By John Mirisch
(Editor’s Note: The views and opinions expressed in this article are those of its author and do not necessarily and in any way, in whole or in part, reflect the official policies or positions of the Apartment Association of Greater Los Angeles. The Apartment Association of Greater Los Angeles and Apartment Age Magazine welcome differing views in order to encourage healthy debate on important topics.)
If housing is a human right, then it should no more be the vehicle for profiteering than other basic utilities of human existence such as the supply of water, education, or life-saving medicine. If housing is a human right, then profiteering off housing is not only bad policy, its also immoral. Among numerous groups in California and elsewhere, there is much talk about a “housing crisis.” Yet this talk is misleading, and if self-styled “housing advocates” want to invoke any crisis, they should more properly be discussing an “affordable housing crisis.”
As State Senator Nancy Skinner has pointed out, there are currently more than 1.2 million vacant units in California. According to the quasi-governmental housing giant Freddie Mac, the housing deficit in California amounts to some 830,000 units. This figure comes from just before the pandemic struck, in February 2020, and before the exodus of firms and residents from the state which appears to have accelerated.
The solutions proposed by many of these “housing advocates,” WIMBYs (Wall Street In My Back-Yard) by any other name, generally involve massive up-zoning, forced densification, the elimination of single-family neighborhoods, and a lot more market-rate housing. Using an oversimplified appeal to the “law” of supply-and-demand, these density fetishists essentially advocate for allowing “the magic of the Market” to “solve” the affordable housing crisis. There is just one problem with the WIMBY prescription: it is wrong.
The notion that market-led forced densification (or any kind of densification for that matter) will lead to any meaningful kind of housing affordability is both misleading and unproven, though it may lead to maximizing developer profits through luxury condominiums – which in most cases seems to be exactly the point. Clearly, statutory up-zoning – the urban planning version of turning lead to gold – seems designed to commodify housing even further.
Manhattan, by far the densest locality in the U.S. (though the entire New York urban area itself is only the fourth most dense urban area in the country), is hardly known as a bastion of housing affordability. In short, advocates of statutory up-zoning cannot point to any substantial empirical evidence that the developer giveaways and corporate welfare they are promoting will actually lead to housing affordability.
In contrast, Vancouver presents a compelling case of a major city that up-zoned aggressively. They eliminated single-family zoning, allowing by right four units where a detached house had previously stood. Today, Vancouver is the densest city in Canada and one of the densest in North America. Vancouver’s urban density has even given rise to the term “Vancouverism” to designate “tall slim towers for density, widely separated by low-rise buildings.” It did not work. Housing has not become more affordable in Vancouver. With a median multiple — the price of housing compared to incomes — of 12, this Canadian city has the highest housing prices in the English-speaking world according to the 2020 Demographia report.
Former supply-side “Vancouverist” Professor Patrick Condon, who himself had in earlier years supported many of Vancouver’s policies of statutory up-zoning has revised his views in the face of what he calls “indisputable” evidence. Professor Condon speaks openly about the prevailing urbanist “addiction” to the notion that if we just “unleashed” the free market, we would somehow create housing affordability. The evidence is in and is hardly surprising to those who never have bought the Urban Growth Machine’s spiel: lot splits essentially double the price of the land.
Building more Porsches does not reduce the price of Priuses. What WIMBY policies do achieve is rather the further commodification of housing and the fueling of real estate speculation. Byproducts of these policies are gentrification, displacement, decreasing homeownership and the further denial of the opportunity to build intergenerational wealth and stability for historically disenfranchised families– not the creation of affordable housing.
It is time to implement a bold, well-examined combination of anti-speculation policies which could, in fact, serve to de-commodify housing. Such policies should be oriented to urban humanism with the aim of creating housing affordability and offering people a wider variety of housing choices. Anti-speculation, urban humanist housing policies should include:
- Limiting Foreign and Corporate Ownership of Housing. All actual residents, regardless of immigration status, would be permitted to own homes. But just as many other countries and jurisdictions place limitations on foreign ownership of residential properties (including Vancouver because of the failed supply-side experiment), and several states within the U.S. place limitations on foreign ownership of agricultural land with policy considerations in mind, we should place limitations on both foreign and corporate ownership of residential real estate.
