An Argument for Cheap Housing

Lately, I've been wondering whether there really is, within this political universe, anything meaningful to be done about the widespread decline in housing affordability. Here in Seattle, as I've written before, the condo market is white hot, with tall skinny towers going up throughout the downtown and around 4,500 units of housing lost to condo conversions from 2005 to date.

Great gushing rivers of capital have flowed to Seattle because our market — with its projected job growth and a pricing equilibrium that favors condo buying over housing rental — is just about the sweetest spot an investor could possibly hope for.

That's capitalism, and much as we shake our tiny fists in its direction, it pretty much does what it's gonna do.

My recent read of Robert Reich's Supercapitalism has reminded me of the rules. I even find myself slightly regretting my jabs at luxury housing developer J. Ronald Terwilliger a few weeks ago. The system is geared to deliver the best prices to consumers and the most return to investors, and is unforgiving in its consistency. This makes his advocacy for workforce housing, his multi-million dollar housing philanthropy, and his leadership in Habitat for Humanity something extraordinary. The only way he could go further is to choose to not be a capitalist, in which case someone more ruthless would quickly take his place.

Last year, Councilmember Tom Rassmussen took the lead on a Statehouse bill that would have slightly slowed condo conversions and offered more assistance to those displaced. While the legislation was widely considered timid, even this failed to make it out of committee. House Speaker Frank Chopp, who is probably as strong an ally of human services as could survive in that position, says the bill died because it just wasn't sufficiently on his radar. I'm sure it didn't escape the attention of the developers, but perhaps they forgot to mention anything to Frank.

Whatever. This year, Frank says he'll do better, and advocates will rally around a second attempt.

While there is value in getting this on the books, the problem is that this year is too late. The horse is well out of the barn and across the pasture, and with rental vacancies at an historic low and rents at an all time high and climbing, capital has unerringly sniffed out demand and shifted toward rental housing construction. My big time developer friend tells me the condo thing is basically done. Aside from a few minor projects here and there, Seattle condo construction stops with what's in the pipeline now. Those rentals, however, won't be built for the lower end of the market. There's no money there. Or at least not as much.

Sadly, the odds of any real federal intervention in the housing problem are exceedingly low. Capitol Hill is dominated by financial interests who don't exactly favor the idea of government subsidizing the lower end of the market with public housing and Section 8 vouchers. This has led to three decades of starving the beast and continued cuts to HUD funding, even as the feds pretend to end homelessness. It has also led to the remarkable situation of more than three federal housing dollars to subsidize middle-class homeownership for every dollar spent on housing for the poor.

Add to that the fact that the capacity of government to mitigate poverty has been severely eroded by the war, tax breaks to the wealthy, and corporate welfare, and the prospects for relief become dim indeed. With local and state resources we have been able to make a dent in the housing crisis, but gains in affordable housing stock are more than trumped by continuous market losses.

So what's left? As I'm fond of saying, in a system where housing is produced for profit, those who can provide no profit get no housing. Unless, of course, conditions somehow change to make investment and construction in the lower end of the market more attractive. Urban renewal wiped out hundreds of thousands of units of "substandard" housing stock because people "shouldn't have to live that way." But no real alternatives were developed in its place, and we've grown accustomed to people living in conditions that are, in fact, far worse.

So what would be this look like? If we were able to build K-Mart housing to add another option to the generally Nordstrom quality stock being built, would this be stigmatizing? More so than homelessness? Would neighborhoods allow such housing to be created. Would the reduction in quality actually translate into lowered consumer cost, or would it simply mean more developer profit? Could the trade-off be legally enforced?

If government were able to find the mean between meeting necessary building code concerns for health and safety and lowering standards to make increased private investment pencil out, would more housing get built and more people be housed less vulnerably than they are now? If so, why aren't we doing it?

Obviously, there are arguments to be made against this from both the right and the left, so hardly anybody ever goes there. But what if we did? Click on the photo up top to see a thought-provoking 80s project in Taiwan.