Why Don’t We Ever Have Enough Affordable Housing?

by Tony Chavira

Visit the website for just about any municipality in the United States, any large developer’s site, or the vast majority of urban advocacy sites, and you’ll find money, time or some other form of commitment to affordable housing included as either a PR piece or a formal mandate. Given the ubiquitous nature of the words “affordable housing,” you’d probably think that every corner had an affordable unit or twelve, that there was housing available for people at every income level, and that homelessness was a thing of the past. And yet, many still can’t afford homes, we still have homelessness, and we still have super-long waiting lists for affordable units across the country. Why?

Let me give you the real answers.


Redevelopment Doesn’t Focus on Affordable Housing First

Most local government programs that advocate for affordable housing are financed through taxes on the middle class. This means that money which would otherwise go to developing housing for the poor doesn’t exist unless there are more middle class people in homes than poor people looking for homes. With a 13.2% poverty rate, it’s not really great news for neighborhoods with a higher propensity for homeless populations … especially since they’re not likely to be places middle class households would want to live (think Skid Row). But the vast majority of policies and incentives for creating affordable housing operate on just this blatantly faulty premise. These policies exist in a fantasy world, where there are always more people looking to pull out mortgages in the $400K range than looking to find a place for $100K or less. Or rent a place for $1,200+ per month rather than anything cheaper. Since that is a completely ridiculous and false assumption, fewer and fewer affordable units are built in neighborhoods that need them (and even fewer than that in neighborhoods that need them the most).


Cities Either Don’t Understand or Needlessly Complicate the Process of Filtering

“Filtering” is a process for producing affordable housing that’s simple to understand, yet insanely difficult to navigate though for most developers and government officials. Here’s the basic premise: it would make perfect sense that—over time—the same housing units will move through different levels of quality and cost. When it first becomes available a space may be ridiculously expensive; over time and because of use, maintenance, the housing market, the value of surrounding units, or whatever, the unit may end up depreciating in value. It can be revitalized and end up costing more again, but in most cases it’s either outpriced by newer/cooler things around it or it falls into further neglect. This leads to a fall in price and value as well. Now take this idea and expand it to an entire housing market. The total number of rental units in an entire city is determined by three basic things: new construction at every level of price and quality; the rate that existing units filter through the housing market; and how quickly units are removed from the system because they are too rundown or because they have been converted to new uses (like a house becoming a restaurant).

Since building high-end condos is more profitable than building low-end ones, affordable housing benefits from the natural filtering process as time marches on and previously expensive places lose their luster. Yet this opposes our expectations that affordable housing be newly-built, as a separate construction project that’s either mandated by governments or incentivized to developers or nonprofits. Since low-income housing development is directly correlated to the development of all housing, governments who make development easy will make it easy to develop affordable housing. The more complicated or political the development process becomes in your city, the harder it’ll be to find affordable housing.


The infamous blunder known as Pruitt-Igoe

Both People and Municipalities Tend to View Affordable Housing as a Strategy to House Poor People Only

It should come to no surprise that everyone under the sun reads the term “affordable housing” and equates it to “public, low-income housing” or “Section 8 housing.” This stigma is largely created by libertarian activists who maintain that taking anything that’s in any way subsidized by the government is essentially wrong. What’s worse is that groups that advocate for public housing, subsidized housing, or mandated government programs that include affordable housing also use the term “affordable housing” in their agendas and mission statements, but without being very clear that affordable housing has a rigidly defined economic goal.

I’m here to debate neither the merits of an anti-government stance nor those of public housing programs. I just want to make the point that housing is too damn expensive when it amounts to more than 30% of the average family’s household income. When the vast majority of professional advocates for affordable housing refer to it, this is what they mean: less than 30% of your household income is spent on housing expenses. Of course, you’re welcome to spend more than 90% of your income on housing, if you so choose; that option is well within your rights. But the core point, lost on most anti-government activists, is that there are currently very few available of options for those interested in affordable housing. In a completely free-market society, developers would want to make cheaper units if people demanded them. Those people might need to make concessions or live in subpar conditions, but, hey, you do what you have to do. This brings me to my next point …


Quality Expectations Have Changed Over Time

I think many people who advocate for affordable housing have the bad tendency to look back to large public and affordable housing mandates from the 1930s though 1960s, which housed a great many people during hard times, as a sort of golden era for America inclusion. But they all tend to (possibly deliberately) exclude from this utopian image that many of these projects came with single community bathrooms, single community kitchens, and sometimes single community living rooms, and that this quality of life isn’t something people want today, when we expect our affordable micro-lofts to at least have electric stoves, multiple exits from the building, and individual showers and toilets. Affordable units today are way nicer and easier to live in than they were when their unit numbers were at an all-time high.

This doesn’t mean that we have to go back to the way things were (who’d want to?), but the residue of post-1950s laws that reduced density and imposed minimum dwelling or lot-size requirements is still seen on a lot of city documents, and thus people expect big and spacious apartments with full plumbing and a bunch of amenities. Adding these makes each unit less affordable. And yes, governments impose laws to ensure that there’s running water and electricity in affordable units too, which keep the costs somewhat higher than they would be were developers to plug a hose into the wall and say “good enough.”


