A Washington Post reporter has penned an op-ed documenting the extent of the housing crisis in the United States. Here's the shocking lead: "In the past five years, housing prices in Fairfax County [Virginia] have grown 12 times as fast as household incomes." Reporter Michael Grunwald suggests that the cost of housing should be a major political issue.
But beyond pushing for more public policy pronouncements, his prescriptions fall a bit short: "The best thing local officials can do to promote affordable housing is to get of the way -- stop requiring one-acre lots and two-car garages, and stop blocking low-income and high-density projects."
Unfortunately, ending exclusionary zoning and upping density may result in more rental units, but experience shows that this will only nudge prices downward at the top of the market.
Question for you economic visionaries out there: what should we do about the ramp up in prices and the acute shortage of affordable housing in the United States?
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As far as the basic needs are concerned, capitalist economic models hardly ever provide sensible solutions. This proves to be true in many fields as public transport, education , health services and, prominently housing. The worst thing is that the illusion of a 'market' as in balance between demand and supply is upheld while in fact there is a great shortage of supply. This shortage is used (definetly if basic needs are concerned) as a means of coercing large parts of the population into unfair work conditions (working poor) just to be able to survive.
A solution to this problem can only be found is restoring a balance between demand and supply. As soon as ppl are not forced to buy a house at any price but can choose to do so, the real estate price will plunge to about the production cost of the buildings plus the land.
The land question of course needs to be resolved as well, whereby private property of land cannot not be the solution. As in a fair economy their must be sound relation between work and trade, property as such is necessarily a disturbing factor. Therefore the land should remain communal property, whereby timelimited (taxable) leases might be granted to builders, as to limit the profits to the equivalent of delivered work, rather than property based extorsion of the needy.
From the moment on that an 'investor' would not be able to extort profits without providing the corresponding input in the form of his/her personal work hours workhours, there will be little interest from these 'greedy parasites'. This is the moment for the communities to step up and start to construct housing for their members. Here again, no rent should be charged, but tax on income, whereby housing (and eventually other goods) should be provided according to need.
As soon as the needs of everybody wanting to participate in such a system are satisfied, what remains can be left to capitalist market economy. Here again, no permanent property guarantees. If communal needs arise, land should be reseized and integrated in the above mention system. Of course unused land can be given out in temp leases to capitalists if they want it under such conditions.
but this is 'socialism'!
of course, man , revolutionary socialism even!
fuck capitalism and the horse it rode in on!
https://squat.net/ps28
I agree, anon, that the classical fiction of supply and demand doesn't work with housing. That said, you haven't really given us a way forward (except for revolution.) Consider: "As soon as ppl are not forced to buy a house at any price but can choose to do so, the real estate price will plunge...." But how do we get from here to there?
The solution lies in another 'old fashion' approach: a land reform without compensation. In the US this was historically never an issue it seems as land claims were made from nature (and its original inhabitants for that matter ) but seems to become an issue now. Only a massive wave of depropriation of private owners to the benefit of comunal organizations can solve the housing crisis as such.
Nevertheless, I agree that some interim things need to be done. I understand that citys are to a large extend property owners as well. Time to invest tax money into housing projects then, preferably at the expense of the more than neurotic security expenses (homes not jails, remember?). If cities and other governement bodies flood the housing market with cheap appartments (with a housing tax instead of a rent system for instance), demand will plunge. Why would somebody with a moderate income and no job security want to bare the risks of private house ownership , if the security of a taxbased housingsystem is provided?
And where would the money come from? From the unproductive part of the economy at first: tax the stockmarket and alikes into a final drought! nobody will notice as a stockbroker does not produce anything in the end! As soon as the parasitic financial markets have disappeared, most products will all of a sudden become affordable to its producers (no added value stolen anymore). I believe that we would be even able to afford to feed lots of people not working at all, seen the productivity in the 'real' economy as soon as we get rid of the parasitic 'happy few' and their excesses.
On a microlevel, I guess withdrawing moneywashing resources from the realestate market would help. If all moneyflows would not only be monitored but the info be publically accessible, I guess the air would be out of the realestate bubble quite quickly.
unrealistic? no way, look at the housingtax system (wohnbausteuer) of the city of vienna , austria in the 1910s. Till now, there is no housing crisis, no slum in that city! Looks at the tax system of scandinavian countries in the 1960s and 70s.
The US housing crisis has to do all with the american dream (of success at the expense of the poor).
The solution lies in another 'old fashion' approach: a land reform without compensation. In the US this was historically never an issue it seems as land claims were made from nature (and its original inhabitants for that matter ) but seems to become an issue now. Only a massive wave of depropriation of private owners to the benefit of comunal organizations can solve the housing crisis as such.