Global capital’s speculation in residential real estate fuels speculation and causes property values to inflate. What real-life human being, especially prospective first-time homebuyer, can compete with foreign corporations or Wall St. REIT’s (real estate investment trusts) or global oligarchs looking for a safe haven to “park” or, yes, launder money, as has been the case in Vancouver?
- Vacancy Taxes. The staggering number of vacant housing units in California, contrasted with the estimated underage of housing units has been pointed about above: 1.2 million vacant units versus a pre-COVID shortage of 830,000 units. The simple math is fairly compelling.
Vancouver and other cities, including Oakland, have already instituted vacancy taxes. In this spirit, some cities have also created laws banning or restricting the use of residential housing for short-term vacation rentals. As with many housing-related measures, the devil is in the details, but it clearly is a lot more cost-effective and environmentally sustainable to use existing buildings for permanent housing than to have to build new ones. The aim, however, would be clear: to reduce or end the use of housing as a financial tool of speculators.
In a discussion on vacancy taxes, WIMBY supply-sider and University of California at Los Angeles Professor Michael Lens fails to differentiate between speculators and families who are hoping to build equity through their homes: “But, you know, in one case, we’ve got, say, a grandmother in Detroit, and the other case, you’ve got a foreign investor in Los Angeles. We want to treat those two people very differently, but they might be hoping for the same outcome in the end.”
Yet the differences between the grandmother in Detroit and the Russian oligarch are significant. The Detroit grandmother who has been living in her home for decades is fulfilling the function of “housing as a human right.” She is living in her home. Her hope to establish equity or intergenerational wealth is a byproduct of her living in her own home. This is a very different situation from the Russian oligarch who is using residential real estate either solely to create profits or perhaps to park money with the intent of avoiding the clutches of the Russian (or American) tax collector.
If the vacancy taxes do not serve to make the empty units more accessible, then cities could even go a step further, as Barcelona has been threatening. A CityLab article outlined Barcelona’s strategy: “Fill vacant rental units with tenants or we will take over your properties, the city is warning landlords.” While taking the intent of a vacancy tax a step further, “Barcelona’s latest affordable housing tool” is a measure we should consider here so that more existing housing units can do what they are supposed to do: namely, house people.
- Anti-Flipping Provisions. If housing is a human right, then the main purpose of housing for people to live in. While people may build up equity and even intergenerational wealth as a byproduct of fulfilling housing’s main utility – e.g., living in it – using housing primarily as an investment vehicle or as a means to profiteer is entirely another matter altogether, despite Professor Lens’s failing to acknowledge the difference.
Hot real estate markets often seem to encourage a kind of land-rush mentality, which give rise to a form of FOMOOP – fear of missing out on profits. Yet purchasing a house, slapping on a coat of paint, making minimal upgrades, and looking for a triple-digit ROI can only contribute to a market which quickly spirals out of control and precludes more real people from having the ability to become homeowners. In short, the practice of flipping homes, often the real estate version of a get-rich-quick scheme, simply fuels speculation and contributes significantly to increased housing costs.
Placing limitations on flipping homes could take various forms, including progressive taxes. A sliding scale, for example, could be created which would reduce the levels of taxes due in accordance with the length of time an individual used the home as her primary residence. Limited exceptions or exemptions could be made to consider real-world situations, like family emergencies, etc. Anti-flipping provisions and taxes would encourage housing stability; aside from the beneficial role of stability in the creation of sustainability (the word – and concept – “stability” is literally contained within “sustainability”), housing stability also furthers the public good of creating a higher level of citizen participation in community and public affairs.
If housing is a human right, then homes are for living in, not for flipping.
