A plan to build millions of affordable high-tech housing units can be the basis for social-democratic political renewal, Part I
Most live and work in major metropolitan areas across the U.S. and Europe, but the majority of working and middle-class families can’t afford it.
Our previous post looked at living standards from the standpoint of their “affective” dimension, the “felt” wants and needs of middle and low-income families along with the stress overload effects that come with economic and social insecurity. This dimension has become particularly important given the real-wage stagnation that has impacted workers since the 1970s. Unfortunately, social-democratic political parties have largely failed to directly address these needs in recent decades resulting in severe electoral losses and the migration of working-class voters to reactionary populism. This in turn has led to a defensive alignment with anti-populist liberals and Greens and further distancing from social democracy’s historical base.
The affordable housing crisis plaguing nearly all advanced democracies (Japan is a significant exception) presents social-democrats with an excellent opportunity to address these needs directly and recover political support. This will involve designing a far-reaching but realistic plan to address the crisis and making it the central element of a political campaign aimed at re-establishing the kind of political power social democrats exercised in the postwar period. That period faced its own housing crisis, of course, that required the complete reconstruction of Europe and Japan and the need to house hundreds of thousands of returning soldiers in the U.S. The affective dimension was obvious. Millions of traumatized people needed to find their way back to a decent life. Social democrats led the way.
The U.S. had to also address the severe deterioration of inner city neighborhoods where miserable conditions fueled urban riots in the 1960s. While still not fully resolved, social-democratic elements of the Democratic Party took the lead by campaigning for increased investment in housing.
Today, over half the populations in the EU and U.S. live in large metropolitan areas (or metropolitan statistical areas – MSAs – in the U.S.), inclusive of one or two core cities and near suburbs. Major metropolitan areas have populations of over a million, reaching as high as 19 million. What defines these areas is their common transportation and communications infrastructure, the concentration of employment and professional services, and access to cultural, entertainment, and higher-education resources.
Metropolitan areas are dynamic centers of commerce, culture, and innovation. They are also the primary locus of the affordable housing crisis, in Los Angeles, Berlin, London, Barcelona, Amsterdam, and virtually every other significant metropolitan area.
The scale of housing needed today may not be as large as it was in the postwar period, but it is quite large nonetheless. It also threatens to be a growing problem in an era of weak economic growth and the relentless aging of urban housing stock. Millions of housing units are needed, and needed quickly. Only national governments have the resources and power to operate at such scale.
What would make housing affordable in a metropolitan area?
Given this context, what do we really mean by affordability? Economists consider affordability to be a function of percent of income. Roughly speaking, a household should not be spending more than 30% of its income on housing expenses, including utilities. At middle-income levels, this ceiling represents the point at which a household may take on too much debt or reduce spending on consumer goods, vacations, entertainment and other non-essential but valued goods and services. This effect impacts not only families but the growth and dynamism of the general economy.
At lower income levels, the 30% ceiling represents the point at which housing costs start to crowd out necessities such as food, clothing, transportation, tuition, health care, child care and other essential expenses. Here the damage to families can be far worse.
Using this kind of metric, governments tend to look at two ways to optimize the housing situation. The first involves vouchers and subsidies for low-income households. The second involves financing the building of more housing units, to force markets to reduce prices.
These prescriptions have severe limits. It takes years to build new housing units and governments struggle to address regressive zoning laws, NIMBYism, environmental issues, and an archaic construction industry. There are also concerns about segregation getting reinforced when private developers resist including low-price units in buildings otherwise targeting middle and upper-income consumers.
Means-tested vouchers also have problems. They can create a benefit cliff and job trap, where someone who gets a raise, finds a job, or finds a better job might lose eligibility for the voucher and be back to square one. In addition, such families are usually in buildings that are at or past their expiration dates, with landlords reluctant to invest in needed major retrofitting or repair. This housing trap further reinforces structural segregation and the persistence of enclaves with high poverty rates.