Nevertheless, I agree that some interim things need to be done. I understand that citys are to a large extend property owners as well. Time to invest tax money into housing projects then, preferably at the expense of the more than neurotic security expenses (homes not jails, remember?). If cities and other governement bodies flood the housing market with cheap appartments (with a housing tax instead of a rent system for instance), demand will plunge. Why would somebody with a moderate income and no job security want to bare the risks of private house ownership , if the security of a taxbased housingsystem is provided?
And where would the money come from? From the unproductive part of the economy at first: tax the stockmarket and alikes into a final drought! nobody will notice as a stockbroker does not produce anything in the end! As soon as the parasitic financial markets have disappeared, most products will all of a sudden become affordable to its producers (no added value stolen anymore). I believe that we would be even able to afford to feed lots of people not working at all, seen the productivity in the 'real' economy as soon as we get rid of the parasitic 'happy few' and their excesses.
On a microlevel, I guess withdrawing moneywashing resources from the realestate market would help. If all moneyflows would not only be monitored but the info be publically accessible, I guess the air would be out of the realestate bubble quite quickly.
unrealistic? no way, look at the housingtax system (wohnbausteuer) of the city of vienna , austria in the 1910s. Till now, there is no housing crisis, no slum in that city! Looks at the tax system of scandinavian countries in the 1960s and 70s.
The US housing crisis has to do all with the american dream (of success at the expense of the poor).
Tell me more, anon, about the tax system in Vienna in the teens and the Scandinavian countries in the 60s and 70s.
I've been wondering if the problem of housing under capitalism has been the ramp up in the expectation of profit. Once upon a time, ten percent a year was solid. Now it's bunk. Why has the expectation of profit gotten so skewed?
Vienna in the 1920 and 30
After the introduction of indicriminate voting rights for all citizens in the crumbling austro hungarian empire, the liberal party lost its majorities everywhere, especially in the capitral Vienna. Under the pressur of a general strikes in 1918 (before the end of ww1),renters protections was where introduced, especially to protect war widows and wise. The main feature was rent control and contract permanency.
After the war and ever since the social democratic party (by then quite left wing) had a vast majority in the city. In order to tackle the housing crisis, their municipal governement introduced a so called housing tax (wohnbausteurer) whereby a substantial percentage (20% and more) of the financial volume of every building project undertaken by privates flew directly into the communal building fund. This money was used to construct vast amounts of council housing (gemeindebauten). The 'red' architects of these time even forged their own style, the buildings, at some extend several thousand of flats in a complex had also communal washing rooms, free childcare, doctors offices and outlets of the socialist consumers coorperative Konsum. The building complexes look like 'fortresses of the pride of the millitant working class' and bare the names of the ideological forefathers (and mothers :) up to this day: Karl Marx Hof, Friedrich Engels Hof just to name a few.
In 1934, when the austrian clerical fascist abolishied parlamentary democracy in a coup d'etat, the army was used to break the resistance of the workers political militias and the big complexes were even attacked by artillery from the hills around the city!
Nor austro fascism (with the catholic church trying to restaure imperial monarchy evebtually) not nazi fascism (the classical dictatorship of the high bourgeoisie) could break the spirit. The city construtcs council housing to this day, some of them baring the names of comrades fallen in the struggle and others being the architects of 'neew society.
the result is clear: Vienna is one of the european metropols where there is NO housing problems ! (and no squatters for that matter)
tax in scandinavia after ww2
the tax system of scandinavia in the second half of the 20st century aimed at a society where all basic needs (and more) was provided to all citizens indiscriminately. This included energy housing public transport education healthcare and even food. The system was financed by exorbitant tax rates (up to 75-80% for the highest incomes) and led to the total abolishment of poverty as commonly understood.
Nevertheless these countries were perfectly able to maintain a capitalist market production system, featuring welknown high tech companies as Volvo Saab Ericson and Nokia. Needless to say that it was people educated in such an environement that designed one of the lead products of the 21st century economy: the linux kernel. Linus Thorvalds was a student of helsinki university.
Up to now, countries like austria or sweden have the highest living stabndards and lowest unemployment rates in the world.
The first world begins where poverty is abolished. I call the US, Turkey Ukraine
the 'second world'
Truly fascinating, anon. I love the Vienna model with its wohnbausteurer. Are all those municipally constructed apartment blocks still under municipal ownership or are there cracks in this system due to modern pressures. And does the wohnbausteurer still exist?
As for Scandinavia, two questions.
1. Before the so-called tax reform under President Reagan, the U.S., too, had a progressive tax system and, indeed, the richest of the rich paid around 90 percent of their income in taxes. Yet we never had the social cohesion to identify a platform of social needs which should be solved.
Which leads to
2. Does the (relative) uniformity of the population help explain this. The U.S. has been a an immigrant country (and before that a slave country), which led to a diverse population, with race, class, and cultural intolerance. Scandinavia, so far as I know, has been a more uniform society. In other words, is the issue cultural as much as economic?
