Housing Crisis

HOUSING CRISIS 2.0

In this first video we are introduced to the idea that we are currently in the housing crisis 2.0. Apartments appreciate faster as houses become more expensive, and people will continue to move to smaller dwellings in less expensive areas to mitigate the cost. Its often found that low income families with children are often forced to spend less on basic needs as a result of current housing costs. People may cut their leisure expenses first, but many ultimately also sacrifice things that they really need due to the current cost of living. About 30% of households in urban areas are cost burdened, and one large cause of this is the devaluation of our currency which causes things to become more expensive.
“The Low-Income Housing tax credit program has become the largest source of subsidized housing” this video illustrates with a graph, explaining how ultimately our taxes are funding these subsidies. We also see graphs illustrating home ownership at its lowest since the 1980’s, and continues to explain how others are even being driven from renting. As the difference between housing costs and income grow further and further apart we find more cost burdened renters, who may end up seeking roommates, or even living with family. No longer does anyone typically find apartments available at a reasonable rate.
The average rent stated here in Toronto was $2,000 each month at a time, and average home prices in most western urban areas are 5+ times greater than incomes. We see a graph nationally illustrating price-income ratio for home purchases nationally. Another graph here shows how most gains in wealth over the past 30 years has gone to the top 1/5 of households. “The rich get richer, and the poor get poorer.” “This is because central banks print money which travels through the system not into the hands of you or I, but into the hands of the elite who have politicians in their pocket, they are the bankers, the people sitting at places like the Bilderberg group.”
Another graph shows how young adults are becoming less likely to move as time progresses. Another graph shows how home ownership has technically increased but that statement would require context. In 2005 the home ownership rate was 69. It was about 63 in 2016, and is about 64 now. The rate is exactly the same as it was in 1985. The person making the video expresses the opinion that this is actually a bad thing. We currently have many people taking sub-prime loans, as well as financing things that they cannot afford. The more this rate increases it can potentially also indicate increased financial burdens on Americans.
Another slide illustrates the growing number of households that face large amounts of student debt. He adds that many people will either default on the loans, or attempt to pay with credit cards they also end up defaulting on. It does not need to be simply student debt, for any number of reasons too many people are overburdened financially. Afterwards it is shown in a graph how as time progresses, and the cost-income divide grows, the number of lowest income renters has begun to increasingly outnumber the supply of units they can afford. Afterwards he explains how the way home prices have risen since 2000 illustrates a “bubble” and is actually bad, and many things are not worth what they are being sold for.

APPLIED ENGINEERING AS A SOLUTION

In this video the author describes how we are now in the 21st century, the era of urbanization. There is a global phenomenon of people moving to cities with 54% of people living in metro areas around the world, which is 30% more than in 1950. Projections currently show that by 2050 there could be an excess of 2 billion more residents throughout these areas.
As this video states, for better or worse we are rapidly becoming a more urban society and as such developers are exponentially increasing metropolises globally. Often in many large cities those who work there can barely afford to live near where they work. One issue becoming more prevalent in modern society are the unsightly cranes which are a direct result of these same booms. As people flock to cities, it creates demand for housing and businesses than are available leaving these cities perpetually under construction. The author adds that rent control alone would not solve the issue facing these people, and the correct approach would both increase the supply of housing while reducing the costs.
Some think that high rise buildings are better because they contain more units, and the additional floors will create more profit. This is actually not true, and high rise buildings often cost more which directly impacts this issue. The actuality is that on top of being drastically more expensive to build, the operating costs will increase more per floor after a given point. The author here makes a point with a graph comparing height to cost stating: “It leads ultimately to a U-curve in regards to the cost/sqm to height, where it will initially drop but then increase after a certain point due to the increased engineering demands.” There is a ‘bottom out’ point, which is the ideal height to minimize operating costs, which is different everywhere. On average most cities will find this number between 6 and 12 stories.
The next piece addressed here is how to reduce building costs. One of the primary reasons for the increased cost is that floor space is used for the necessary core that provides structural integrity to the building. More aesthetic designs typically have a lower ratio of floor space to building core, and typically a square would prove to be ideal for space efficiency to reduce costs. Wall to floor ratio is another piece the author lists as a factor into cost efficiency. This basically explains how mathematically, depending on the floor layout it will change how much wall is required. Again, different designs will result in their own ratios but the concept is that the more walls that are ultimately needed, the more construction will cost. Later he talks about also reducing costs of construction by prefabricating parts. China built a 57 story building in under 3 weeks this way!
In his conclusion he talks about how many cities around the world that have issues with increasing numbers of homeless citizens also have building height restrictions. He elaborates that many cities on average only have apartment buildings between 1 and 3 stories. His input here is that were these policies changed, then many cities could create buildings between 6 and 12 stories that could create a much larger supply of housing with greatly reduced costs. In his opinion we will need to begin rethinking how we build and plan our cities for optimization.

