by Thomas Silverstein
A growing chorus of community organizing, civil rights, and affordable housing groups is coalescing around the demand for transformative investments in social housing as a key to solving our housing crisis, ending homelessness, facilitating a just carbon transition, and remedying racial injustice. Social housing is decommodified housing and can take the form of public housing, other state or municipally owned housing, community land trusts, limited equity cooperatives, and housing owned and operated by mission-driven nonprofits. If built and operated in accordance with housing justice principles, social housing really does have the potential to deliver on these lofty but essential goals. At the same time, we are far from winning transformative investments in social housing, and, in order to get to the place where victory is near at hand, we, as a housing justice movement, need to understand not only why Congress did not pass the significant affordable (but not necessarily social) housing investments of Build Back Better but also how opponents prevented the public housing program from becoming our country’s transformative investment in social housing. In national, state, and local fights in the middle third of the twentieth century, real industry groups worked hand-in-glove with homeowners to oppose public housing, often resorting to both red-baiting and race-baiting in furtherance of their goals. To not repeat that saga, we must carry on the fight for social housing in the context of a broader movement for a holistic set of economic rights that drives a wedge between industry groups and a sizeable proportion of homeowners.
In light of the federal government’s retreat from expanding affordable housing supply through the public housing program, the United States’ two primary vehicles for meeting growing affordable housing need are the Low-Income Housing Tax Credit (LIHTC) program and the Housing Choice Voucher (HCV) program. A curious fact about these two programs is that, while they have their opponents on the right (largely motivated by austerity logic), the posture of the real estate industry towards them is relatively sanguine. When considering how the programs function, it is not hard to see why: both programs adopt the neoliberal logic of leveraging the private sector to meet social welfare needs; provide massive subsidy to for-profit (and some non-profit) developers, landlords, and property managers; and leave the basic structure of the housing market in place. When there are proposals to tackle the affordable housing crisis by expanding these programs as Build Back Better would have done, the opposition does not come from the kinds of industry groups that played a significant role in throttling the public housing program in the middle of the twentieth century.
Why not, then, pursue an approach to solving the housing crisis that would garner industry support, driving a wedge between homeowners and industry but positioning tenants on the side of industry? Unpacking the reasons why could be the subject of its own article, but, briefly, it is important to make three observations. First, although the LIHTC and HCV programs can be tweaked around the edges to better conform with social housing principles such as those articulated by the Alliance for Housing Justice, in operation, they typically do not, and attempts to better ensure that they do (such as by requiring permanent affordability or nonprofit ownership) would undercut the very industry support posited as a potential benefit in the fight for Build Back Better. Second, both programs have significant scalability issues with tax credits deriving some of their value from their scarcity (thereby meaning that more available tax credits could mean lower tax credit equity prices) and vouchers boosting the market power of landlords to increase rents and thereby the per-household cost of assistance. Third, both programs, to differing degrees (with LIHTC by far the worse offender than the HCV program), are inefficient insofar as they build intermediaries, who are all motivated to achieve their desired profit margin, into the process of providing affordable housing.
If we want to solve the problems that we need to solve and to do so in ways that are consistent with housing justice principles, scalable and efficient social housing is the ticket, but it is the ticket to a train that industry is not going to want to board. Industry will not support the demand for transformative investments in social housing, because, in the mirror image of LIHTC and HCV, they will not be leveraged to play their neoliberal role of social welfare provider, they will not receive massive subsidy, and the structure of the housing market will in fact change.
Understanding how transformative investments in social housing would change the housing market requires understanding two related imperfections of the current market: scarcity and lack of competition. Housing, overall, in some places, and for poor and working class households, everywhere, is too scarce. The causes of this are complex, but, while it would be possible to mitigate the harm of scarcity through measures like zoning reform and interest rate cuts without fundamental transforming the market, market-based solutions to housing scarcity ultimately face scalability problems because, beyond a certain point, the profit accrued by building new housing is offset by reductions in the value of the same actors’ existing holdings. At a point even further down the line, the price point for newly constructed housing in a glutted market would be lower than cost inputs, such as labor and materials, that are not as easy to affect with housing and land use policy tools as is the cost of land.
Real estate sector incumbents that benefit from scarcity and lack of competition, ranging from multinational corporations to individual homeowners, have obvious incentive to fight against the abundance and competition represented by scaled-up social housing. Together, the real estate industry and homeowners have tremendous political power, both in terms of the money to influence elections and in terms of actual votes as nearly two-thirds of households in the United States own their homes. If they move in lockstep, the reality is that we cannot win. To win, it will be necessary to cleave economically precarious homeowners from financially secure ones and the real estate industry. Effectuating that cleavage will require an agenda that goes beyond housing.