Where can I read more about housing issues in Vienna and Scandinavia?
There's some interesting info in this study of housing affordability in the UK, US, NZ and Aussie: http://www.demographia.com/dhi-pavrls.htm
It's notable that all three areas covered in New Zealand are ranked 'severely unaffordable', even though we have a relatively small population for our land area and houses are mostly of light timber-framed construction, so fairly cheap. Clearly the market isn't responding to supply and demand in a sensible way.
What has happened here is largely due to increases in capital put into speculating in property, rather than into building new houses. This is supply and demand, but the demand being supplied is for things to make money out of, not things to use.
There's some interesting info in this study of housing affordability in the UK, US, NZ and Aussie: http://www.demographia.com/dhi-pavrls.htm
It's notable that all three areas covered in New Zealand are ranked 'severely unaffordable', even though we have a relatively small population for our land area and houses are mostly of light timber-framed construction, so fairly cheap. Clearly the market isn't responding to supply and demand in a sensible way.
What has happened here is largely due to increases in capital put into speculating in property, rather than into building new houses. This is supply and demand, but the demand being supplied is for things to make money out of, not things to use.
Thanks for the post, Sam. It's utterly incomprehensible that Auckland is the 15th most unaffordable city, accoring to the study you point to.
Interestingly, the study draws the same conclusion the Washington Post writer did: the problem is excessive land use regulation.
The problem: here in New York that only yields a slight tailing off in prices at the height of the market. So a $5,000 a month rent drops 1 percent to $4,950.
Tell me a bit more about the housing situation in NZ. Any squatting there? Any reaction on the part of the bulk of people to the high cost of housing? Is it a political issue yet?
It's become a political issue, but only recently - New Zealand had a strong social democratic tradition in which the ability of the average worker to own their own home was considered a social cornerstone. Large scale state housing schemes produced a large number of reasonable quality cheap homes.
The wholesale adoption of neo-liberalism from 1984 killed that off, with prices rising and wages at the mid and lower end of the scale dropping.
Nowadays home ownership rates are fast dropping in New Zealand. The government has responded with some assistance to first-home buyers, but this only covers a small number of people. Generally the response has been to just accept paying a large chunk of onesincome in rent, or to move to sub-standard accomodation. People will probably get grumpier as time goes on.
Squatting is illegal in NZ and hasn't really taken off. It does happen here and there, but is very low key.
SAM: Do the large state housing schemes in NZ remain in government hands? Or did the neo-liberals sell them all off?
In Geneva, Switzerland, publicly owned urban lots (with or without a building on it) are "leased" for free to cooperatives who ask and continue on asking. The cost of reparing the buildings or builiding anew is then left to the cooperative, which does'nt have to actualy buy the land. Its called "droit de superficie" or " right of acreage" and usually runs for 70 years. 70 years is enough to negociate a longer term or to buy the lot.
I live in such a venture. We bought the decrepit 1917 4 floor building 350'000 USD, in 1996, added 750'000 USD to repair it, add a floor and make it a highly energy efficient builiding. Our rents are well below the average in Geneva, we do not speculate, all our rent goes where we want and where we have to put it (reimbursing the bank and saving for future reparations). As we reimburse the bank, the interests we pay diminish.
Once the investment (building anew or reparing) is amortized, a speculator keeps the same rents and starts making a return on his investment - a profit. In our case, we turn the amortizing into a reduction of rents. Other cooperatives use the surplus to build another cooperative.
Capitalism is not the problem, as the scandinavian and austrian example show. The problem is capitalism, market economy with no or little state CONTROL. A recent "Le Monde" poll showed that 85% of interrogated people in France think the economy must be forced to work for the common good, and that a real "free market" goes against the public interest.
Yes, Philippe. Capitalism is not the problem, but the 'free market' costs too much.
I love the idea of the "droit de superficie." Is that Swiss law or particular to the canton of Geneva? Do you know if this law exists anywhere else? Has the government has ever attempted to sell the buildings out from under the people who have right to acreage? Can the "droit de superficie" be invoked on abandoned but still privately owned parcels?
To answer your questions Robert:
The "Droit de superficie" is not a law but a decision that the state of Geneva has sometimes taken for its own property, when it thinks that by doing so, it can further a social or a political goal.
I do not know if other states have a similar practice.
And I do'nt know of any case where the state has attempted to sell the buldings out from under the ones who have the right to acreage. It would be a huge scandal if it happened.
On the contrary, there is a Geneva legislation (initiated by a popular proposal and voted into law by the citizens) about 10 years back, stipulating that in case of a serious housing shortage, the state has the right to temporarily expropriate a private owner if he has left his building/house empty longer than 6 months for no reason. Then the state can put the building/house on the rental market.
