The invisible laws that led to America’s housing crisis
The invisible laws that led to America’s housing crisis
In the 1910s, US cities began enacting policies that would shape neighborhoods and, unintentionally, lay the roots for the severe housing shortage today: single-family zoning laws.
Zoning laws affect what you can build where. But a quicker route to increasing the supply of homes (this lowering prices) is to levy high taxes on single family homes that the owner does not live in.
Single family homes have become an investment opportunity for corporations and wealthy individuals. When vast sums find their way into a market, prices can go up sharply. Corporations, private equity funds, and the like cannot inhabit a home. And a person can only inhabit one primary residence (>50%). So if people (or companies) want to own homes as rental properties, they'd pay higher taxes. Some would sell those extra homes, reducing Demand and putting them on the market, increasing supply. The additional taxes some would pay to keep the extra single family homes could fund housing-related programs like section 8, redevelopment of depressed areas and so forth.
Can anyone with experience in housing policy with in? Would this work? Aside from pissing off rich people?
In most states there's already an additional tax for not living in the home in the form of not receiving the homestead exemption.
Expanding the homestead exemption could be part of the solution.
Perhaps, but the prevalence of single family homes is a huge problem itself. They generally bring in less in tax dollars than they cost the city to maintain, since it's more road, sidewalk, sewer, etc. for one household. My tax dollars as someone who lives in a multifamily building subsidize others in my city who have one household on much larger properties. I don't want these people to have more tax breaks and incentivize more of that to be built.
This is a huge problem with suburban devlopments (single family homes, strip malls, box stores). Almost all of them rely on denser parts of the cities to maintain themselves. Unlike the denser parts of cities, the commercial zoning often struggles when the original business leaves, unlike denser areas that are more flexible. Not only do these developments cost more to build and maintain, they often don't provide for as long and can be costly/resistant to redevelpment due to suburban zoning and NIMBYism.
My tax dollars for a single family home are far above that paid for a tiny apartment, and that’s as it should be
The consequences of that would be tens (hundreds?) of thousands of people like me quickly losing their place to live. Lots of people can only afford to live right now because they're fortunate enough to know somebody with a second place which they can rent at below market rates. Most of the neighborhood I live in was bought and built in the late 80s, and is now the de facto retirement plan for dozens of military members who bought these places. No one idea fixes anything entirely, but I think the zoning ideas are the most widely and quickly effective, without destroying lives of average people.
The reverse would actually happen.
Home prices without corporate/wealthy investments would quickly fall due to the increase in supply and a decrease in the purchasing power of the average buyer. They would eventually stabilize at prices that people like you could afford.
Rent for multi-unit buildings would also fall as more renters could afford to buy a home.
Those who purchased homes as rental units would still be able to recoup most of their investment by selling the place. They could then invest somewhere that is not hoarding resources and causing other people to suffer.
You wouldn't lose your place to live. Your place to live would become for sale on the open market for someone like you to buy, and if tens (hundreds?) of thousands of those places went up for sale at once then someone like you could afford to buy it. Having necessary housing for other humans be a retirement plan is kinda fucked up.
The issue is there's nothing stopping house owners from increasing the rent they charge to cover their costs. There needs to be enforced rent control in order for the profit margin to be squeezed.
That's a different argument. The point here is that extra money (even if it is paid by the renter) then goes into the city funds to build more high density housing and more public transit to get from lower density areas to the higher density areas.
Yea they tried to make America into Camazotz.
I am a builder and have watched this mess get worse and my solution is to get rid of air bnb and corporate investment in housing and to tax the holy hell out of second and third homes.
Edit: Camazotz is the mundane world in A Wrinkle in Time. Its description always had me picturing the suburbs.
Been saying for years the easy way out of this mess is that residential property may only be owned by individuals, and to prevent hoarding, add an additional 10% to the property and sales tax of each property above one. So your 2nd property costs a mere 110%, but your 11th property will be assessed at 200% of the taxes.
We would also need some enforced rent controls, so that expense isn't passed on to the renters.
Honestly, the taxation proposal would have the same effect as simply outlawing corporate ownership of residential property, with the added benefit of temporarily pulling in tax revenue until the hoarders can unload their properties.
Not sure how this would apply to multifamily residential properties or things like hotels or campgrounds, though.
For those wondering like me, Camazotz is a Mayan bat spirit at the service of the lords of the underworld. So, I’m really not sure what to make of that reference.
Maybe they meant Camelot? Although that doesn't make much sense either, at least it's building-related.
Camazotz is the mundane world in A Wrinkle in Time and its description in that book always reminded me of the suburbs.
As a similar alternative, a Land Value Tax would be a good way to drive more efficient uses of land. Single family homes on large lots in cities would quickly become uneconomical.
Seriously how fucking hard is it to implement that? It seems so incredibly obvious.
This is the root of the problems with housing. We stopped building cities the way cities were built for thousands of years to try a new method. Even after proving that method costs more, uses more land, and is socially isolating, that method is promoted.
I personally think corporate greed helps keep it this way as this type of development promotes more spending. You have to buy a car, gas, insurance and you have to use it to get anywhere. This lets those "I'm already here so I'll get this" or "I dont wanna drive again so ill buy more" mindsets flourish. Single family homes often leads to everyone owning a lot of stuff as well, private pool, private lawn equipment, private playground for your kid to play alone.
Developer greed also plays a role as buildings are built to be the most profitable, not the most useful, even most new SFH developments are massive, luxury homes. Developers won't build smaller, affordable homes because they get less money per square foot of developable land.
I don’t think the “corporate greed” argument is that relevant here, not having to buy all of those things means someone has more disposable income, so spending I don’t think really changes, it’s just you spend less on necessities and more on “fun stuff” so to speak. There’s not much imperial evidence to support it either way, and most of the opposition to zoning reform comes from NIMBys who are scared of any changes in the neighborhood and maybe a little bigoted.
Speaking of which - developers: They have good reason to support denser housing, they’ll get higher returns on selling more houses or apartments on the same land. The reason houses are built huge and expensive is that zoning laws specify large minimum lot sizes, forcing developers to sell what few homes they can build for higher prices. Single family zoning creates artificial scarcity (again mostly out of bigotry and paranoia). If developers weee given more freedom to build what they want, it would be most economical for them to build transit-oriented rowhouse developments. This was standard practice a century ago, but since then it’s mostly been banned.
Unfortunately, the political climate favours corporations over public opinion, so corporations have the real power to change our policies. I doubt they would want anything that helps local busniesses thrive (like density and transit) and reduces our dependancy on products like gasoline, cars, and bulk processed foods. Building in a way that the only convenient option is to drive to whatever strip mall is close to you ensures that the corporations in the strip malls and big auto/oil still get your money while they are subsidized by cities/governments.