Student considers policy reactions to housing affordability crisis

Democratic politicians at the state and federal level are pushing plans to dramatically expand the government’s role in addressing unaffordable housing costs, as rent prices hit new highs in major American cities and the party’s increasingly young and urban base embraces big social programs. Taken from the Washington Post. https://www.washingtonpost.com/business/2018/07/19/rents-soar-democrats-push-new-policies-affordable-housing/?utm_term=.56c9e1835168

    New policies are being suggested to regulate housing rents and control rent prices on housing units and control unaffordable housing costs. I personally think that all of this sounds good, but the reality of it is that unless they find a way to put together and standardized rent based in on the number of rooms and the location of the neighborhood.

    Currently I have the knowledge of a suggested rental price strategy named the Fair Market Rent, not everyone follows the suggested fair market rent when renting their properties because it is not enforced for the landlords to fallow the FMR.

    Now the FMR prices are mostly followed by housing programs with federal funding and affordable housing; now in an ideal situation a family should be able to pay their rent with 25% of their income. The reality is that some people actually pay about 30% of their income or more towards their housing than when they are in subsidized housing. I know about this based on my experience working with housing assistance programs in the pass, and currently working with section 8 housing assistance.

    Now the California’s Democratic nominee for governor is calling for 3.5 million housing units in the state and low-income families to receive new tax credits. In my opinion the problem with tax credits and money being given to low income families is that landlords can definitely take advantage of the fact that their tenants now have all this money for them to take by increasing their rents. This is why if there is not any type of regulations place about rent control the landlords can always take advantage of their tenants in this regard.

    I personally think that rent and fair rent should be regulated by the government in a sense that there is fair treatment about rent prices and housing conditions for those low-income families. Policies that promote fairness and stable rent prices can definitely have a positive impact in these families and their housing opportunities.

    Now in the other hand this type of policies usually don't get approved because is most likely to interfere with the wealthy landlords and the realty businesses as it is well known that some people working in the government own

 Rental properties and will probably oppose to this type of policies that will affect the interests of the rich and wealthy. 

“The reality on the ground, of how severe the crisis is, is getting the attention of the policy makers” (Diane Yentel) – President and executive of the National Low Income Housing Coalition.

    I personally think that the fact that fair regulated rent is being talked about and some good housing policies are coming out and then being rejected shows the importance of people being able to afford housing opportunities. Hopefully in the future the Housing Quality Standards for renters get to more adequate and affordable housing could definitely help to reduce the amount of people experiencing homelessness in the United States giving them the opportunity to provide for their families and get permanent employment opportunities.  

  I was not very familiar with the Fair Market Rent policies you mentioned.  I know that HUD establishes Fair Market Rent prices for various statistical metropolitan areas, and that these rates are used in setting allowed rental costs for persons receiving subsidized housing vouchers, and I also had the impression that the official Fair Market housing prices were also used in planning by community development agencies in their housing affordability strategies, but I had never considered the details of how those rates are developed or used.  Perhaps you would be interested in doing more with that issue in a later paper.

  Housing affordability and the human right to housing are indeed issues that America has not adequately addressed.  I can understand that in many markets it makes little sense for developers to produce new affordable housing, because their costs and inputs to create housing units yield far, far greater profits if they create housing for higher income residents, and even the many billions of dollars (somewhere around $7 or $8 billion?  Check the Frontline documentary)  spent by the Federal Government in tax breaks given to developers of low-income housing seem to have little impact on the problem.  The government recognizes (through policy) no right to housing (despite the Universal Declaration of Human Rights—see article 25), and almost all the $40 billion or so spent on affordable housing in this country is discretionary spending.  Also, as we target low-income households with our public housing policies, we seem to be neglecting middle-income households, who cannot afford housing in many markets (San Francisco Bay Area; Los Angeles; Seattle; Washington, DC; New York City; Boston; etc.)

   I have often wondered why government at some level (could be state or city government if not the federal government) has not become more involved in providing more affordable housing directly.  I envision governments producing dense housing areas for mixed-incomes and then selling the properties at cost (revenue neutral), and perhaps financing most of the buyers (with adjustable interest rates matching or slightly above the increases in the consumer price index, again so there is no loss or gain to the government providing the housing).    The units could be owned by the purchasers and residents, but with some sort of a land trust agreement, so that when owners sold the units outside their families (they could give the housing to spouses, children, parents, or nephews and nieces), the government or land trust would be the buyer, and a condition of the initial sale would be that the price for the unit would be the same price paid by the owner, adjusted for the inflation since the time of purchase, and perhaps further adjusted for any improvements made to the property by the owner.  

Such a scheme could: 1) make housing available; 2) have minimal long-term cost to the government; 3) provide some slight surplus (through financing the sales of units with interest rates slightly above the inflation rate for those who could afford it) to the government that could be used to provide nearly free housing to persons who could not afford it; and 4) would not damage the private for-profit housing market much, since that market is interested in maximizing profits and therefore is not serving the low-profit margin provision of affordable housing anyway.  The policy could be instituted only in areas identified as having Fair Market Housing rates that were above some fraction of typical median year-round full-time wages of workers in the area.  For example, if local two-bedroom fair market housing rates reach higher than 40% of median monthly income of year-round full-time workers, the government can set up the quasi-public land trust and housing development agency to provide the housing.  Ideally, I would like to see the mixed-income housing units constructed in such a policy to encourage more environmentally friendly housing construction and more dense housing in city centers, so that residents would be more able to walk to work, ride mass transit, and live in structures that used passive solar heating in winter and solar or wind power generation to reduce energy costs of heating and cooling.  

  One problem I don't know how to address is the problem of low-income persons who are nuisance tenants. Among the persons who cannot afford housing there is a small subset of persons who are obnoxious neighbors who would destroy property even if they owned it. The scheme I envision involves home ownership (within the context of a land trust where the quasi-public land trust entity would have the right to purchase any unit that comes on the market at a price where no profit-taking—adjusted for inflation—would be part of the property sale), partly because I think residents will take better care of their homes if they own them, but even so, there are persons who are incapable or unwilling of taking care of their housing, and while I'm sure there are policy solutions to that problem, I haven't quite figured out what they must be, aside from the idea that there ought to be some form of assisted living services available for some residents.