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Raquella Thaman is a public school teacher in Berkeley, California, and an attorney with an LL.M. in water and environmental law. This column was produced for Progressive Perspectives, a project of The Progressive magazine, and distributed by Tribune News Service.
The price of housing in many areas of the United States is too high for many Americans, and in some areas, the demand for affordable housing outstrips the supply. There is a heated debate as to how, exactly, to target this crisis.
Some would like to address the shortage of housing using the basic economic theory of supply and demand. Others believe that in order to make housing affordable, it is necessary to remove housing from a purely laissez-faire economic dynamic, and provide guardrails to prevent out-of-control prices.
In California, for example, a measure on the Nov. 5 ballot seeks to overturn a 1995 state law that limits a municipality’s ability to enact rent controls. Opponents argue that rent control will cause a decline in property values and lead to a decrease in home construction, which will perpetuate the shortage of housing. They simultaneously argue that the shortage of housing is responsible for high property values and the inflation of rents.
While this seems to be a logical glitch, it is more likely an indication that free market forces are not well-suited to maintaining a reliable supply of affordable housing. A key tool used by investors, for example, is the 1 percent rule — the monthly rental return on a property must be at least 1 percent of the purchase price. Given such formulas, it is not possible to lower the rent and have steadily increasing property values.
Over the last several weeks, President Joe Biden and Vice President Kamala Harris have moved the creation of more housing to the forefront of their platforms. Prior to announcing his withdrawal from the 2024 presidential campaign, Biden called for action on two fronts.
On the one hand, he proposed to add a set of brakes to spiraling housing prices by seeking to place a temporary cap on rent increases by large corporate landlords. On the other, he promised to add to the supply of housing both by building new housing and by rehabilitating existing housing.
Whether you believe that supply side economics alone can dampen the skyrocketing price of housing in the U.S., the time is now for a coherent national housing policy based on human need and available resources.
The federal government should participate in the creation of housing in a manner that improves the standard of living in the communities it hopes to serve. For example, rather than adding new units to a region that has already outstripped its water supply, it would be better to support economic development and increase housing in regions that can easily accommodate the population increase.
While there is certainly a marked shortage of affordable housing in some areas of the country, other areas have vast numbers of vacant properties, which negatively impacts the quality of life in those neighborhoods.
Consider the city of Saint Louis, where nearly 20 percent of the properties are vacant or abandoned. Federal actions to improve the housing supply could focus on rehabilitation of these properties with an eye on increasing home ownership among local residents. That would be a tangible and direct way to increase housing and improve neighborhoods and the lives of residents.
It would be more direct than making concessions to developers and real estate investment companies in the hopes that the benefits might eventually trickle down to those who really just need a decent, affordable place to live. It would also ensure that the economic benefits stay local and continue to circulate.
If we are going to facilitate the addition of a million new homes in a given region, we also must provide hospitals, schools, public safety, sanitation and an adequate water supply. We must avoid bringing people to places from which they will almost inevitably have to evacuate due to high environmental risks.
We as a nation have done great things. Let our approach to solving our housing crisis be one of those and not another transfer of rights, protection and wealth to bolster the profit margins of a few.
