Friday, November 19, 2010

Affordable Housing – A Death Spiral

To ask what is affordable housing is a find oneself in a quandary. Affordable to whom, why is it affordable, and, most especially, who is providing this housing are many of the questions. Let’s make it a simple fact at the outset: Governmental affordable housing is not a direct result of market values and regional housing affordability. Affordable housing, in the United States, is a politically driven, subsidized, and artificial construct that provides a residential unit bought with intentionally contrived political land uses, OPM (Other People’s Money), and unrealistic social beliefs and demands.

During the last century there has been a consistent and successful growth of wealth and equity in this country, much of it due to the increase in property values. This has resulted in some being left behind. The obligation of supporting these people (a significant portion being urban dwellers) through welfare and subsidized housing; was taken on by the public institutions at all governmental levels. An inevitable divide was created between the “haves” and “have-nots,” a pejorative argument that implies one owes something to another. As such, housing, being the most visible, becomes a vehicle to push the agenda of supplying shelter by one group for another.

This effort is accomplished through fees paid by builders to the community so the government and its agents can provide this housing. It is also done by requiring a set number of units within a new community to be “affordable”-the formulas are fascinating to calculate. The solutions bear no semblance of current housing values and the marketplace. In fact, I would not be surprised, today in some areas of the Central Valley of California some affordable projects are MORE expensive than the current market value of foreclosed homes in the same area. These contrived housing units are the product of entrenched political operations within city, county and statewide housing programs.

The argument is that public housing is needed (there are Public Housing Authorities in most states) and the marketplace is not meeting this demand. In most cases this is true, but the developer and builder cannot compete in this marketplace, not when the carrot of approval hangs before the applicant. To not contribute means your development cannot be approved. Fairness is not a visitor to this party.

It is also a social issue of extreme importance. Wealthier communities are concerned that this type of housing (in reality it is not the housing—it is the resident) is not acceptable in their backyards. It is literally kicked down the freeway. The urban areas contain the largest number of people and as a result the burden of affordability falls on them the most. Like welfare itself, it becomes a vicious circle that continues from one generation to the next.

In the wealthier neighborhoods these housing projects have literally changed the name of the game by calling this housing “workforce housing;” housing intended to keep the resident with essential skills the community needs, police officers, firemen, teachers etc., in the community. With today’s excessive benefit packages for these specific groups one wonders whether this is a good argument now.

There will always be a place for affordable housing, but the model must be changed to reflect the marketplace. And, in fact, during some economic times, it may be necessary to drop the charade entirely. These housing institutions must be accountable to the taxpayer and the development community. In fact one of the most fascinating arguments has been that this socialized housing (let’s call it what it really is) is necessary to protect the capitalist system by providing economical housing for workers closer to jobs. In fact this housing has been cited as a solution to congestion, sprawl, family problems (more time with kids) and not having enough time for yourself. Aren’t we lucky that it is available; let’s plan more!

Stay tuned . . . .

No comments:

Post a Comment