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Affordable Housing Starts From the Bottom Up

Does affordable urban housing require socialized costs? That’s where I left off a month ago [1], discussing San Francisco’s tortured housing market and its desperate need for a pressure relief valve of greater density.

Affordable housing is a vast and thorny policy issue, and will be the subject of much discussion here at New Urbs over the next year. A great place to start orienting yourself is the discussion that Emily Badger just collected at the Washington Post, “How to Make Expensive Cities Affordable Again, [2]” and Daniel Hertz’s follow-up thoughts [3] at City Observatory. The Post discussion centers around the displacement of longtime residents in hyper-expensive housing markets like San Francisco, and debates whether new development aimed at the high-end makes housing markets more expensive or less. Market-oriented writers note that high-end construction reduces competition for lower level buildings by the wealthy, whereas others are concerned that the new construction just turns a neighborhood into a magnet for the well-to-do.

I’d like to approach the issue from the other direction, however, by borrowing from Charlie Gardner’s discussion at “Old Urbanist” of the time “When the Market Built Housing for the Low Income.” [4]

Gardner is responding to the idea that “very little private housing in the United States was originally built for low-income people,” meaning that affordable housing almost entirely comes from once-expensive homes that have aged and filtered down the market. And when you survey the current American housing stock, it may well be true that most affordable housing was once premium supply.

But, Gardner takes care to note, absence of evidence is not necessarily evidence of absence:

Although this may be somewhat accurate so far as it only applies to formal housing developers, throughout the history of American cities and indeed most other cities in the world, a large portion of the housing stock came from the informal economy, most of it purpose-built for indigent migrants or very poor laborers. This was the case even in some of the largest and wealthiest cities in the Western world until fairly recently.

Prior to the 1920s, the lower end of the housing market was supplied by a combination of pop-up shantys and self-built shacks on low-value land, temporary single resident rentals, small multi-family construction like the proverbial “apartment over the garage,” self-built quality housing like Sears kits [5], and company-provided housing, among others.

Rather than requiring a wait for upper-class housing to “filter down,” the self-built shacks in particular had a tendency to “filter up,” Gardner says, as people invested in and expanded their homes as they moved up the economic ladder. Even better quality self-built construction was not typically fixed in form upon move-in, but was often subject to a continual, incremental improvement. A small shotgun starter home could be added onto as families and resources grew. But, crucially, people just starting out did not have to pony up all the capital for their final product up front.


What happened to all these components of originally affordable American housing? Simply put, it was often banned, and the evidence torn down. 20th-century reformers seeking to save the poor and working classes from their squalor endeavored to provide safe and sanitary housing while razing the blight of their neighborhood “slums.” It must be acknowledged that the conditions of such neighborhoods were not comfortable or clean, and were often decidedly lacking in plumbing and wiring amenities.

But as Gardner remarks, “the ‘eradication of slums’ element of this strategy was more faithfully carried out than the provision of dwellings.” Gardner summarizes the results:

The elimination of the self-built home as an affordable option in much of the country, in conjunction with zoning regulations limiting small multifamily housing, setting minimum lot sizes and imposing other similar restrictions, completed the elimination of the lower rung of prior housing options.

A few decades after the low-end of the market was cut off with a floor of zoning and code regulations, the upper end of the market, that source of eventual filtered affordable housing, was capped by even further zoning tightening, preventing new development. And so markets like San Francisco and New York have been impossibly squeezed from both directions for generations, leaving a housing supply that is hopelessly inadequate to meet demand. In situations like that, extreme unaffordability isn’t the product of gentrifiers and condo developers; it’s built into the bones of the city.

As the Washington Post discussion demonstrates, there’s a lot of interesting thinking to be done about how the high end of the housing market affects urban affordability. That should not come at the expense of close examination of how the market came to its current state in the first place, however.

When affordable housing structures have been regulated out of existence, affordable housing will necessarily require subsidized provision, as the difference between the market cost of legal housing and the price understood to be affordable are bridged by government. That may come from direct subsidy, housing voucher, or an in-kind exchange with developers, granting permission to build luxury apartments as long a few units are set aside as “affordable.” Acknowledging this situation is a far cry from acquiescing to the inadequacy of unconstrained urban housing production, however.

What is required, then, is a close examination of the state of the American built environment, looking at which rules and regulations are well-considered protections against unsafe corner-cutting, and which are unnecessary barriers to housing access. It will also require a thoughtful consideration of what controls local communities should put in place to shape their city in their own preferred image, and what freedom new residents or developers should have to provide for the underserved or unwelcome.

We’ll look forward to digging into those questions in the coming year, but one guiding principle will be the value of small-scale decision-making and incrementalism. By the time problems are big enough to warrant top-line consideration, they are often too wicked to resolve satisfactorily with the blunt tools large institutions have available. Enabling local responsiveness and relatively low-risk course correction can allow environments to rescue themselves.

