This article appears in the August 2022 issue of The American Prospect magazine. Subscribe here.
America sits on the cusp of a severe housing shortage. The systems that have propped up the American housing economy are failing, as they have been for a while. The 2008 financial crisis led to a depletion of residential investment, and a decade later—before the country could fully recover—the pandemic forced millions of workers to accommodate a work-from-home schedule. Housing in America was already a battle between progressive organizers who see housing as a human right and greedy private investors who see housing as a good, but now rent and home prices have skyrocketed past what many can bear. Even upper-middle-class families are getting squeezed in many cities, while at the other end of the income ladder, a crisis of homelessness is festering.
Traditional American solutions are generally focused on the private market and spurring competition. The government’s role is reactive to the whims of this sector. It’s relegated to a helpless position that can only perpetuate broken cycles. As a result, many have been sold the idea that people should either buy a home or live in an apartment owned by a private landlord, and that the government itself should then grudgingly run a few units for the poor.
Yet there is another solution that addresses the crisis much more directly: social housing. Rather than American-style public housing, which is reserved for the lowest incomes, this housing would be open to everyone. Housing supply would be delivered to the people who need it most urgently—which is to say, all people.
Ultimately, housing would become a right for all. To fight for this goal, the culture must disabuse itself of the notion that there are some people unworthy of government-owned housing—whether it’s marginalized groups like the poor or even the upper middle class. American society must renounce the presumption that there are people who cannot or should not live in proximity to each other. All people can cohabitate; what’s more, everyone must for a truly equitable future to be within grasp.
TWO BIG PROBLEMS ARISE from relying nearly exclusively on private developers and landlords for housing. The first is that building happens in erratic surges depending on the business cycle, not the needs of the American people. Millions of homes were built during the housing bubble of the mid-2000s, but after the financial crisis, construction collapsed, and by 2009 new construction for privately owned homes was at its lowest point ever. As Business Insider reported, the U.S. has not had a return to those pre-recession highs since.
Need for housing was not down during the post-recession years; on the contrary, the population continued to grow. Private builders, however, had no incentive to flood the market with new properties because it took the U.S. multiple years to fully recover economically. When full employment was finally approached, there were few affordable properties available, and so prices began to rise dramatically, eventually increasing 35 percent over the course of the decade. In 2020, the pandemic caused increased demand and also boosted building costs, causing another 20 percent price increase.
A large social-housing sector would stabilize the construction industry.
And now, long before the massive construction backlog has been addressed, another market downturn may already be started. In June, the Federal Reserve raised its federal funds interest rate by 0.75 percent—the biggest hike since 1994—and more may come. As a result, mortgage interest rates increased from about 3 percent to nearly 6 percent in just a few months, and new home starts are plummeting.
The second problem is that the incentive for the private market to build housing is maximizing profit, not meeting the needs of the people. Many people do not have the income necessary for the housing they need—and others can’t afford any housing at all. The result, particularly in cities like San Francisco and New York, where high-income job growth outstrips new housing construction, is that developers cater almost exclusively to the luxury market.
Public housing is already a vital source of low-income housing across the country, particularly in New York City. It is owned by the U.S. Department of Housing and Urban Development and operated by local public-housing authorities. According to the National Coalition for the Homeless, about 1.8 million families live in these legacy units.
But there are problems here too. First, because the units are provided below cost, they require an outside subsidy to build and maintain that is often cut when conservatives are in power, or during hard economic times. This is why America’s public-housing stock is reportedly some $80 billion behind in maintenance and investment.
Second, public housing in the U.S. has been exclusively for the low-income (typically below 80 percent of the local median income). That, coupled with the often poor quality and bad reputation of public housing, means that in many cities housing projects are de facto reserved for poor African Americans (helped along by chronically racist mortgage finance institutions). As many have noted, including the Prospect in 2012, public housing was built in already low-income, Black neighborhoods. The concentration of poverty begets poverty, so that eventually public housing in America became associated with dilapidated, neglected, overcrowded high-rises. Today, public housing is just 1 percent of the housing market.
SOCIAL HOUSING ADDRESSES all of these problems. The idea is simply public housing for all. For example, a municipality might have an apartment building in which a third of the units were deeply subsidized for low-income people, a third provided at cost for the middle class, and a third at the market rate open to anyone. Every segment of the housing market, from top to bottom, would get more supply simultaneously.
Such a building would not require a subsidy to operate, since maintenance could be funded by the second two classes of units (how much depends on the market). Rents could be kept as low as possible because the government doesn’t require a profit margin. Construction could also be financed by floating a bond against expected future revenues, so construction could be greatly scaled up without requiring any direct government financing.
Finally, a large social-housing sector would stabilize the construction industry. The best time to build would naturally be during an economic downturn, when labor, land, and materials are relatively cheap. So instead of homes being built in boom/bust cycles, causing labor shortages for construction companies followed by bankruptcies and mass layoffs, there would be a steady, constant rate of building and employment. This would also help stabilize the rest of the economy.
Social housing can be those traditional, multifamily high-rises, but it can be any other form as well. Most importantly, social housing will not be stigmatized, income-restricted, or run-down.
And this isn’t some theoretical idea either. In fact, social housing exists in a number of ways across the world, with varying successes and failures. Vienna has had particularly strong success, where 3 in 5 residents live in public housing.
As Peter Dreier, professor of public policy at Occidental College, wrote for the Prospect in 2018, since at least 1922, the Viennese government has deliberately grown its share of housing stock. In addition, the government provides communal spaces such as “kindergartens, nurseries, mothers’ advice centers, courtyards, health clinics …” while maintaining properties on its dime for a small fraction of a family’s income.
Vienna’s success can also be attributed to the government adopting a mixed-income model for social housing that eventually made social housing accessible to all. The legacy continues today, as Dreier continued: “Vienna today has about 800,000 housing units. The municipality is Vienna’s largest landlord.”
GOOD THINGS RARELY come easy. Some changes would be needed for a full-fledged national social-housing program. A big issue is the Faircloth Amendment, implemented under the Clinton administration at the behest of the GOP. It was a part of a larger package of welfare reform enacted with the Quality Housing and Work Responsibility Act (1998). This specific amendment puts a cap on how many public-housing units can be built by pegging it to the amount of public housing available in 1999. Essentially, for traditional public housing to be built, it has to be destroyed. Repealing this sordid law would be an important step in any revitalization of government-owned housing.
However, states or cities still can and sometimes do maneuver around Faircloth. So long as a social-housing scheme does not require a federal subsidy—like the one detailed above—Faircloth would not apply. Indeed, Montgomery County in Maryland has even built out a few projects along these lines.
THERE ARE ALSO other options available to the country in the interim. One is the idea of community land trusts, nonprofit bodies that govern housing, and sometimes communal spaces, in a given area, made up of community members. There are at least 225 in the country. Land can be managed by the people who actually live there, giving more people a say in their living conditions and likely increasing the longevity of property.
At any rate, a social-housing program would take time to come to fruition, and the population will not be easily disabused of the notion of housing as a commodity. But that’s the beauty of big ideas. The housing status quo, where about a third of the population spends more than 30 percent of their income on housing, and 15 percent more than half their income, is not working. Far too much of the national wealth disappears into the pockets of idle landlords. Far too many people are homeless. Big problems require big solutions—that’s how housing becomes a right.