Affordable Housing- Text and Long Video Version
This is the longer video version of my affordable housing proposal, with more detail and commentary.
We MUST solve the affordable housing problem in this country before it becomes any more critical.
That means addressing the root cause of the problem.
I have been promising to lay out my housing policy for some time. This single issue is the most complex one which I have had to face. You will understand why this is so complex as I go through it.
It is no secret to any American that affordable housing has become a major problem for the general population. It is beyond the reach of more than half of Americans to be able to afford to buy a home. Meanwhile, average rents have increased by 25% up to 50%, depending on geographic location. Many Americans are forced to spend half of their basic income for even substandard housing.
Much of this has been caused by hedge funds and large corporations buying available housing, driving up housing costs to unsustainable levels. A one bedroom apartment is unaffordable to a person making minimum wage in any state in the country. The number of people being forced into homelessness due to financial limitations continues rising by the day.
Meanwhile, wages are declining. No American should have to work multiple jobs to maintain a basic living standard. Even in locations where wages have increased, the response by property owners has been to increase rents while food, energy, medical care and transportation costs have also increased dramatically.
This has driven more 18–29 year old Americans to remain living at home with their parents than at any point since at least the 1940’s and possibly since the Great Depression.
There are claims made by the current government and the media that the problem is a shortage of housing. Let’s be clear about this. There is no shortage of housing in this country. There is a shortage of affordable housing. The number of vacant residences in the US outnumbers the homeless by a very wide margin. There may be limited geographic areas with a shortage of housing but those locations are few and far between.
There are government agencies and various organizations in place to provide services to the homeless but study after study has shown that they are ineffective. It costs more to provide these services than it would cost to simply provide people with stable, long term housing. In truth, these agencies and organizations do not have the goal of providing stable housing. Their purpose is to maintain and expand their existence, when their purpose should be to eventually downsize and possibly eliminate the needs for their existence.
One of the major complexities involved in establishing affordable housing is conflict of interest. Most forms of housing assistance does far more to benefit landlords and developers than it does to provide housing. Section 8 vouchers are really nothing more than corporate welfare and are only intended for temporary housing. Recipients may see their incomes increase, lose any government assistance, be forced to move and then must spend any additional wages and possibly more to pay rent at their new location, leaving them potentially worse off than before. In most cases, they will be forced into an endless cycle of poverty, with or without governmental assistance.
What happens when we subsidize landlords is that this gives them more income and credit. They use the income and credit to purchase other properties, reducing the number of affordable homes for purchase on the market. The other thing they can do is use the federal money they receive to upgrade the property and then increase the rent. In each case, the number of affordable residences for sale or rent continues to decline. This is precisely what has been happening in this country for decades and why we have this crisis. Government subsidies, poorly devised, have created this problem.
It is no secret that Commercial Real Estate (CRE) is in crisis. The rhetoric tends to revolve around office space but the truth is that this crisis includes retail, warehouse and residential property as well. The companies that borrowed far too much to build overvalued properties are now finding themselves under water and expecting we, the taxpayers, to bail them out. It is primarily the CRE market which is leading to bank failures across the country, especially regional banks, who hold 70% of CRE mortgages.
The Biden administration seems more than willing to provide bailouts to the failed enterprises by creating more debt and subsidizing efforts which will lead to substandard, possibly unsafe housing in some cases and in other cases housing tied to a specific employer. For example, the Biden administration is offering subsidies for failing office properties to convert office space to residential space. For the majority of office space, especially high rise, this is impractical at best for structural reasons. Office buildings are not built for the same needs as residential space. Plumbing, wiring, fire escapes, parking and even structural weight standards are less stringent for office buildings than residential properties. In other cases, this administration is subsidizing housing being built by corporations like Google and Amazon for employees, which is unstable. It reminds me of company housing in the 19th century. Lose your job for any reason, including retirement or being laid off due to downsizing and you also lose your residence.
Donald Trump, a real estate mogul, is ironically silent on the issue of housing.