Given these limitations, how can we expect to build the many millions of new units needed and to build them quickly enough to truly address the crisis? Again, it seems amply clear that the barriers can only be overcome by government-led mobilization. This is what social-democratic parties are uniquely situated to carry out.
To construct a viable plan, though, we should avoid a top-down approach and look at affordable housing through the eyes of those who need it and try to better understand just what they look for in a home. Choosing a home and a neighborhood or community is usually the most consequential decision an individual or family makes at any one time and then makes again at various life stages. This goes deeper than just economics.
By learning how people perceive their housing needs, we are also learning what will motivate them to politically support an affordable housing plan. We boil this perception down to three major considerations: location, available services, and housing unit design. Achieving adequacy in these three aspects will define how such housing should be produced and at what cost.
Location: How and where will we live?
Metropolitan areas will be the locus for discussions about housing for the foreseeable future. While there have been trends involving population decline in older core cities, the idea that folks would be moving out of metropolitan areas in any significant numbers is dead. For every declining metropolitan area there have been other growing areas and migration of especially young people into metropolitan areas seeking careers and work is continuing apace. There has even been some movement from suburbs and exurbs back to dense core cities, stimulating gentrification. However, the very nature of metropolitan areas creates a number of concerns that an affordable housing plan must address.
Where to house the workers who provide services for the urban core
To be accessible, many major businesses and institutions are located at the center of a metropolitan area. Financial institutions, corporate headquarters, government offices, major hospitals, universities, museums, department stores, theaters, concert halls, hotels, and much more. It is natural, then, to see the proliferation of expensive housing in the nearby vicinity and preferential construction of light rail commuter lines that are convenient for higher-paid workers and professionals in the suburbs encircling the urban core.
Unfortunately, it is also inevitable that developers will see opportunities for gentrifying older center-city neighborhoods and warehouse districts which can further increase the cost of housing.
Not everyone who works in the core city can afford these prices, of course, and it’s not even close. It takes many tens of thousands of low and middle-income workers to provide necessary services: building maintenance workers, security staff, wait staff, hotel workers, cab drivers, hospital nurse aides, tellers, transport workers, clerical workers, retail workers, ushers, teachers, civil servants, and the list goes on.
Where and how do these workers live? Here we see the affordable housing crisis in real terms, that is, from the vantage point of those experiencing it. Families have several choices, all of which are burdensome and stressful:
Increase income: A non-working household member might get a job, perhaps after dropping out of school or deciding against pursuing a degree, or a working household member might get a second job.
Add a rent contributor: double up with another individual or family, increasing household crowding.
Find a lower-rent housing unit: Called “filtering”, this involves seeking less desirable housing in a suitably-located but less-desirable lower-rent neighborhood. Such filtering can further neighborhood segregation.
Move to a more remote community: Increased commuting time and expense are traded for a lower housing expense.
These choices can affect both low and middle-income families, and middle-income families may sometimes face additional concerns if they have traded renting for shares in a coop of one sort or another, something common in the 1980s and 90s. Problems can arise as buildings age. When such buildings reach their “sell by” date they may need significant repairs, often more than what shareholders can afford. At that point shareholders may see a decline in market value of their home or a potential bankruptcy of the coop corporation, frustrating and demoralizing experiences.
There are limiting factors for suburbs
The towns and villages that surround urban cores have matured over the last 50 years and have locked in some serious problems for low and middle-income families. One is the persistent problem of local zoning whereby private homeowners have created barriers to the construction of multi-unit residential buildings and larger commercial buildings.
A second concern involves the nature of suburban transport. Housing near light rail stations is priced at a premium and the cost of parking at the station ahead of commuting to the urban core can be prohibitive. In many towns, lower-wage workers who serve local businesses often get segregated into older nearby neighborhoods with poor housing stock and forced to use typically inadequate local bus service to get around. Many of these neighborhoods have become suburban versions of urban poverty enclaves.
