There is much talk of a crisis, based on statistics such as this one, from a 2018 report by the Pew Charitable Trusts: Of the nearly 43 million households who rented their homes in the United States, 7.3 million — 17 percent — spend half or more of their monthly income on rent. Often, their apartments are an hour or two away from where they work.
The situation is worst in booming coastal cities such as Los Angeles, San Francisco and Seattle, which means it is mostly a Blue America problem, and that Democrats — both those who run the blue states and those campaigning for president — are under pressure to come up with solutions.
It’s tricky: Democrats are the party of government, but the housing crisis is in large part government-created.
To cut a long story short, blue American cities and counties need new rental housing, but local zoning, building codes, approval processes and other regulations — the whole legal infrastructure that keeps West L.A. neighborhoods neat, green and oh-so-pleasant — hinder construction.
That web of rules has accrued over decades: In 1960, Los Angeles had 2.5 million people and enough zoned real estate to accommodate housing for 10 million. By 2010, population had grown by 60 percent, to 4 million, but authorities had reduced the city’s maximum zoned residential capacity by 57 percent, to 4.3 million.
A month ago, California’s state Senate shelved a bill to deregulate apartment construction. The sponsor was a Democrat from San Francisco, backed by Newsom. Opponents were progressive groups that said the bill would enrich private developers but not ensure affordability — and Democratic elected officials from such places as Beverly Hills, Palo Alto and West Hollywood.
Among Democratic candidates for president, Sen. Elizabeth Warren (D-Mass.) has offered the most detailed housing plan and, to her credit, it identifies “the root causes of the problem” as insufficient supply, “and state and local land-use rules that needlessly drive up housing costs.”
She would encourage states and localities to change these rules through a $10 billion grant program that would fund parks, roads or schools in return for land-use reform. It’s like the Obama administration’s “ Race to the Top” education-reform program, but for housing. It also resembles a state-level incentive plan Newsom has already proposed in California.
Then Warren would spend $500 billion over the next decade “to build, preserve and rehab” affordable units on the freed-up land (and elsewhere), paid for by restoring estate taxes repealed by the Republican Congress and President Trump in 2017.
Of course, if Warren really wanted to shake things up, she would fund her plans by eliminating both the mortgage interest deduction, for an estimated savings of $33.9 billion per year, and the exclusion of capital gains on home sales, for another $36.3 billion.
Ending those breaks would raise revenue and reduce huge tax-code subsidies for single-family housing — another “root cause” of America’s distorted residential real estate markets. West Los Angeles, and the rest of America’s suburban upper middle class, wouldn’t like it, though.
Tax changes might even be more efficient, as housing policy reform, than spending a national fund on a shortage that is crippling in some localities but nonexistent in others. Warren would distribute the money through all 50 state governments — guaranteeing that the dollars would not necessarily go where they were most needed.
Warren identifies a real challenge and its real origins. Her proposed solution taxes the ultra-rich — “14,000 of the wealthiest families,” in the words of Warren’s plan — but this populist flourish tends to obscure the much wider role of the suburban upper middle class.
These are the people who would ultimately decide whether local communities accept zoning reform. And recent political events in California suggest that their acceptance would be grudging indeed, even if the federal government sweetened the pot with infrastructure funds per Warren’s plan. Perhaps it’s better to see what that state’s own efforts yield before committing the whole country’s resources.
It is largely in Blue America that the future of the nation’s most sought-after living spaces will be decided, with huge implications for the Democrats, and for the social and economic opportunity the party champions.
The battle will be lost unless and until Blue America’s haves find ways to share more of their neighborhoods with the have-nots.