Stronger Together: The Necessary & Incomplete Platforms of Warring Housing Advocates – Part 2

(This is the second in a two-part series examining how YIMBYs and Leftists each offer necessary but incomplete solutions to the housing crisis, which are symbiotic but often treated as mutually exclusive. Last week, I focused on YIMBY solutions and their shortcomings.)

A little over a week has passed since my last post, where I dug into the policy and political benefits and shortcomings of YIMBY solutions to the housing crisis (some people suggested that YIMBY is a large enough umbrella to render it unfair to the label interchangeably with packing all market urbanists – a fair critique, but for nevertheless I will continue to use it for consistency between the two pieces).

In that time, we got exciting news on the housing politics front, followed by ample examples of the little civil war between housing advocates. After an indefensible period of inaction on housing, federal Democrats – led by Senator Kamala Harris – introduced an ambitious package of reforms targeted at providing relief to cost-burdened renters. Harris’s legislation would provide ample subsidy to renters with incomes under $100,000, to help them afford rent. Immediately, the proposal came under fire from YIMBY-minded public intellectuals, who accurately noted that the legislation would not fully solve our housing crisis. Duh.

This dismissal of Harris-and-company’s new legislation misses the bigger picture. High-profile Democrats are staking out territory on housing, and focusing their attention on immediate, palpable financial relief to cost-burdened renters. That’s huge. The details can be sorted out down the line, but from a political perspective, it’s a net win for people who care about American progress, and for prioritizing housing as an issue.

For understandable reasons (many of which I laid out last week), Leftists are currently winning progressive politician hearts and minds. Democratic gubernatorial candidates and nominees are backing expansions of rent control, while congressional candidates promote huge expansions of public social housing. These positions generally align closely with Leftist priorities.

Leftist housing proposals hold some serious appeal. Protections from eviction and rent controls/stabilization offer immediate relief for suffering tenants. The results are swiftly palpable, felt without any filtering or market adjustments required.  

Massive infusions of affordable housing prove attractive as well, especially in a moment when so many of us are suspicious of capitalism and so resentful of developer profits. Leading Leftist think tanks like the People’s Policy Project have audaciously proposed 10 million new units of publicly owned social housing, including some truly insightful ideas about mixed-income public housing.

While all of these proposals provide genuine promise, each also falls short of solving the problem, or risks cannibalizing other Leftist priorities.

True rent control – capped rents for incumbent tenants – offer real security for their current renters but appear to restrain the building of new homes and drive up rents for everybody else (neighborhood-based rent stabilization seems to work fairly well at helping renters across the board but is less widely used). Banning or limiting rent increases may offer temporary and much-appreciated salve but it cannot solve the housing affordability crisis writ large. Only building more places for people to live can do that.

Given the obvious and inarguable lack of available homes, even the most market-skeptical Leftists admit America needs a huge infusion of housing supply. That (understandable) market skepticism has led Leftists to insist that more-or-less any new housing be publicly owned.

Without question, our nation needs an infusion of public social housing. Myriad low-income Americans simply cannot afford market-rate housing at any imaginable price, and lessons from 20th-century housing projects strongly suggest that social housing should be integrated across socio-economic strata.

Yet meeting America’s housing need with exclusively public dollars presents a potentially insurmountable challenge, especially if we hope to achieve other key socialist priorities.

Let’s look at what it would cost to build 10 million new publicly-owned homes.

Let’s start with the assumption that these homes will be apartments (which are consistently cheaper to build per unit than single-family homes, townhouses, plexes, etc). The average apartment construction cost per unit in the United States is $125 per square foot. Add an additional 10-17% for architect fees (let’s say 14% as a midpoint), and we’re looking at $142.50 per square foot for designing and building the apartment.

None of this prices in land acquisition costs. But let’s set those aside for a moment, and assume that the government already has all the land it needs.

If we assume we are building the average sized American apartment – 889 square feet –  then each apartment costs $126,682.50 to build. Operating an affordable unit costs an additional $4,541 per year on average. At one million new apartments a year, that’s $131,223,500,000 annually (by the time you’ve built 10 million units, the operating costs would grow to $45 billion per year, but let’s keep things simple). That’s roughly the current federal budget for education and veteran services combined, which is not outside the realm of reality, especially when you consider the annual military budget is roughly $600 billion.

So, in a vacuum, we could likely afford to build and operate public social housing at the scale suggested by the People’s Policy Project. But that gets sticky when you factor in other progressive priorities and start staring down tradeoffs.

Let’s say leftist-leaning politicians take power and set about enacting the socialist dream budget – Medicare-for-All, Free Public College, and a Job Guarantee, plus social housing.

Bernie Sanders pegs the price-tag for Medicare-for-All at $1.38 trillion annually (on the low-end of estimates, but I’m inclined to trust Bernie). A Job Guarantee would cost $543 billion per year. Free public college pencils out at roughly $70 billion per annum.

That would be an additional federal expenditure of $2.124 trillion per year – over half of the total federal budget, three times the total military budget, and just about the cost of all nine years of the Iraq War.

$131 billion is a relatively small slice of our socialist dream budget, but that’s also operating at an almost impossibly low cost-per-unit assumption. Actual affordable housing is consistently costing $250k-$500k per unit, which would balloon the annual budgetary impact to $250 billion or $500 billion.

When we’re just speculating about new public programs, it can feel silly to worry about the costs. But as a socialist, I want to win. I want to make these programs real and that requires facing political reality. If we want our dream agenda, we need to figure out how to pay for it all.

Repealing the Trump tax cuts would get us ~$230 billion a year. Ending the military budget (unlikely, but let’s pretend) would net an additional $700 billion annually. That still leaves us over $1 trillion short every year. Eliminating essentially every tax loophole used by the wealthy would raise us ~$270 billion per year. Raising tax rates on the 1% to the current 33% to 45% would net another $276 bill per year. Which means with every tool in the toolbox (including some real long-shots), we’re still coming up hundreds of billions short.

There are some elements of the economy that we’ve seen truly need a universally available public option – education, health care, and a safety net for the chronically poor being the most obvious. There are others where smart regulation can largely do the job. If we want Medicare for All, free public education from kindergarten to grad school, and a job guarantee, housing offers a reasonable place to compromise.

We have consistently seen that building a lot of new homes drives down home prices across the board. We know that is not enough to meet the needs of the 7 million extremely low-income households who cannot find affordable homes, but a new housing boom could free up a million or two affordable units through filtering, and certainly prevent additional units from becoming too pricey.

Plus, exclusionary zoning bans publicly owned apartments just the same as privately owned ones. You must end exclusionary zoning to make any massive expansion of social housing work.

This is where a robust “kitchen sink” combination of housing solutions – from the YIMBY camps, and the Leftist camps, could solve our problem. Building, say, 5 million new deeply affordable units, plus ending exclusionary zoning and legalizing densely nestled housing in communities, plus rent stabilization, plus widespread rental subsidy may actually provide adequate, affordable places for every American to live.

YIMBYs and Leftists often treat one another like rivals, training our attention on one another while landlords and other wealthy property owners reap the profits of our dallying’s delays. If we instead join forces – recognizing that rent stabilization and tenant protections create political space for upzoning’s benefits to take effect; allowing that ending exclusionary zoning makes social housing apartments possible and creates budget space for other leftist priorities; recognizing that we need more affordable homes at all income levels – we can solve this problem and manifest housing as a human right in America.

[Featured image created by Michael T. Sweeney]

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