SOME SOLUTIONS FOR AFFORDABLE HOUSING [TEDX]

In this video Nicole gives a talk where she states that the solution to the affordable housing crisis is actually quite simple. In her opinion, the housing market has become “a competitive sport where the winners make the most money, and the losers are first home buyers and low income renters.” She says that people shouldn’t think so much of it as investing in real estate, and more like investing in communities.
In her talk she gives a very informative history of how we got to this point over the past few decades. The first thing she advises is correcting the issues in the public housing system which has seen less and less funding over the years in comparison to demand. The next thing that would need to be addressed is affordable homes near cities. Many people will choose a house over an apartment, and inclusionary planning to develop more affordable homes will be imperative. She also stresses rethinking the ‘how’ of our urban planning. In Australia, the majority of their population is highly condensed into a few urban areas. As she too points out, more towers is not the most practical solution to the affordable housing crisis.

COMMUNITY BUILDING AS A SOLUTION [TEDX]

Betsy starts off explaining how the housing crisis affects everyone, but absolutely in different ways. As she states, the heart of it all is the rising costs of the private rental sector. Houses have become expensive enough to be off the table for most, yet the public system offers very little to people either. People are ultimately stuck in the private rental sector which is also so expensive there is no means to save and buy a home. Decades ago these systems were set up with safety nets designed so that people would transition into an apartment and be able to set money aside to settle down when ready. Presently, private renters will spend a large majority of their income for often sub-prime conditions which could include a lack of security.
The UK pays more proportionally of their income towards rent than any other European country. Despite unemployment’s decrease poverty has actually risen as a result of incorporating housing costs. Just like Nicole, Betsy gives the history of how this occurred from the perspective of the UK. Like Australia, it appears to stem from systematic changes occurring in the 1980’s. At the time, they abolished rent controls, enacted shorter term tenancies, banks were lending more, and ultimately the government failed to ensure enough affordable homes were being built. This eventually led to house prices that kept people out of that market, and stuck renting where they were prey to the ‘rising landlord class’.
She too remarks that on a societal level it appears as if we are addicted to the rising costs of housing. We view housing as a commodity versus a human need which she views to be a slippery slope. As she adds, simply blaming the government will not solve anything and quotes Frederick Douglass, saying “power concedes nothing without demand. It never did and it never will.” As a community developer, her stance is that of ‘what we the people struggling with this can do about it’. In her opinion, if everyone came together, they would have the power to make sure ‘those forces have no other option than to succeed’.
Community organizing is broken down into power, relationships, and action. The ways we typically perceive power is either through money, numbers, or position. The general idea that is employed for trade unions is that with enough numbers, the people inherently have more power than the people with position, or money. Her illustration with fish does a great job of illustrating the way unions use strikes to gain better benefits for their workers. She continues that the reason this philosophy has been difficult with private rent sector, and ultimately stifled rent control is the changes to mortgages in the 1990’s flooded the market with investors in the rental sector. The number of landlords continually increases which makes it hard tor tenants to all band together for a collective purpose.
She says there is a principle in organizing that says “relationship always needs to precede action.” This means in her words that “people need to know that if they’re going to stick their neck out for the greater good, then others will have their backs.” People need relationships to be able to rely on one another, and as she adds too ‘relationships are what make you accountable to your community and vice versa’. The more relationships are built throughout a community, the more those people strive to ensure its benefit. The movements that have succeeded in gaining tenants increased rights were typically fueled by the relationships as they are the motivation that unites everyone.
2 out of 3 renters according to her will move within 3 years, 1 in 3 will move every year, and 1 out of 4 have experienced an unwanted move. On talking about the third principle of organizing, action, there are many challenges. She says that with issues so deeply entrenched in our society, we need these relationships to be able to persevere for the long haul. However, in her conclusion she remarks how the number of challenges does not mean there has been no action. There is absolutely a growing housing movement, and in her opinion the larger it gets will empower tenants to see changes happen in the private rental sector.

