Monday, August 2, 2021

#214 / Solving The Housing-Homelessness Crisis


Online, the opinion column from which this picture came is titled, "It’s Hard to Have Faith in a State That Can’t Even House Its People." In the hard copy version of the column, which appeared on the editorial page of The New York Times on July 30, 2021, the headline was a bit more upbeat: "California Can Solve Its Homelessness Crisis."
I was pleased that Ned Resnikoff, the author of the column and the policy manager for the Benioff Homelessness and Housing Initiative at the University of California, San Francisco, didn't call out so-called NIMBYs, and their supposed opposition to new housing developments, as the sole or major cause of the the state's homelessness problems. Resnikoff's column included the following observation, which I think is right on target: 
As economic inequality has threatened the nation’s political system, it has most likely worsened homelessness in California. In a recent paper, researchers presented evidence that income inequality may fuel homelessness in regions where housing supply fails to keep up with demand. The authors theorized that this may be because the wealthiest households in an unequal city bid up the cost of housing for everyone else, making it increasingly unaffordable to lower-income residents.

This appears to be exactly what happened here the Bay Area, where the unfathomable wealth generated by the tech boom has been mostly captured by those at the top of the income distribution. Because Bay Area cities have failed to produce enough supply to keep up with population increases, lower and middle-income residents now have to compete for housing with the super-wealthy, whose ability to outbid everyone else continually forces prices up (emphasis added).
In order to deal with our homelessness crisis, we (collectively) have to deal with our crisis of "wealth inequality," and provide housing (both rental and for-sale housing) at prices that average and below-average income persons can afford. Simply building "more" housing doesn't solve the problem, because if we are looking for "the market" to provide housing, we will never be able to build enough housing to meet genuine community needs at the lower end of the income scale. 
In our current capitalistic system, a "market-based" approach to providing necessary housing will never succeed, since the whole purpose of the market it to make sure that sellers of goods and services get the highest prices that purchasers are willing to pay. When there are lots of people with the economic ability to buy housing (a very scarce commodity) those people will end up owning or renting what's available. Those with lower incomes will lose out. There is no "market" solution to our housing crisis.

There are, however, two or three ideas that could help address the problem: 

  • First, we could enact legislation to require large businesses (like Facebook, and Google, and Netflix, for example) to provide housing for all the new workers that the company will need, when the company expands and hires new workers. Currently, the companies expect local communities and others to provide housing for their new workers, and since their new workers often receive very handsome salaries, they outbid ordinary income persons, and make the homelessness problem worse. This is, in essence, what Resnikoff was saying, in what I have quoted from him, above. This is certainly something that residents of Santa Cruz County know about, firsthand.
  • Second, the state government could enact a statewide program of inclusionary housing, requiring housing developers to restrict the price of, perhaps, 25% of all the new housing they construct, making that housing available at a rental or for-sale price that is affordable to persons with average or below average incomes. Such inclusionary housing should also come with a resale restriction, insuring that those who buy such housing, at the restricted price, cannot turn around and then sell that housing into the "market," but will be required to sell the house, if and when they do sell, to another person of average or below average income.
  • Finally, the state could also enact a rule that would require all new housing, specifically including market rate housing, to be sold with a resale restriction that would require a person who buys a new home to sell it, when and if they do sell it, at a price that is no larger than the price for which they bought the home, plus verified inflation. That would help, a lot, in taking speculation out of housing prices.
There are, undoubtedly, other things that we could do (collectively) to provide adequate housing. Spending public money to provide housing to those who need it is an obvious example of a very simple solution to the housing crisis. Publicly-produced or subsidized housing, sold into the private market with resale restrictions, as discussed above, could directly deal with the problem. That would take a lot of money, of course, to provide the amount of housing that is needed, but I'm with Resnikoff (in the hopeful headline version of his column): California Can Solve Its Homelessness Crisis. 

We would have to spend our own money to do it, and that would mean higher taxes on those with higher incomes. That's where we would get the money to spend. California could do that, and so could the federal government. Higher taxes on upper income people would mean less consumption by those upper-income people, whose money would have been committed to address the homelessness problem. 

The extremely wealthy wouldn't like that, of course, but Resnikoff is right. We can solve the problem. The question is whether we will!
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  1. True that current Bay Area market rate housing is increasing homelessness. I would rather be homeless than pay way over inflated current real estate or rental costs. It is, however, not the only cause. The policy of de institutionalization increased the number of mentally ill on he streets. Also is a demographic and cultural component , a number of homeless have no family support whatsoever. You can see a lot of cultures that have good family support, their demographic shows little representation in the homeless population.

    1. You are certainly on target in pointing out the other factors you mention. I wonder, though, if you would really choose homelessness over inflated rents, if those were your only options!

    2. Fortunately those aren’t my only two options, however, if hypothetically those were my only two options, I’d choose homelessness. My style of homelessness would not be a tent city, rather a motorhome or car. I would not pay 7 figures for a small single family home even if it were in my budget out of principal. For me, real estate in the Greater Bay Area and Santa Cruz is worth 1/4 current market prices.


Thanks for your comment!