A third concern relates to cars. Many suburban lower-income workers must use a car to get to work, typically a used vehicle with high mileage. Middle-income families often acquire more than one car if a second earner needs to commute to a workplace or a family member needs to get to a local college. In both situations, the car can become a major cost center due to fuel and repair expenses. European fuel prices are particularly prohibitive and have sparked social unrest. Efforts to combat climate change can also drive fuel costs up.
Available services: Will the neighborhood or community support new housing?
Housing is more than just the unit residence, whether high-rise apartment, garden apartment. or individual home. People need associated services to be affordable and accessible. This includes shopping, schools, hospitals, libraries, fire houses, police stations, movie theaters, post offices, banks, parks, senior centers, child care centers, and recreational facilities. We’ve mentioned the importance of light rail transport and cars and the problems they pose for lower and middle-income people who need to commute to central cities, local employers, or schools. For a housing plan to be supported, residents will want to access additional necessary services.
The urban core in a metropolitan area can provide access to most services but will typically have limited available land for large-scale housing construction. Governments must then look to tracts of undeveloped public land at the outskirts of core cities or in near suburbs as possible locations for new housing. While land costs may be lower, the need to provide services and the associated infrastructure (e.g., water, sewage, power, fiber) can quickly drive overall costs higher. This could be politically challenging for local governments and lead to a lack of sustained investment in the services especially if the new housing serves primarily immigrant and low-income families with limited political clout.
Historically, underinvestment in large-scale housing projects and associated community services has caused many such projects to cross a threshold: middle-income families start moving out and are replaced by recent immigrant and other low-income families, leading to further decline, segregation, and even collapse. Deteriorating conditions are visible along the outskirts of many European cities and nearly all the low-income housing projects erected during the 1950s and 60s in the U.S. were demolished within 30 years.
Planning for a new wave of mass housing construction must be done in a way that provides robust high-quality community services, including transport and public safety. To get those who might live there to support the plan, they must see a deep commitment to providing essential services. It’s also a prerequisite for assuring the kind of racial, ethnic, and income-level balance that can combat segregation, increase the dynamism of the community, and assure continuing government and private investment.
Housing unit design: A home, not just a box.
Gone are the days when people in need of housing willingly accepted living in a standard featureless flat in a monolithic multi-unit apartment building, whether European modular suburban high-rise, U.S. inner-city housing project, or UK council house complex.
Today people spend more time in their homes than in the past. Some work remotely, many shop remotely, and most everyone can access a huge variety of entertainment options through internet and cable services. To the extent possible, therefore, people want to exercise control over the aesthetics, comfort, and functionality of their homes. Aesthetically, they want options with respect to paint, floor style, woodwork, tile work, and other features.
Functionally, they want to be able to engage in quiet study or remote work, and to easily access laundry, recycling and trash removal services. They want their homes to be fireproof, pest proof, soundproof, waterproof, and have adequate window ventilation and HVAC controls. They also want easy and affordable access to high-speed internet and basic cable services.
From a broader societal perspective, most people would also want to know that their new residence is environmentally sustainable, energy efficient, and with as small a carbon footprint as possible.
These design elements can vary depending on family size and age demographics. Younger couples may need space to accommodate a future child. Families with children may want to give each child a separate room as they get older. People with disabilities may look for certain access and safety features, and seniors may want to move from a larger to a smaller home. A housing plan should be built with flexible interior design and a housing complex should offer a variety of convenient options
Model homes and colorful brochures
A proper housing plan should have a diversity of home styles, sizes, and features that can be presented to prospective future residents. A choice of high-rise structures, low-rise garden apartments, or single-family homes and choices of size and configuration within each type of residence.
Future potential residents should have access to brochures and model homes that can give them the kind of buying experience that a good realtor might provide in the private market. This would not just aim at producing a satisfied customer but also a political ally in navigating the inevitable barriers that might affect a long-term project. Living in a public housing development should not be something one resigns oneself to, but something to look forward to. This is the kind of attitude that made the postwar period successful.
In the second part of this post, we’ll look at how to best produce such homes and consider costs and financing.