AFFORDABLE HOUSING AND THE HISTORY OF THE HOOD

In this next video Adam Walls starts off with a visualization exercise. He talks about how he aims to discuss why certain issues exist to very specific areas. Aiming to delve into the facts behind why ‘the hood’ exists and how it came to be. Starting off with a map of Chicago in 1939 it shows the areas the FHA would ensure mortgages so banks would be able to lend money freely without risk. The idea following the depression was that banks needed to be able to do this to prop up the real estate market. In total there were 239 maps, and during this time millions of African Americans were moving to Chicago to get away from Jim Crowe laws. Of the 77 neighborhoods they all ended up in 3 which were subsequently labelled ‘high risk’ and not insured. The remaining neighborhoods attached rules to the deeds that only Caucasians were allowed to own at the request of the real estate coalition.
What ultimately happened is it overburdened the system, as the residents were unable to purchase homes. As time went on, units intended for one person grew to occupy several. He describes the birth of the term ‘blockbusting’, when real estate investors would approach white home owners paying minorities to accompany them, saying they were moving in and would lower property values. There so few buyers for homes at the time with little insurance for mortgages, and these investors would conn people at selling their homes far below market value. Then, they would remove the ‘restrictive covenants’ on properties, and sell it to a minority family on a contract for several times what it cost them. These functioned like a mortgage except there was no deed transferred, and they were responsible for everything. If the family missed a payment as part of the contract, since they did not hold the deed they were evicted immediately and the landlord could do it all over again. “It’s estimated that between 1940 and 1970, blockbusting cost the African American community $500 million dollars.” In 1960 there were 813,000 African Americans living in Chicago. That same amount of money then, adjusted for inflation would be $4 billion dollars.
The hardships facing people living in these communities as well as their physical condition are what defined the term ‘the hood’. Affordable housing is defined by HUD as ‘affordable if you are not paying more than 30% of your income in rent’. In Chicago, there are 350,000 households making less than $30,000 annually. The way he sees it, these communities have long suffered from lack of investment which must be addressed as much as their members need affordable housing. He suggests using affordable housing as a means of investing in communities where the government programs simply cant keep up. He talks about his experience which entailed both acquiring investors as well as banks willing to lend in certain areas. Ultimately his goal was to bring top quality affordable housing to all zip codes.

CORRUPT REAL ESTATE DEVELOPERS ARE THE REAL PROBLEM

An idea suggested at the beginning of this video is modeled after a program done by habitat for humanity, to give tax breaks to people who invest in developing affordable housing in low income communities. By turning dilapidated homes into rejuvenated ones, it breathes life into communities and raises their value. The idea of allowing property taxes to be invested into construction was intended to stimulate investment. The problem that has occurred though in Baltimore is construction has only occurred in the wealthiest neighborhoods and protests have been held demanding affordable housing.
At the beginning of the interview, they start with how the city has done literally nothing to provide affordable housing. With only a few dozen units alleged to have been created he gives an example of just one high rise with 2500 luxury units and rents for a studio start at $2000 per month. Not only is it an issue that it creates a ‘mirage’ like the city is doing something when it in fact is not, many of the units also sit empty due to the price. The number of homeless in most cities they say stems from low wages, lack of affordable housing, and poor social services. The ’20 20 plan’ for Baltimore is as the third person explains “20/20 Vision” and that their goal beyond creating more affordable housing is to also find more beneficial use for vacant properties.
Even after the mayor offered a $10 million dollar bond, protests were held because citizens have lost confidence she will follow through on her commitments. Initially the offer had been $5 million, but the point was raised that the city’s capital budget had recently spent twice that. The mayor wouldn’t budge for more than they spent on computers it would seem. The idea that they would have such priorities to the people interviewed argues that initially their elected officials thought new computers were more important than solving an issue taking lives. In 10 years Baltimore has only created 32 additional units that are by definition ‘affordable’ as they claim later, and remind us again about the high rise with 2500 luxury units. Not a single one of the 32 units created was rented to a person actually in extreme poverty.
The three men use Port Covington as an example, where a $600,000 tax incentive was given to a billionaire in addition to a waiver so the waterfront could be developed. They are obligated by law to create affordable housing but the waiver allowed them exemption from putting it there. Instead they scattered the units elsewhere. Even though it is illegal to ‘steer’ communities, the end result of what happens in these situations is communities separated by economic class. There was no language here obligating the affordable housing actually be rented to the truly needy. Likewise they remark that beyond the credits given to these developers, they are only lightly taxed. As they all agree, “its a constant gravy train being a developer in this city”. Much of the wealth in society is created by the development of luxury units. The way it continues is by these developers influencing politicians through lobbying.
The next topic is how the city would be selling off much of the public housing as part of the RAD program. An Obama initiative, it was designed to privatize public housing by giving bonuses to developers to take over the housing that all levels of government had neglected for quite some time. They state that the federal budget to provide housing to the poor is about 40% of what it was 40 years ago. It is not any one party, both have been chipping away at public housing for decades. The next question is that with all of the issues public housing actually has, is it even something worth fighting for? The answer is that it is, but the problem that exists is the public housing system is not democratically controlled. With the example of community land trusts, the people who live there own the land, property, and take care of it to a given degree.
As the interview continues, they explain how this even affects school funding and structural deficits. The vice chairman of the school board recently drew attention to how all the tax breaks being given away were going to affect their budget. School funding is based on a complex formula that computes all of the assessed value of real estate in the city. The amount of funding schools get is essentially tied to the property taxes being paid in a way. As thousands of units are created with tax credits as they have been, it thrusts exponentially more students into a public education system that will never be properly funded.
Throughout Baltimore many crowdfunding campaigns have shown promise with regards to acquisition of run down properties to be used as community land trusts. “A community land trust is an organization that would act as a trustee over land within their community. They would lease the property to people in the community where they could rent or own while keeping the property within the trust. Where the community owns the land, it would keep the rent at a reasonable amount as the decisions would all be arrived at democratically. Its a democratic organization that gives the community more control over itself. The trust is made up of residents of the community, people who actually live in the land trust, and experts in the field.”