As the long list of types of social housing suggests, social housing is not one particular thing, but the most consistent common thread across these types of housing is that social housing is not treated as a commodity. Although it might not be realistic for all housing to be social housing, the fight for social housing cannot be neutral as to what proportion of total housing is social housing. That is true both because increasing the share of the pie that is comprised of social housing would result in more households having their needs met in a manner that is affordable to them and because the commodification of the balance of the housing market makes the provision of social housing more difficult. One reason why commodification makes social housing production harder is that, if land is a highly valued commodity, social housing developers may find themselves being outbid for scarce land by for-profit developers. Additionally, the more profits exist in the real estate sector, the more industry actors can invest those funds in lobbying against public funding of social housing production with the goal of limiting the supply of housing that is capable of undercutting incumbent landlords on cost. If industry lobbying were not effective at shaping public policy, corporations would not invest vast sums of money in the enterprise. Presumably, these outcomes would occur less and less as more households’ needs are met by the social sector. Crowding out the for-profit market is therefore an important step. Meaningfully achieving that crowding out requires not only massive investment but also a rethinking of who can and should live in social housing. In general, our dominant affordable housing programs are highly means tested. Households lose subsidy and, in some instances, dwellings, if their incomes rise above certain thresholds that are typically framed as percentages of the Area Median Income (AMI) for the metropolitan region or rural county in which they live. Existing programs vary slightly in their details, but none meaningfully serve households with incomes above 80% of AMI. In reality, the vast majority of households living in affordable housing have incomes at or below 60% of AMI and a considerable portion have incomes at or below 30% of AMI. Unsurprisingly, just 43% of households nationally have incomes at or below 80% of AMI, and just 14% of households have incomes at or below 30% of AMI.
That data suggests that a policy regime cannot credibly claim to crowd out the private market if it cedes the housing needs of 57% of households (or even 86% of households) to that private market. Crowding out the private market therefore requires either an abandonment of means testing or higher eligibility ceilings (e.g., 200% of AMI) such that the private market would be left with a small sliver of wealthy households to serve. This move away from stringent means testing should not be confused with a shift towards a different kind of rigid, mixed-income model wherein households of many income levels live in the same developments but in rigid proportions (e.g., 20% of units for households at or below 30% of AMI, 20% of units for households above 30% of AMI and at or below 50% of AMI, 20% of units for households above 50% of AMI and at or below 80% of AMI, 20% of units for households above 80% of AMI and at or below 120% of AMI, and 20% of units for households above 120% of AMI). We would not artificially cap the proportion of units available to the lowest income tenants. Instead, socially housing would ideally be open to and affordable to all with all households paying no more than a set percentage of their income in rent (preferably less than the current norm of 30%) and with subsidy, potentially including but not limited to cross-subsidy from tenants whose rent contributions exceed the cost of providing their units, making it possible to sustainably house lower income households. As households’ incomes rise, they would not be pushed out of social housing – as sometimes happens with extant affordable housing, depending on the subsidy program – but instead would merely pay more rent in absolute terms, but not relative to their incomes.
Eligibility for social housing for middle-income households will not automatically translate into occupancy and, indeed, income-based rents may be unappealing to households that could find private market-rate housing available for which they might only need to pay 10% or 15% of their income. In some markets, like the San Francisco Bay Area, where it can be challenging for middle-income households to find market-rate housing they can afford, the cost of social housing will be appealing, but we cannot design a social housing system that is only sustainable in the hottest real estate markets. More is needed. Fortunately, that more, rather than caving to the potentially discriminatory preferences of middle-income households (through means like capping the proportion of extremely low-income households in a given development), actually enhances quality of life for low-income households. Specifically, amenities, high building quality, attractive design, and prime location should all make social housing desirable to everyone, regardless of income level.
Building housing that is physically and geographically desirable will do a lot to attract a socioeconomically diverse group of residents to social housing communities, but it will not, on its own, sway the kinds of homeowners who teamed up with the real estate industry to oppose public housing. Homeownership, ironically due in significant part to federal policy interventions that were roughly contemporaneous with the creation of the public housing program, has been an effective wealth creation mechanism for many families. Middle-class white families, in particular, have done pretty well for themselves with federally-backed mortgages and the mortgage interest deduction.
Public policy can make that version of success less essential. It can do this by narrowing the gap between being a social housing tenant and a homeowner in our society. To do so, a policy need not even be perceived of as particularly radical. For example, the otherwise very regressive Tax Cuts and Jobs Act of 2017, passed during the Trump Administration, rendered the mortgage interest deduction superfluous for millions of homeowners by significantly increasing the standard deduction for all taxpayers, whether renters or homeowners. That change did not hurt the financial position of these homeowners. Indeed, nearly all are benefiting financially from the increase in the standard deduction.
