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Have you ever seen homeless people sitting or laying on the streets when you get around the city? If yes, you might have noticed you’re seeing them much more frequently than before. Because of the rising inequality, it became way difficult for middle-classes to afford the living cost in the urban areas, some of them move out to suburban areas, and some were unable to fit in the gigantic changes and then became homeless.
In “Affordable Housing in California: The Political Economy of Homelessness” written by Martin, Edward J, he stated that the homeless have a lack of work experience and education. The homeless are mostly unable to get a job, which is also increasing the gap of inequality. While the economy develops rapidly, the total income increased, but the rise of the wage wasn’t equally distributed between the wealthy and the poor. It is necessary to solve the issue to break down segregation so the middle-class won’t be forced continuously out of the center of cities. What should people do to let those in need have affordable houses? To advocate for affordable housing, new luxury units should be built continuously, old buildings should be turned into affordable housing, and the process of demolishing old apartments should be slowed down.
Lower-middle families are struggling to afford either buying or renting a house because of multiple reasons. In the article “The affordable housing crisis, explained” written by Patrick Sisson et al, they discussed the factors that make housing unaffordable. The housing stock being unable to release is one of the problems, the newer generations(aged fifty-five or older) were more independent than the older generations, and combined with their longer life, less and less housing is released. And as lesser stock leads to higher prices, housing gets more expensive.
The mortgage-interest deduction, established in 1913, was also a law that benefits house owners instead of renters. Owners get to remit their housing loan interests from their income taxes, which overall increases the inequality of those owning a house and those who couldn’t afford to buy one. Because of the housing becoming unaffordable, middle-classes are spending most of their wages on paying households, while the riches could spend their’ on investments, advanced studies, or hoarding more houses and earn on collecting rent. Younger generations that just entered the workforce were also seeing their salary not able to afford expensive rents, which they may have to stay at home until their twenties.
The cost of construction going higher is also blocking in the way of building affordable housing. The costs of building affordable housing’s climbing high, but that’s not the only case. The main problem is that fewer and fewer construction companies are willing to build entry-level houses, which tightens the starter houses supplies, and the prices soar rapidly easily since demand far exceeds supply. The restrictions of building heights were also making houses unaffordable because the numbers of housing are limited in a fixed space, while needless to say, the land is expensive in urban, especially flourishing areas.
It had became more and more difficult for construction companies to build affordable houses. In “Why Are Developers Only Building Luxury Housing?” by Daniel Herriges, who serves as the Senior Editor for Strong Towns since 2015, the author provided several data describing the situation: “according to data from the National Association of Home Builders, the median cost of constructing a single-family home in 2015 was $289,415, or $103 per square foot”. With that minimum cost, it would be out of reach from a part of middle or low-class buyers even if the construction company worked with no pay and dismissed the price of the land. And when it’s built into an apartment building, the average per square foot goes to $192, renting an apartment per month can easily cost higher than $1500.
The minimum costs make it nearly impossible to tell the construction companies to stop building luxury units and only build affordable houses. The reality is that even if they meant to build the buildings for the middle-class, the minimum costs already blocked certain low-income buyers from choosing newly built affordable housing. The affordable housing shortage was making the start-level houses’ prices soar high, it’s necessary to put more affordable houses into the market to slow down the lifting price. Since building affordable housing won’t work, building luxury housing may be a better solution to the problem.
However, not everyone agrees with building luxury housing. Some might even consider this to be a ridiculous idea. The opponents might say: “Since what we’re trying to provide is affordable houses, why should we build luxury houses?” They might argue that if the governments pay for the costs of building affordable housing, and set up laws to keep construction companies from only building luxury housing, the issue can be solved directly. They say that building luxury housing only benefits the construction companies and the wealthy. “All we have to do is circle a piece of land and build affordable houses on it,” they consider it a straight and easier way. Building luxury houses doesn’t seem to impact the situation, at least not as obvious as what they think to be the influence of building affordable houses. And in recent years, multiple cities have tried exactly the solution they offered.
Building affordable housing, however, didn’t solve the problem. The failures can be seen by reading an article written by Alan Ehrenhalt, who has been a contributor in, the Washington Post Book World, The New York Times Book Review and op-ed page, New Republic, and The Wall Street Journal. And he also received the American Political Science Association’s McWilliams award for distinguished contributions to the field of political science in 2000.
In “Why Affordable Housing Is Hard to Build“, Ehrenhalt brought out examples of multiple cities that have built affordable housing, but none of them were working very well. A city in Texas, Arlington, was one example that failed after years. “Back in 2000, it had more than 20,000 places to live that were deemed affordable to low- and moderate-income residents…since then, more than 13,000 of these units have disappeared”. On the other hand, building affordable houses relies on governments’ money.
An article was written by Joe Cortright, who is President and principal economist of Impresa, and specialized in urban economies in the past two decades, also held the same opinion. In his article “Why Is ‘Affordable’ Housing So Expensive to Build”, Cortright explained that the cost of building affordable houses is completely over budget: “new affordable units in California will cost nearly $825,000 each, according to recent press reports…at that cost per unit, it’s simply beyond the fiscal reach of California or any state to be able to afford to build housing for all of the rent-burdened households”.
In other words, no state can afford to build enough affordable housing. Building some affordable housing may seem to work in a short amount of time, but the huge cost determined that it’s not a lasting neither efficient method. Overall, building affordable housing is not the right solution, and there’s not enough budget for it.
Continue to build luxury housing and slower the process of demolishing old ones is how we should advocate for affordable housing. In another article “How luxury housing becomes affordable” also written by Joe Cortright, he explains that this is always how we have generated affordable housing through this ‘filtering’ process. How it works is that housing tends to become more affordable as it ages. When a few decades past, the once luxury buildings become outdated and modest, then the price goes down.
Cortright brought out the Timberlee apartments built in 1960 and the Belmont Court building built in 1910 as examples. They were both luxury buildings in the meantime they were built. As time passes, the Timberlee apartments become affordable and turned into homes of low-income families. But later the government paid 65 million to demolish these apartments, and this decision displaced hundreds of families. On the other hand, the Belmont Court building had a different evolution. It still stands in the city, and its rent per month is $1100, much lower than the average rent in Portland, which is about $1600. New buildings are always built for the wealthy and turn into affordable housing after they are dated and no longer considered to be luxury.
In addition, Cortright states ”What causes affordability problems to arise is when we stop building new housing or build it too slowly to cause aging housing to filter down-market”. We should continue to build new luxury units so that affordable housing can be produced incessantly. Also, we should slow down the process of demolishing old apartments. When these two processes are balanced, the stock of affordable housing would also be balanced and no longer tighten.
In sum, what we should do to advocate for affordable housing is to build new luxury buildings, save enough old ones and keep them as affordable housing. If we build a luxury building now, it’s the same as building an affordable building after 50 years. This is more practicable than building new affordable housing since it has always worked, it’s how the majority of affordable housing was produced, and it follows the natural marketing system instead of trying to fight against it. After the process is balanced, there would be enough affordable housing in stock, and the price won’t continue to soar high so rapidly if it’s not always out of stock.
On the other hand, building new affordable housing is like pouring buckets of water into a dried lake, it’s not a real solution, the government can’t build affordable housing forever, the demands are way larger than the number of affordable houses they are able to build. As long as we continue to follow the process of building new luxury buildings continuously, affordable housing will be automatically released.
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