December 10, 2013
New York mayor Bill de Blasio (AFP Photo/Stan Hondastan)
New York mayor Bill de Blasio (AFP Photo/Stan Hondastan)

Today, homelessness, poverty, and housing policy are the focus of a big debate among liberals. After the 2008 crisis rooted in homeownership, more and more people are renting every day. But liberals have not really grappled with the problem of affordable housing, and traditional solutions are unequal to the task.

The Obama administration’s housing policies have mostly fixated on restoring the pre-crisis home mortgage status quo, but have barely addressed renting at all. Homeownership is important, but liberals now need to set affordable rental housing on an equal political footing with owning. At a minimum, this will involve massive new construction to address the desperate shortage of affordable rental units.

One place for liberals to start is with this magnificent piece in the New York Times. It tells the story of a girl named Dasani, as she and her family struggle to survive homeless in Brooklyn. It’s a gripping tale that, if you have even a scrap of human decency, inspires deep sympathy.

Dasani’s family has a lot of problems. But possibly the biggest one is housing. New York City rents are very, very high, and climbing all the time as rich whites move back to the city en masse. The city bureaucracy keeps encouraging the family to go out and find their own place to live, but with rents so preposterously far out of reach, and rental assistance vouchers cut in the age of austerity, it’s easy to see why Dasani is stuck so long in a thoroughly wretched homeless shelter.

For a long time now, market-oriented types like Matt YglesiasRyan Avent, and Ed Glaeser have focused on easing building supply restrictions (like the DC height limit) so that more housing and office buildings can be constructed. More supply means cheaper prices, it’s basic economics. The Yglesias/Avent/Glaeser agenda has not been enthusiastically embraced by liberals, probably because it sounds too free-market and deregulatory. And when people see new construction these days, especially in hopping markets like DC, it’s almost always new luxury apartments, and so people tend to associate a proposal for lots more new building with rich people shoving everyone out of the city.

I think YAG understate the amount of government involvement that would be necessary for their plan. But we should remember that the status quo is already very bad. There is a mad boom of construction and renovation going in DC’s Columbia Heights, for example, where skyrocketing rents are squeezing incumbent low-income people terribly. One might wonder why new luxury apartments aren’t being built on the other side of Rock Creek Park, where lots of rich people already live. The answer, of course, is that influence over the political system is correlated by wealth, and rich incumbents west of the park resist any change to the status quo.

So we can see where this is headed. Poorer neighborhoods are least able to resist a redevelopment agenda, so their buildings are slowly converted into expensive luxury housing through renovation and new construction. In turn, this creates a new crop of wealthy incumbents who fight upzoning hammer and tong, and the neighborhood becomes locked in a high-rent, no change equilibrium. Developers then focus on a new poor neighborhood to expropriate; rinse and repeat.

However, traditional liberal solutions to high rents tend to be clumsy and insufficient to the scale of the problem. Because where YAG are unquestionably right is that there are simply not enough cheap rental units in America. Here’s Felix Salmon with some numbers: We “have 11.8 million households chasing 4.3 million affordable rental units.” The typical liberal agenda of affordable housing mandates and/or rent control are better than nothing. But they won’t house 7.5 million households.

The answer is to use the political system to confront these forces head-on, using markety solutions as tools. For starters, we can 1) force construction of the sort of housing that poor people might afford, meaning lots of upzoning and small-unit construction, axing parking mandates, relaxing setbacks, etc; and 2) force rich neighborhoods to accept upzoning and new construction as well. The second one is badly underappreciated, in my view. Wealthy neighborhoods tend to be the most wasteful of land, and building those luxury units in the already-wealthy sections will ease the expropriation-redevelopment cycle described above.

This means that liberals need to make housing policy a first-rank issue, up there with health care and the economy. (Bill de Blasio’s plan would be a great start.) But it only makes sense — the way things are heading, in short order half the country will be renting. Lower rents mean a better life for everyone.