ADEQUATE HOUSING IS A HUMAN RIGHT

The woman interviewed here is an appointed official to work globally ensuring the right to housing. Article 26 of the International Declaration of Human Rights that everyone has a right to an adequate standard of living, and adequate housing. The way she puts it is that “housing has tentacles that tie into everything, and it is the most articulated socioeconomic human right.” Housing has to be about peace, security, and dignity as much as it must be about its physical structure. Another basic tenant is freedom from discrimination, or fear that one would lose their housing. We get a very clear definition here of “Adequate Housing”.
900 million people in the world live in ‘informal settlements’, or slums. Homelessness is a global problem, and it is nearly impossible to find a city without the issue. Many times people have lived in these settlements for generations, and this is why updating should really be done with the members still present at the time. We get here an elaboration on degrees of urgency within the homeless population as there are different situations one might find themselves in. One thing that happens is when people become homeless it can trigger psycho-social disabilities. People of sound mind are so traumatized by the experience that they may turn to drugs and are utterly decimated by it all.
The way we view societies we view them through a lens of how wealthy they are, or their GDP (Gross Domestic Output), and their homeless population afterwards. The speaker here remarks how one would think the wealthier a nation, the less you would see issues with homelessness. The actuality is that as nations accrue wealth, their issues regarding homelessness also increase. The wealth of these nations breeds inequality that is driving more people out onto the streets, and many do not make it back. In Kenya we get to see footage where peoples homes were actually demolished in order to develop a road for the wealthier classes neighborhood expansion.
As she concludes she remarks how some small attempts have been made to correct this growing issue. Ultimately as she seems to see it too, the power wielded by developers to ensure maximum profit drives more people onto the streets as long as it continues. The world has set many goals to update slums and eliminate slums. Many experts have educated nations across the world about human rights based housing. Still however, it seems that things are only getting worse in some regards.

CAN HOMELESSNESS BE SOLVED?

IN MY EXPERIENCE...

