plague the world: immigration and high housing costs. They explain much of our political conflicts, economic imbalances, and inability to support shared values and unified public goals.
A Persian immigration lawyer told me, “Around the world, we are divided into two parts: immigrants and the rest of us.”
Recently, I sat in a barge bar on the Seine in Paris and met a young German couple who discussed Germany’s changing politics and youth discontent.
What’s behind it? I asked.
“Housing costs are high,” the young woman said. Her partner nodded enthusiastically.
The reality is that we are divided across the world into those seeking affordable housing and the rest of us.
I’ll leave the immigration quagmire to others.
Can housing affordability be solved? Yes, I believe this wholeheartedly.
Humans can make the world a better place
Seventy-five years ago, the intractable problems of low life expectancy and high poverty rates seemed stubborn. At that time, global life expectancy was less than 45 years, but today, it has reached 78 years.
World Bank data shows that in 1990, 2 billion people lived in poverty. By 2019, this number had dropped to 600 million.
Two important things happened in both cases: Government action drove private investment and innovation. China and India are prime examples of government action that has unleashed free markets for economic activity and reduced poverty rates.
Medical innovation, supported by government action, has led to new treatments and vaccines that can stop or contain disease, dramatically extending our lifespans.
Affordable Housing Rehabilitation
A two-in-one mix of government action and private sector innovation and investment is the formula for solving the affordable housing mess, and it has historically worked well in the United States when it mustered the political will.
The Homestead Acts of the 19th century democratized property ownership. Between 1862 and 1934, the federal government granted 1.6 million homestead lots to families and allocated 270 million acres of federal land to private ownership.
Loose local policies
In the 1930s, 30-year mortgages and home loan tax breaks made homeownership possible for millions of Americans.
From 1950 to 1990, flexible zoning rules in suburbs across the United States sparked a private-sector real estate boom that fed housing demand.
In the late 1970s and early 1980s, New York City Mayor Ed Koch used the power of city government to spur the development and redevelopment of 180,000 housing units. His efforts promoted housing and economic growth throughout the city.
In the 1990s, the relaxation of rent control rules to improve properties boosted the housing stock throughout New York City.
In the early 2000s, Mayor Jerry Brown announced plans to build 10,000 housing units in downtown Oakland, California. He suspended arcane zoning and building rules and welcomed developers to build thousands of homes — revitalizing downtown with new residents, tax revenue and retail and office growth.
Today we need a new generation of bold thinking and big action.
Incentivize the private sector
Here are some ideas.
- Special tax incentives are provided for companies producing large-scale affordable and industrial housing production.
- Municipal bond rating agencies should downgrade cities with restrictive zoning policies.
- Provides tax incentives to landowners who partner with homebuilders to build affordable housing.
- Reward title and mortgage companies that lower fees and offer new, affordable closing and financing options.
- Establish new federal real estate depreciation rules that reward the production and ownership of affordable housing.
- Redirect the Realtors Political Action Committee (RPAC) supports a new national housing policy that supports a large-scale housing production program.
- Use RPAC funds to support state laws such as allowing accessory dwelling units (ADU). California implemented zoning changes in 2017 to increase the number of ADU construction from 1,100 units in 2016 to 23,600 units in 2021 and as many as 100,000 units this year.
- Use RPAC funds to support YIMBY (Yes, In My Backyard) organizations fighting restrictive housing policies.
- Stop institutional real estate funds from buying homes or give them tax credits to convert a portion of their portfolios into affordable housing.
- We should consider modern homestead laws that give away underutilized local, state, and federal buildings and land to people who build homes and investors. There are many governments.
NIMBYs need to calm down
Those who have enough housing should start to understand the importance of building more.
Their local political influence killed many great housing projects.
Their greed and exclusionary attitudes spell doom for civilized and egalitarian societies.
Maybe not embracing the homeless shelter next door, but a properly sized, well-built apartment complex will enrich the community rather than destroy it.
I swam in the ocean at Midtown Beach on affluent Palm Beach Island. Just 1.5 miles from the West Palm Beach Intracoastal Waterway, thousands of affordable apartments and condos are being built to house South Florida’s budding workforce. Many of them are young people, immigrants, retirees and others of various races and religions who come to Midtown Beach.
This is how it should work. Public beaches should be our model for building more homes and more vibrant, safer communities – not fiefdoms, but an open, inclusive society. This would go a long way to solving our housing problem.
Housing reform agency
I recently met a colleague who is part of a large investment fund that has purchased tens of thousands of homes across North America.
He admits he feels some guilt about being in an industry that has driven up housing costs and kept many people out of the housing market at a reasonable price.
When rents and home prices rise, his financial model works.
This group of investors has long employed this strategy. However, their learning is valuable, so we must curb their greed with incentives to get them to do the right thing, just like New York City landlords did in the 1990s.
Only bold policies will work
Incremental measures to address the housing problem are not working. The political consequences are dire, with an entire generation of young people unable to find an affordable place to live, causing further alienation and triggering legitimate political unrest.
Decent and affordable rental housing should be a civil right, but there are steps to homeownership.
The only thing holding us back is a lack of private and public courage and leadership.
Pessimism won’t do us any good.
As a species, we have the intelligence and will to make the planet a better place. That’s because, like other species, we have one motive: survival.
Email Brad Inman