Jonathan Coppage is senior staff editor of The American ConservativeNew Urbs is supported by a grant from the Richard H. Driehaus Foundation.

9 Comments (Open | Close)

9 Comments To "Affordable Housing Starts From the Bottom Up"

#1 Comment By EngineerScotty On February 24, 2016 @ 12:40 am

There are plenty of lower-cost apartment buildings in the surrounding community, built by private industry, which never were dwelled in by the wealthy. While it is certainly true that housing stock (and communities that are homogenous in age) tend to move down the socio-economic ladder as the housing stock becomes expensive to maintain and functionally obsolete, it in’t that simple.

But regulation–often designed to keep the poor out of certain neighborhoods by setting an effective price floor that they cannot meet–is indeed a big culprit.

#2 Comment By JMA On February 24, 2016 @ 8:56 am

Looking forward to more on small scale decision making and incrementalism to address wicked problems. Thanks!

#3 Comment By Johann On February 24, 2016 @ 9:57 am

If wall street had not been bailed out after the housing bubble burst, there would be affordable housing today. The government and the Fed has worked hard to keep housing prices high because of their insane belief that deflation causes economic depression.

#4 Comment By Hankest On February 24, 2016 @ 10:41 am

“….affordable housing almost entirely comes from once-expensive homes that have aged and filtered down the market.”

Certainly not the case in NYC, where 230 sq ft tenement apartments, constructed to house poor immigrants on the LES (for example) now rent for $2,600 a month. And homes in Greenpoint, Gowanus , Red Hook, and Williamsbug that were built for blue collar workers are now only affordable – even the most decrepit ones – to the wealthy.

That aside, perhaps before we try to figure out what needs to be done, we should figure out the reason housing is so absurdly expensive right now in NYC.

Meaning is there a fundamental reason for the alarming price increases in Manhattan, and large parts of Brooklyn and Queens over the last 15 years? Has there been a sharp increase in population? No, not compared to the 1990s when home prices were fairly stable. Has median income in NYC increased by a large margin? No, again not compared to the 1990s.

Perhaps the housing price increases are nothing more than another RE bubble, like the one we had here in the late 1980s. That one popped, leaving many homeowners underwater until 2003ish and many developers bankrupt (ask Trump).

If this is a bubble, no amount of building or removing controls on developers will stop it, if anything it will only make matters worse. While also threatening to destroy many of NYC’s more human scale neighbors, as has been done already in Williamsburg and Long Island City.

#5 Comment By Joan On February 24, 2016 @ 3:17 pm

I’ve seen this process in a town I lived in for a couple of years, a historically working class town that is gradually becoming a bedroom community for the nearest good-sized city. The yuppies have recently become numerous enough to show their strength by trying to enact ordinances that would do things like forbid any property zoned residential from having more than two cars out front, a clear knock at the local shade tree mechanics. They have yet to succeed, but if the demographic trends continue, they may yet get their way.

#6 Comment By grumpy realist On February 24, 2016 @ 3:35 pm

In San Francisco, the reason is very simple: earthquakes. If you want to build something with many many stories that will stand up against earthquakes, it’s going to be a bloody sight more expensive than a two-story Painted Lady type of house.

#7 Comment By Vie On February 24, 2016 @ 4:09 pm

It’s a tough issue that the government should stay out of. As well, the fed should stay out of regulating monetary policy.

Everyone acts like the fed is the end all and do all. BTW, do you Trump voters know what his policy is on the fed?

#8 Comment By Jim G On February 24, 2016 @ 10:07 pm

This problem is big in Sydney, Australia where we own two units (apartments) in high demand, low-rise area a short walk to the CBD (central business district). Once the neighborhood no one wanted to buy or visit, it is now one of the most expensive. We were lucky to buy when we did, but the problem now is that mortgages are sitting at 8-9 times the average annual salary across the city and even higher in this neighborhood. The government has tried to increase new development with tax incentives and first home buyer benefits on new development, but that hit a wall with the latest economic crisis looming so developers are slowing or holding on progress. Furthermore, allowing for self regulation in building code adherence has been a disaster. No one wants to buy into a new property developing fully aware the looming headaches and costs likely to come.
Our children are fortunate that they will inherit our lucky purchase, but their friends will struggle. Coming from a very poor background myself where my mother was never able to afford a home, this greatly concerns me.

Please forgive all spelling/grammar mistakes as I am typing on a mobile device.

#9 Comment By Emrys On February 25, 2016 @ 2:58 am

I live in Portland OR where the cheapest apartments are now well out of reach for even moderate income renters. But what makes it really hard is that to get into an apartment, even if you can afford it, is you usually need 2-3 months rent, in advance, in cash, and a top-tier credit rating. Somebody like me is locked out because my credit is not high enough for them and I don’t have several thousand dollars in cash laying about just waiting to be given to a management company. These same rules apply to those low income housing units that the city has set aside. Good credit and deposits are still required. As one young woman said to me “If I had good credit I wouldn’t be needing low income housing.”