While we should grab the low hanging fruit that is within reach, it will not be possible to neutralize homeowner opposition and convert some of that opposition to support without achieving some more ambitious wins. To figure out what those more transformative changes might be, it helps to ask: what does the wealth associated with homeownership buy? Among other things, it could buy the ability to afford deductibles and co-pays needed to access medical care, higher education tuition, private school tuition in places where public elementary and secondary schools are struggling, childcare, nutritious food, and a secure retirement. Whether cast as needs or merely as desirable attributes of a good life in a prosperous country, government has the power to render them irrelevant as reasons to cling to a commodified housing system. With Medicare-for-All, free public higher education, better funded public elementary and secondary education, subsidized childcare, expanded food assistance, and more generous Social Security benefits, the utility of an extra, say, $50,000 in home equity will shrink dramatically.
Public policy can reduce the marginal benefit of greater household wealth gained through home equity accumulation within one’s lifetime by increasing quality of life and meeting basic needs through public goods, but can it lessen the appeal of being able to convey generational housing wealth to one’s heirs? To a degree, the answer is yes. To the extent that a desire to secure their children’s health, wellbeing, and economic security motivates people to leave wealth to the next generation, the health, education, childcare, nutrition, and retirement interventions noted above are just as germane looking forward as they are in the present. Beyond that, it is worth observing that, if we are able to peel off the homeowners who may be able to use their housing wealth to meet their needs through the end of their lives but who would not have anything left to leave at that point, we will already have the basis for a coalition of renters and less economically secure homeowners that comprises a supermajority of the population. The high end of the range of estimates of U.S. households that receive an inheritance at any point in their lives tops out at about 40%. And, if we decide to prioritize the intergenerational transfer of modest amounts of housing wealth, that goal can be accommodated within a social housing system through the expansion of some existing community land trust and limited equity cooperative models.
Of course, the point of all of this is not to suggest that the housing justice movement can fix the housing crisis and win the objective of scaled-up social housing simply by accomplishing the much “easier” goal of solving every other major domestic policy challenge facing the United States. Rather, the point is that there is a critical need for greater interconnectedness among movements for social, economic, and racial justice in this country. Organizers are already fighting for policies to meet our needs with respect to health, education, childcare, nutrition, and retirement. Some of that work is taking place within the same organizations that are doing critical housing justice work. Even when that is not the case, the organized base of the groups advancing this work outside of housing policy often overlaps with the organized base of the housing justice movement. The rudimentary pieces of a more interconnected movement are present; they just need to be put together.
Connecting those dots is not just important for better positioning the housing justice movement to win homeowner support through an agenda that decreases the incentive to support ever-increasing home prices, it is also important because of another lesson from the middle of the twentieth century: if there is not sufficient mutual accountability, portions of a broad progressive coalition may sell each other out to achieve their own wins. The most egregious examples of this unfolding include domestic workers and farm workers not being protected by the Fair Labor Standards Act and the Social Security Act, exemptions that both had the intent and impact of harming Black workers. Avoiding similar outcomes in the future is clearly important.
There are green shoots that are suggestive of the potential for a more interconnected, mutually accountable movement. Teachers’ and nurses’ unions have started to support housing justice demands, both through collective bargaining with their employers and through policy advocacy. The Debt Collective has fought to liberate poor and working-class people from the burden of student loan debt, medical debt, consumer debt, and housing debt. At the federal level, there was intensive coordination around the Coronavirus Aid, Relief, and Economic Security Act and the American Rescue Plan Act, but, underscoring that green shoots are a start rather than a finish, a collaborative approach to Build Back Better could not prevent the outcome of an Inflation Reduction Act that offered a great deal for the environmental movement and relatively little for others. We still need to become stronger in addition to becoming more interconnected and mutually accountable.
The human need for housing is inextricably linked to other basic human needs. By situating the fight to meet that need alongside the fights to meet other similarly essential needs, the housing justice movement would reclaim the most aspirational rhetoric of the New Deal Era, working to secure, in the words of President Franklin Delano Roosevelt, “freedom from want.” By working towards the decommodification of housing, the movement has the potential to unwind one of the more harmful aspects of the nuanced legacy of the New Deal, the creation of a housing finance systems oriented towards ever-increasing home values and, frequently, racial and economic exclusion. It would do so by giving homeowners who at least occasionally benefit from that system a viable alternative, thereby driving a wedge in the decades-old alliance of real estate industry groups and homeowners. By doing the work through a more interconnected, mutually accountable movement, those who are organizing for housing justice would increase the chances of victory and of not being left behind.
Thomas Silverstein (tsilverstein@lawyerscommittee.org) is the Director of the Fair Housing & Community Development Project at the Lawyers’ Committee for Civil Rights Under Law.
