Gimme Shelter

Public housing officials in Chicago turn homeless squatters out of abandoned public housing units in the dead of winter. Bureaucrats from San Francisco to Boston prowl the streets looking to uncover residents' illegal conversions of single-family homes to multi-person living spaces. A local television news team uncovers the city of Los Angeles as the biggest slumlord in town, owner of hundreds of housing units that do not meet minimal standards of decency required of capitalist landlords.

But all liberal eyes are on Washington, D.C. From there, all blessings flow. Oh, Congress, we beseech you, let our prayers be answered. Let us have "a comprehensive housing bill for the 1990s."

Trembling in anticipation of the miracles that will happen once that old devil Reagan is gone and housing can be restored to its rightful place in the pantheon of the welfare state, the housing coalitions and task forces are releasing their studies and escalating their cries of crisis. This spring, four groups—from a national task force headed by developer and philanthropist James W. Rouse to the left-wing National Center for Policy Alternatives—blessed the faithful with alarmist reports. Robert Kuttner, The New Republic's "economics" correspondent, quickly stepped to the pulpit. All exhort government to do more, more, more about housing—at least for the poor, and, now that you mention it, for just about everybody.

The new-found housing crisis isn't all it's cracked up to be. Particularly suspect are the frequent and pointed references to a decline since 1980 in the percentage of 25-to-39-year-olds making the jump to home ownership.

It's no doubt politically savvy to broaden the crisis to the middle class (and call for mortgage subsidies for first-time buyers). But this baby boom generation has confounded many other predictions extrapolated from their parents' experiences and choices. It's unlikely that the new trend, if it holds, can be simply explained as a function of scarce housing, as though late marriages, small families, and other lifestyle decisions made no difference.

Yet if there is not a crisis there is at least a significant problem when it comes to affordable housing for low-income Americans. The majority of poor people are renters, and they are spending a rising percentage of their incomes on rent. The problem is worst among those with the very lowest incomes; 47 percent use more than half their income for rent. Only a quarter of eligible households live in housing built or subsidized by the federal government. This in spite of construction of such housing that exceeded 200,000 units a year in the early '70s, dipped in the mid-'70s, and again went over the 200,000 mark in 1981 before being cut back to 41,000 units last year.

But a "new national housing agenda" envisioned by the preachers of crisis is not the best that can be done for those who lack housing opportunities.

It is, for one thing, completely unrealistic politically to think that the government spending machine can be cranked back up once Reagan is safely disposed of. The problem can't be dismissed with a wave of the Kuttner wand: "What's needed now is some serious money.…higher taxes.…When Reagan finally leaves office, there will be a great deal more to do than balance the federal deficit [sic]" (Just think about what higher taxes would do to the home-buying prospects of those baby boomers.)

But even if Uncle Sam were rolling in money, having him in the landlord and construction business is not very smart. Under government regulations, such as those dictating prevailing union wages, building public housing ends up costing, on a monthly basis, $700 a unit. By contrast, under a housing subsidy voucher program operating in the last few years, the government has found that low-income renters can go into the market and get comparable housing for $300 a month.

Government-financed housing also has a social cost: the segregation of residents into areas that are "safe"—not for them, but safely away from suburban neighborhoods. And it has an opportunity cost for the poor: its location can limit their responsiveness to employment opportunities.

For all these reasons, there is a growing recognition that government construction of subsidized housing is no solution. Thus the conservative Heritage Foundation and the President's Commission on Privatization call for converting federal housing assistance into vouchers.

Liberals object that this does not address the lack of supply of low-cost housing. Where are the poor to spend their vouchers? If the market were up to the task of supplying low-cost housing it would be doing so now, and no one would be spending half their income on rent. As the Rouse-led task force declared, "The private sector, without subsidy, cannot produce housing for low-income households. In 1986, only 7.5 percent (30,600 units) of the private sector's new unsubsidized, multifamily production rented for less than $300 a month."

But this focus betrays a failure to understand a key source of "new" housing at the low end of the market. Once that is understood, it is clear why Washington is not the answer to the poor's prayers.

In a 1986 study published in Scientific American, urban planning professor William C. Baer detailed the extent of "the shadow market" in housing—reconstruction of the existing housing stock by subdivision, merging, and enlarging, as well as conversion of nonresidential structures to housing. He found this shadow market a major source of low-cost housing, accounting for a third of owner-occupied low-cost units and half of rental units.

Moreover, Baer pointed out, the shadow market could be even more effective if local governments would step out of the way, lifting restrictive zoning and building code requirements that outlaw or wrap red tape around creative adaptation of existing structures to existing people's needs.

What else could local governments do? Get rid of construction-discouraging rent control. Start realizing and publicizing the dark underside of "no growth" measures and building moratoriums: higher housing costs, more people squeezed out of the market, more homeless. Press the government to begin selling public housing to the poor at favorable terms. Stop tearing down housing in the name of redevelopment. We don't need a national housing agenda.