I have seen this a lot in my own life, growing up in a family that owns property provided me many insights. It were these same insights that led me to my distaste for this system and to repeatedly find ways to give back how I can. These experts hit the nail on the head, even in a medium to large outfit there are never enough apartments to satisfy demand. Rents go up yearly by unreasonable amounts even without any renovations. Often loopholes in discrimination laws are used to toss people for all sorts of reasons. Plenty of times I’ve seen students, young adults, immigrants, and others denied due to a low credit score and no cosigner. Sure, knowing these things are reasonable in checking out a prospective tenant, but blindly denying most applicants who have a subsidy on shaky ground like this is a huge piece of why people stay trapped at the shelters.
It can take several years to get a voucher to find an apartment due to how backed up the system is currently. In this time any number of things can drastically impede someones ability to function. Once they do obtain this voucher they are often denied by all of the rental agencies a chance at an apartment altogether. The cycle spans much wider than that, as many cannot hold a job under these conditions so they make terribly risky tenants on paper. Most programs will only cover a portion of a persons rent, so they still must substantiate how they would pay the rest of the rent to be approved. I’ve seen older buildings renovated to have rents nearly double, and then have college students denied the apartment based on their age. The defense being that the laws actually provide for several back-doors to make judgments like this without penalty.
Likewise, an equally problematic observation is that of the landlord who may go years without performing any repairs on their property. Finally something may change and the building is updated only to see prices increase astronomically. You could see tenants paying for heat and hot water year round, with the boiler off half of the year in some companies. Likewise I’ve watched new tenants in a building experience massive rent hikes to fund repairs that went unaddressed for years prior to them living there. Similar to banks, landlords will also capitalize on fees that can compound. I’ve encountered late rent fees, bounced check fees, and fees for opening windows when the heat is on…even screwing the common hallway windows shut. Realistically you name it and most landlords will bill you for it, likewise more than would seem reasonable.
Likewise I’ve made observations of something occurring in large apartment agencies but its not an annual occurrence. Essentially, every few years once there are tenants who have help their apartment long enough that large rent increases are unreasonable many means can be employed at times to steer these tenants out of a building. Often this will apply to only the low income tenants who hold a rental voucher like the retired, or the disabled. Once these people have vacated by some means, the unit will often be repainted and put back on market for significantly more money. Behind the scenes, the private rental sector does more to keep at need citizens out of their properties than the contrary. Often the businesses do not view the security deposit they require as enough to satisfy the risk they view these clients as. Often a variable in the high rental rates too is aimed at keeping homeless people out of apartments the same way African Americans were in Chicago close to 100 years ago. Landlords are able to obtain the rates section 8 pays ahead of time to ensure their apartments cost more. The allure of more money continues to draw the attention of smaller landlords looking to move up the pyramid.
As the large developers bring large scale buildings to small and medium metro areas, the existing landlords often capitalize on this. When a high rise is built in a city often some degree of gentrification will occur. Tenants will be driven out so the bare minimum can be done to justify charging the same price as the high rise for a lower quality product. The way the market works for apartments is that essentially it all costs exactly the same, and you really cannot escape the rising cost of living in an apartment.
Likewise, moving out can be equally as costly. Likely there are far more landlords than I can contemplate who do everything in their power to keep their tenants security deposits. Some may even go so far as to charge tenants for things that were wrong with their apartment before they moved in. Several of the people above have it perfect, it has evolved into an addiction to the money that can be milked out of the real estate sector. There are literally so many sides to that statement, and it can even apply to contractors. That relationship is a two way street. You can see the property owner do a real disservice to their employees in many ways, and you can see contractors who take their employers for a ride. The last thing most people think about is how housing should be some form of right once you get a couple levels up the ladder towards being a landlord.
Having done ample things to volunteer helping with homeless outreach, I know it is absolutely imperative that something is done immediately. I’ve personally snowballed many ideas over the years that seem feasible enough, but it’s seemed pretty obvious to me that the people making all the money at the top don’t want to spend a little now and then to correct the issues that arise from the way they develop cities. If society were just a little less profit driven I think we would at least see less people sleeping on the streets. As much of the content here shows, there are ample ideas out there ready to try in hopes of solving this, we just need to develop the numbers and relationships to actually do something about it.

What I see being the best multi-step approach would take the following (work in progress):

  1. Zoning law reforms to allow more 6 story affordable housing buildings.
  2. A program created in major metropolitan areas to take the “shelter” concept further. Using housing first model, provide units on the upper floors and after one year allow citizens to leave with landlord reference. Provide work, and assistance to help transition from shelter to independence with centralized resources.
  3. Reparations in the sense that the companies responsible for the predatory loans should be funding programs for both #2 as well as the creation of affordable housing.
  4. A bar on developers influencing legislature through lobbying.
  5. A program that would be an “opt-in” for small and medium landlords nationally to agree to enact 10 year rent control measures in turn for the government funding bringing all buildings up to code. Print currency to fund program if fed still exists, and use opportunity to create jobs for #2, all buildings could go green at this time.
  6. Several amendments to ADD to the housing laws in the country.
  7. Create tenants unions in all metropolitan areas to give tenants as much power over housing market as landlords.

– Adam Rice

Leave a Reply

Your email address will not be published. Required fields are marked *