Low-Income Housing Incentives are Too Small for Such High Risks and Responsibilities

When I say “high risks and responsibilities,” what I’m actually saying is “credit risks” and “financial responsibilities.” Running a low-income development is tricky enough, given the number of hoops you need to jump through to make sure you maximize your tax credits, but you also always need to worry about a core point of renting low-income units: your residents have a very low income. They may be financially irresponsible; they may even attempt to squat in the space (at which point, it becomes very burdensome on the good-intentioned property owner to get them out). So the process of finding renters for affordable spaces becomes tumultuous, requiring a large amount of time and background checking the owner must pay for.

Besides knowing they can make a ton of money with luxury developments, many developers shy away from affordable units because of the intensive process of screening potential renters. This is especially problematic when a developer first announces that they want to build low-income units, as they must pay the up-front costs of intensive screenings while dealing with the massive amount of paper and legal work required to be a legitimate, government-approved low-income housing provider.


High-Income Housing Incentives are Too Large for Such Small Risks and Responsibilities

Although this would seem obvious, the “incentives” I’m talking about here aren’t just related to money. Time spent screening, and dancing with the government to ensure tax credits, may simply be too burdensome for developers who would rather put all those upfront legal and management costs into architectural design, building materials, or staff quality. Aside from this, imagine this very common scenario: you own a lot in an area that has very few (if any) low-income, public, Section 8 housing, or even government-defined affordable units. What are you most likely to build?

There will be a stigma associated with building anything less than middle-class units, even if the community is completely saturated with middle-class units. Even if the units are affordable and built meticulously to the highest level of quality, the very fact that they are “affordable” will carry a negative connotation for the neighbors, business improvement district, local activists and politicians, even your peer building owners. Some of this has to do with the negative connotation attached to the term “affordable housing,” but let’s be honest … a lot if it has to do with fears of attracting an unsavory crowd into an otherwise very savory neighborhood. The rest has to do with people who don’t want stuff they don’t approve of themselves built at all … “Not in My BackYard”ers (or NIMBYs), and that brings me to my next point.


NIMBYism Doesn’t Really Understand Density Bonuses

A lot of NIMBYism is either a fear of dropping property values or a fear of a change in the cultural climate of a neighborhood. But most people who are against new or different development do not understand density bonuses. If they did, they might not be so fearful of the idea of attracting more affordable housing. Density bonuses are basically incentives that reward small buildings for going one or two floors higher to add a little affordable housing. It means the community will have high-quality facilities, with affordable units integrated with really nice ones. Economic integration keeps crimes rates low, improves schools, increases property values, and contributes to the cultural melting pot. And all they ask for is one or two floors, tops. What’s especially hard about this process, though, is that the most widely used and utilized systems for zoning cities to separate economic classes is also, in some ways, culturally ingrained …


Euclidean Zoning

Euclidean zoning, which never seems to die in America, is an act of separation … industrial spaces are all on the south side of town, single-family residences are on the east side, businesses on the north side of town, parks on the west side. Euclidean zoning doesn’t attempt to mix one thing with the other; that is what people expect from Euclidean zoning. What people also expected (until relatively recently) was that it worked in all cases on all scales. On a macro scale, one may assume that zoned space in New York City is far more important, useful and rigid than zoned space in Newark, or that zoned land in Beverly Hills somehow has better reasons for its zoning distinction than zoned land in unincorporated Compton. On a micro scale, when you make the east side of town all affordable housing units and the west side of town all luxury housing, one side of town becomes run down while the other flourishes. This complete separation of spaces and units further reinforces a bad assumption that some land simply has more value than other land, an invalid argument (especially at its financial core). However, despite many efforts to adjust zoning laws and ordinances to become more inclusive, this is only a tactic and not the starting point for developing new affordable units.

Here, I believe, is the biggest problem we face in developing amazing and universally affordable units:


Encouraging Affordable Housing Is Only an Minor Focus for Most Revitalization Efforts

Things are the way they are. You can re-zone an empty, rundown industrial space and incentivize it over and over again to try and draw in a new development, but it’s still going to be an empty, rundown industrial space.

We could search Google right now and find a plethora of similar stories regarding revitalization efforts across the country. These stories start with a requirement to demolish or totally rehabilitate dilapidated apartment spaces. But then, instead of replacing the units with equally affordable ones for the current low-income renters, the owners will develop units that are targeted at middle- to upper-middle-class residents. There may be rules in place for relocating existing tenants during construction and/or offering them a year or so of rent at their former rates, but once the owner’s legal obligation is up there is no community organization in the world that can stop them from pricing their units at “market price” (which, in some cities, is very high above actual market value).

This happens because affordable units are seen as either an afterthought or a hindrance to major high-end housing and development. As very few affordable housing developers contribute to political campaigns, versus developers with grand and luxurious agendas in mind, very few politicians have a direct obligation to provide affordable housing to the low-income residents of their district. This is especially true knowing that these people tend not to vote, because they don’t feel that it would affect their living conditions, and because they can’t break from work to vote. They need the money the most. They live in low-income units for a reason.