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Why Is There a Housing Crisis?

March 25, 2016

By eastbayexpress – excerpt

Yes, we need more housing. But the real “market distortions” propelling the crisis are inequality, speculation, financial bloat, tax havens, and more.

The Bay Area’s outrageous housing prices have led to howls of protest. Average rents have shot up by half during the last five years. Rents and house prices are the highest of any metropolitan area in the country and among the most unaffordable in the world. This is not just true of San Francisco but applies to the entire Bay region — now twelve counties and 8.5 million people, according to the US Census.

According to mainstream policy shops and planners, such as Gabriel Metcalf, president and CEO of the pro-urban growth organization SPUR, the housing crisis is caused by activists and neighborhood residents who oppose more market-rate housing development. Their solution is to allow developers to build more freely.

But while it’s true that we need to expand the region’s housing supply, building more housing cannot solve the problem as long as demand is out of control, as it is today. There is simply no way housing could have been built quickly enough to avoid the price spike of the current boom.

But while it’s true that we need to expand the region’s housing supply, building more housing cannot solve the problem as long as demand is out of control, as it is today. There is simply no way housing could have been built quickly enough to avoid the price spike of the current boom.

Three basic forces are driving the Bay Area’s housing prices upward: growth, affluence, and inequality. Three other things make matters worse: finance, business cycles, and geography. All of these operate on the demand side of the equation, and demand is the key to the runaway housing market…

So is there no recourse? Since the biggest sources of the housing crisis lie in the general conditions of contemporary capitalism — the tech boom, gross inequality, frothy finance, boom and bust cycles, and the power of the elites — local reforms can only do so much. Without a major political upheaval for financial control, higher taxes, equality, and more public spending, we are in for perennial housing crises. The housing market can never heal itself under existing conditions.

But some things can be done locally. Rent control with reasonable annual increases works quite well to dampen overheated markets. Eviction controls are critical, along with other restrictions on speculation. Demands for set-asides for low-income units are another proven strategy, along with development fees. Land trusts have worked well for open space protection in the Bay Area, and could work for housing, but will require major funding. And a real commitment of earmarking money for low-income housing by the federal government — on a scale to match the money going to highways — is a must.

New housing will have to be built, as well. But developers are profit-seekers, so don’t expect them to be innocent bearers of what people need. It is absolutely necessary to question developers and city planners over what is to be built, how high, how big, and where. A livable city demands good design, historic preservation, neighborhood protections, mixed use, and social diversity, among other things, and figuring out what those things are should be a collective, democratic and, yes, conflictual process of politics and public debate. Nonetheless, opposing all new building, greater density, and neighborhood change is not a viable policy, and we cannot cling to the idea that our town or neighborhood will remain the same in a dynamic urban system.

Conservative critics, of course, denounce all popular efforts to control runaway housing costs, displacement, speculation, and bad planning as unnatural violations of some “natural law” of perfect markets. No one should be fooled by such fantasies. The real “market distortions” propelling the housing crisis are inequality, speculation, financial bloat, tax havens, and more. The day when the runaway privileges of bankers, builders, speculators, wealthy suburbanites, and the rest are reined in — that’s the day the housing crisis will be over.

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Some of the best suggestions we have heard in a while. Let’s hope someone is reading and taking Mr. Walker seriously. Do comment on the source.

 

 

 

 

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One Comment leave one →
  1. March 25, 2016 2:56 pm

    Reblogged this on Grassroots Actions.

    Like

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