RFK Jr, who is economically Libertarian, has policies which are entirely in line with Libertarian views and benefit landlords far more than tenants. These include changing zoning laws and encouraging corporate investment, which would mean more rental housing.
For many reasons, I wanted my policy to be able to address this issue from a realistic approach which would provide long term, affordable housing, avoid corporate welfare and offer the possibility of those receiving assistance to build equity in their homes.
From here, I will launch straight into my policy.
1- Place stringent limits on the number of residential properties any company can own while receiving federal funds. It may be necessary to restrict the number of residences of any form that any business entity may own as a whole.
2- Expand the Department of Housing and Urban Development (HUD) with extensive reorganization of that agency. This would include empowering HUD to oversee housing quality standards for those receiving services.
3- Establish a separate governmental financing department for home loans, with a stable interest rate at a proposed 3%. This would be for primary residential properties only and could not be used for investment or commercial property. Properties above a certain value or investment properties would be ineligible for government financing and would have to be financed through the private market. This would stabilize the interest rate charged for primary residential housing, keep the interest rate low for this purpose and prevent any future bank bailouts in the residential sector.
4- Hire a federal workforce to build quality residential homes and apartments. That workforce would evolve to maintain and manage these properties. This would create tens of thousands of living wage jobs.
I stipulate using federal workers, rather than engaging private contractors to reduce the cost of building these homes. If a contractor earns a 20% profit, that means 20% fewer homes are constructed for that price. This also means workers rights, wages and benefits would be insured.
Workers could include former prison inmates, to provide living wage jobs and reduce the risk of recidivism.
5- Housing created under this plan would be rent controlled, to impose no more than 20% of monthly income for rent. That percentage would be lower for extremely low income residents, such as disabled and elderly residents.
These would not be the low income housing colonies which were seen in the past. These housing systems would incorporate private housing as well as subsidized housing as the housing would be desirable to live in. Rents collected by privately paying residents would also help fund the continuation of such housing and remove the stigma associated with low income housing.
6- After a percentage of rent is subtracted for interest, maintenance and management, the remainder of rent would go toward equity in that property. Meaning, if a resident chooses to move after several years, they could sell that property back to the government at current market rates. This would improve credit worthiness for low income residents and maintain the availability of affordable housing. This is intended to be permanent housing and, if paid in full, may be passed from generation to generation. Standard residential mortgage rates, as previously mentioned, would apply.
One should note that, while such an investment would be substantial, collection of rents and applying a portion toward capital would mean this program would fund itself over time. The funds collected would be reinvested toward building more affordable housing in a rolling investment. Such a program would reduce the burden on taxpayers over time. This is in contrast to current and historic programs for low income housing, which require constant funding year after year at taxpayer expense, with a negative return on investment to the taxpayer.
This entire program is designed to provide a stable, long term, sustainable solution to the affordable housing crisis which continues growing worse. This program has the strong potential to reduce the cost of housing in the private market as well as the subsidized market.
Another factor in this is that many people object to low income housing, viewing residents as being destructive. I readily admit this has been a problem with low income housing. However, much of that is because residents have no ownership. Those who own their homes and build equity are far more protective and responsible due to their investment.
7- None of us want to live around current criminal activity. However, I recognize that former inmates have multiple difficulties, including obtaining living wage jobs while being banned from receiving housing assistance and being banned from public housing. For this, I would establish a nonpartisan committee to examine this subject and come up with positive solutions to the problem. Unstable incomes and housing conditions often force people to reoffend. However, no criminal activity would be allowed on government property.
I admit that this proposal is an advanced draft and could probably use some refining. However, I do believe this to be the most realistic proposal put forth by any candidate you are likely to see.
We absolutely must do something about the housing affordability issue in this country before it becomes any more critical than it has already become. Americans cannot spend 100% of their incomes on housing, which is having a considerable negative impact on the economy as a whole and catastrophic effects on people’s lives on a daily basis. If we keep going the direction we are going, we are headed for a widespread humanitarian disaster which will impact our country for generations.
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