This has never been put into practice, partly because of the giant loophole "in case of a serious housing shortage". Serious for who ?
I sent the question on to specialists here and shall transfer their answer if it adds to mine.
Philippe:
I'm confused by the idea that the 'droit de superfiscie' is "not a law but a decision that the state of Geneva has sometimes taken for its own property." If anyone has more information on how it works please add to the conversation.
I do like the idea of the 'temporary takings' of property that has remained vacant. Some British cities have contemplated enforcing this (I blogged about the idea a bunch of months ago) but I have no idea if they've actually done it or were just floating a trial balloon.
Laws comparable to the 'droit de superficie' exist in many countries, most prominent examples are the Netherlands and France, where there is a rampant housing crisis in the major cities.
In spite of existing laws are necessity, none of the governements use their possibility, m ost probably because of their religious respect for landed property. They apparently ratjer see substantial parts of their urban population being housed precariously than run the risc of offending (their colleagues of) the ruling classes.
Adn btw, not the market is the problem as long as supply and demand is in balance , but capitalism as it allows per definition the stocking of rare goods in order to gather profit. In a balanced market, profit is impossible without continous input of work. Capitalism is the ideology defending the priviledge of the few to gain profit without inputing work.
The base of this predicament is private property, which should be abolished as soon as possible
tierra y liberdad!
U.S. housing prices are about to take care of themselves in a big way (as they did over the last decade in Japan and are beginning to do in Australia). Unfortunately, a lot of people have bought more house than they can afford using mortgages they don't understand, and are going to end up being foreclosed upon.
I live in Phoenix, Arizona, where housing inventory for sale has shot up 496% in the last year. I don't see anonymous's claimed shortage of supply--most of the 50,000+ homes for sale are vacant.
BTW, in most parts of the U.S. rent is *much* cheaper than owning, because house prices have been driven up by speculation, tax changes, and some of the issues you've already mentioned about land use restrictions.
Sikes: Do you know if there's been anything written on 'droit de superficie' in English? I'm interested in whether community groups can push for it to be put to work in various municipal contexts.
Jim: I'm happy you're convinced that the bubble's going to burst. Perhaps New York is an anomaly, but I don't see the evidence you do in Phoenix. By the way, has the price come down as the inventory for sale has shot up almost 500%? Because otherwise, we may be experiencing what Sikes refers to: 'the stocking of rare goods in order to gather profit.' And can owners of vacant homes get a tax write-off because they're not making any income on a property that costs money to maintain?
Precisions on "droit de superficie"
The droit de superficie is in fact a very long-term rent contract (33 to 99 years, renewable), with a usually much cheaper rent than the normal land rental price, or even for a symbolic amount of money.
The droit de superficie IS based on a law, but its always a decision submitted to the good will of the Govt.
These land rights are not only for homes and buildings to live in, but also for sports fields or universities.
France: its called bail emphitéotique and concerns land and the buildings on it.
In many african countries and in Viet Nam: After colonial rule the State gave temporary property rights to farmers, and often continues doing so. It avoids the concentration of land in the hands of the wealthy few. Peasants can trade their land rights and often do so. The State keeps the upper hand and can enact a development policy without being stopped by property owners.
Private property and its anti-social effects can be tempered by such laws. For example, in Geneva, we could never have stayed in our building as a cooperative without this law. Because we did have just enough money for the costs of the building but not anything close to what the land would have cost. Now we collectively own the building which sits on government land, for which we pay a symbolic sum, and we can stay untill 2068. By then we will hopefully either have renewed the land lease, or reached another solution difficult to imagine today.
The problem is with the "rolling back of the state" people now in power. Their plan is to sell state assets instead of using them for social goals. Nothing is certain.
Thanks, Philippe, for the more precise information.
The mechanism of the droit de superficie is interesting. It's a great concept: the state owns the land, the people own the building. This cuts down on speculation, but does allow for a market, as you note about Africa and Vietnam.
One question about your town: Does Geneva have a large amount of public property, or was your building one of the lucky few?
Here in New York City, the government sold of most of the public domain in the late 19th century to finance the creation of the Croton Aqueduct, the city's water supply. More recently, the city foreclosed on many properties in the 1980s, but chose to treat most of them as ways to make a profit rather than ways to house people affordably.
Must there be an emergency of some sort to use the droit de superficie (the way that rent regulations in New York are pegged to a vacancy rate of less than 5 percent; if the number of vacant apartments rose above that level, the state could end the rent regulation system) or can the government employ it with any parcel of land it owns?
rn: Phoenix median home prices are starting to come down, as foreclosures go up. I think 2008 will see both of those trends continue, in a big way. Over a third of Phoenix's homes for sale (more than 50,000 of them, up from 5,000 two and a half years ago) are vacant.
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