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THE HOUSING QUESTION

Housing, defining the term broadly, is probably the most important issue in urban planning. Housing constitutes the biggest single land use in most cities and towns; in many places it occupies more land than all other uses combined. In many cities housing and the land under it constitute more than half of the entire real property tax base. There are few, if any, planning issues which touch most people more deeply than the condition of their immediate neighborhoods, because that is where they spend most of their time. Moreover, housing is often the single largest item in a family's budget, and a house is the most expensive possession that most people acquire. Equity in a house often constitutes the major share of the estate a person passes on to his or her descendants.

We may all agree that housing problems are important and that they need to be solved, but when asked what the housing problem is, different people will give very different answers. Although we may speak generally of the nation's housing market, it really represents the sum of thousands of separate housing markets. For some, the quality, quantity, and cost of housing available to low-income Americans may be the nation's biggest housing problem, though some economists will argue that it is really not a housing problem at all, but rather a problem of income distribution. If you are renting now but want to become a homeowner, you may have concluded until recently that the nation's biggest housing problem was that in many housing markets prices have risen more rapidly than had personal income.

If you are a middle-aged homeowner who wants to build an accessory apartment in your garage for an aging parent, your biggest housing problem may be what you see as the excessive rigidity of the zoning codes that will not let you do this.

If you are a homeowner in a bucolic exurban town that is fast turning into a suburban town, your biggest housing problem may be that too much of it is being built too near you.

If you are a homeowner in a nice suburban house that you have lived in for 25 years, you may not think that there is any housing problem at all. You are comfortably housed now, and when you retire and sell, that big capital gain will make it very easy to buy a nice condo in Florida. You won't get upset if housing prices rise because the faster they rise, the better off you are. In the writer's experience as a planner in the suburbs, it is very difficult to get homeowners concerned about housing shortages for exactly the reason just suggested.

For many years planners and others worried that housing was too expensive. There was concern about the availability of housing for those with low incomes. Planners in the suburbs, including this writer at one time, were worried that in affluent areas prices were so high that the children of residents would not be able to afford to live in the areas in which they had been brought up. When housing prices crashed in the Great Recession worries changed. There was concern about all those homeowners who were "under water" on their mortgages. There was concern that when home values go down people feel poorer, so they spend less and that prolongs the recession. Now increases in house prices are celebrated as a sign that the economy is strengthening.

Where is public policy in all this confusion about what our housing problems really are, you might ask. The answer is: almost everywhere. Policies often point in different directions because different elements of public policy are responses to different constituencies.

In 2006, the last year before the housing market started to collapse presaging the beginning of the Great Recession, the federal government spent about $38 billion on subsidies for the housing of low-income people. In addition to that, it provided about $8 billion in preferential tax treatment to the builders of low-income housing. (In general, preferential tax treatments are referred to as tax expenditures because they achieve a somewhat similar result as do direct expenditures, but they are delivered instead through provisions in the tax code.) Certainly, on balance, such expenditure and tax policies may be characterized as pro-poor. However, at the same time, federal tax expenditures in connection with property taxes, mortgage interest, and the treatment of capital gains on the sale of owner-occupied housing were worth more than three times that amount, and these sums, for reasons explained in Chapter 17, clearly favor the prosperous. The fact that these two packages of policies point in different directions is not to say that either is bad. Helping low-income people obtain better housing certainly seems praiseworthy. Then, too, many would say that encouraging homeownership is also praiseworthy. But if the federal approach had been designed by a single intelligence (say, that of a wise and benevolent despot), it would probably look rather different and would be more internally consistent. But it was not designed by a single mind. It came out of the workings of many minds—out of the democratic political process.

At the local level, policy may not be entirely consistent either. A town may limit the amount of land it zones for multi-family housing and require larger building lots for single-family housing than most planners and urban designers would consider necessary. That treatment tends to raise rents and house prices. At the same time, the town may also have inclusionary zoning requirements that compel builders to set aside a certain number of units for low- and moderate-income renters or buyers. Of course, these policies are somewhat contradictory, but they respond to different constituencies, they may have been enacted at different times, and their inherent contradictoriness may not be readily apparent to the citizen-voter who has many different things besides local housing policy on his or her mind.

Finally, as big as public direct expenditures and tax expenditures connected with housing are, they are dwarfed by private expenditures on housing. In 2006, the nation spent almost $2 trillion on the purchase, ownership, and operation of housing.12 That was, very roughly, one-quarter of after-tax personal income in the United States. Inevitably, then, government's ability to influence housing is limited.

 
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