Unpanacean public housing

Mixed income "social housing" in Maryland

I am in this Discord with a bunch of older (than me) people in Ann Arbor. We are all interested in local politics, and before Twitter was bought by Elon Musk and became X, we would frequently post on the #a2council hashtag. One person shared this article: "What if public housing were for everyone?" from Vox. The central story of the article is that in Montgomery County, Maryland, north of D.C., county leaders decided that they could simply invest in housing themselves — building new, in collaboration with developers, creating mixed-income communities subsidized by the county. 

That's a smart idea. The author writes that "government, when it wants to, can make attractive bids." In theory, governments can take part in markets. Heavy handed government intervention can skew markets — for example, if the government of Montgomery County spent millions of dollars building housing blocks in most rural areas of the county, because that is where cheap land is available, they might be screwed. But if they do as they are doing now, and subsidize mixed income development, they might actually accomplish something. 

The article opens up with mention of a few different places.

Governments have successfully addressed housing shortages through publicly developed housing in places like Vienna, Finland, and Singapore in the past, but these examples have typically inspired little attention in the US — which has more restrictive welfare policies and a bias toward private homeownership.

I think that while some of these places have in fact ameliorated portions of their housing shortages, they are not perfect. A recent article from the New York Times lavishing praise on Vienna pointed out that Vienna has a two year waitlist for one of its infamous social housing units. Vienna also builds new housing at a much higher rate than expensive American metros. More housing almost undeniably makes for better affordability. There is less competition for every unit, lowering prices. A myriad of studies have proven this. Vienna built about 16,000 new units in 2021, for a population of about 1.9M. More housing I compared a metric of housing production I just invented — people per new housing unit. A lower number means the city is producing more housing per person, and seems correlated with housing affordability. For Vienna, their rate is 119 (2021). For all of Austria, 126 (2021). For New York, their rate is almost 3x that of Vienna at 326! The Los Angeles metro area is even worse, at 415 people per new unit. 

The point is that there is no solution to the housing crisis that does not involve immense amounts of building. In Vienna, 1100 square feet is considered sufficient for a family of four. American families are unlikely to put up with that. In Vienna, 95% of new housing units are built in buildings with three or more units. Much of the United States is zoned to prohibit that. The building code requirements that make family-oriented units possible in Vienna aren't possible in the United States. Onerous two-stair requirements make apartments considered normal across the rest of the world completely infeasible in the United States. 

The reason that social housing works is that opportunity cost does not always exist for governments, especially in wealthy areas in the United States. Jumpstarting social housing through a large municipal bond like Montgomery County is one option. But Boston leaders' discovery that mixed-income projects make money, just less than 20%, is not extremely relevant. Just because a profit does not actually lose money does not mean doesn't lose money relatively. Investors won't put up capital for a project that makes them less money than a project with a similar risk profile that makes them more money. Innovative financial solutions to the housing crisis can be a powerful tool for improving the housing market for those worse off in the United States. The money has to come from somewhere to subsidize the units. Creating a low-interest bonding system to fund limited-profit housing is a smart idea, but isn't possible if you can't build cheap housing in the first place. 

Also unclear is if social housing will help support those with extremely low incomes, below 30% of the area median income. 

Other leaders, like in Boston and Atlanta, told me they’re exploring how they could “layer” the mixed-income social housing model with additional subsidies to make them more accessible to lower-income renters.

The money has to come from somewhere! In my opinion, there are two prongs to the housing crisis. 

Prong A is on the supply side. We have put up an immense amount of barriers to the production of housing. This system has created expensive housing. In the face of low subsidies for those worse off, we have doubled down on the restrictive system, tightening zoning and introducing asking private developers to make subsidized units, a profoundly neoliberal idea. This has been a resoundingly vicious cycle. We need to tear through this cycle, tearing down the structures that literally separate neighborhoods into rich and poor. 

Prong B is on the demand side. No matter how hard you try to make housing cheaper, some people still live in poverty for a range of reasons. Fortunately, we know how to solve poverty. Simply give people money, and they will become less poor. The problem is that the money has to come from somewhere. Good thing Prong A is completely free — lets get to it.