- Anti-hoarding Measures and Antitrust Measures. Within many societies, especially those that have pretentions to social equity or egalitarianism, the hoarding of scarce and precious resources is considered to be morally wrong. At the same time, as a society, we tend to look upon competition as a public good. Fair competition within the marketplace offers us choices, another public good (not to mention lower prices and, often, better value-for-money). Competition within the marketplace of ideas offers us the ability to create dialogue and dialectic among varying conceptions of the good life.
If housing is a scarce resource and overcrowding is a result of there not being enough of it to go around, then there should be limitations to preclude hoarding, there should be limitations on how many homes a person – or, perhaps even more importantly, a corporation — may own. As with the suggested flipping provisions, this could also be regulated through the taxing of non-primary residence properties (in some cases the vacancy taxes would apply).
The goal is to avoid the total corporatization of housing, something which is only being accelerated with WIMBY policies touting “the magic of the Market.” Thresholds could be established to differentiate between corporate and small business “mom-and-pop” landlords, who would be subject to regulations designed to protect tenants and promote resident stability such as rent stabilization policies. Turning us into a nation of renters beholden to corporate interests and Wall St. means that financial values are necessarily placed before human values and market goods are prioritized over public goods when it comes to something which supposedly is a human right: housing.
Consequently, stronger, and stricter antitrust laws should be developed and enforced in order to prevent the further corporatization of housing, as well as to end existing corporate ownership. Corporations should be forced to divest their housing holdings, as housing trusts, co-ops and nonprofits should be put in positions (including being created within local communities, if necessary) to help assume the role currently held in many places by corporations. Instead of a corporate takeover of housing, we would be looking at a community-based approach to housing, both in the creation and stabilization of a diverse variety of unique, inclusive, urban humanistic communities.
If housing is a human right, then we should remember that, despite SCOTUS’s warped and dehumanizing interpretation, corporations are not people.
- “Homes for Homeowners.” If housing is a human right, then housing should be owned and operated by humans and good housing policy would aim to allow more people to own their own homes. Under the concept of housing as a human right, homeownership has numerous possible advantages over renting. As an invested stakeholder with a sense of ownership, one might tend to feel closer ties to one’s own community and have a greater impetus to develop the civic virtues important in creating Community.
State Senator Nancy Skinner authored Senate Bill last year, which she called the “homes for homeowners” bill, and which the governor signed into law: The new law gives owner-occupants, tenants, local governments, and housing nonprofits a level playing field to purchase such homes, helping retain owner-occupied home ownership. Senate Bill 1079 also authorizes higher fines that a local government can levy on corporations or other property owners that leave homes vacant or blighted, to incentivize refurbishing and renting or selling such homes.
While this bill is a step in the right direction, it does not go far enough, as the existing system itself does not allow owner-occupants, tenants, local governments and housing nonprofits to compete on a level playing field with Wall St., major corporations and global capital. The suggested measures that are the subject of this piece are, of course, designed to address the inherent structural problems and the impossibility of a “level playing field” that the commodification of housing itself creates. Homes for homeowners should also be real estate for real people.
Programs should be set up and funded which empower and enable people to become homeowners, particularly first-time homeowners. Programs should be broadly designed and should include aid to help deal with many of the various aspects of homeownership. A recent bipartisan (sic) proposal in the Senate, which would provide tax credits to revitalize distressed homes and neighborhoods, may be a step in the right direction. Any tax credit program needs to be designed with the express understanding that the “objectives of private enterprise” almost never include equity, inclusion or community; their objectives always involve the maximization of profits. Policies need to create more homes for homeowners, but they also need to ensure that there are broad housing/lifestyle choices for community members.
Ultimately, we need to ask ourselves the following question: do we want to be a society of renters and ultra-wealthy landlords, corporate or otherwise? If housing is a human right, shouldn’t the focus be on ensuring homes are owned by humans? We need policies that strengthen neighborhoods, create sustainable communities, and avoid devolving into neo-feudalism.
Unfortunately, most of the recent housing bills from Sacramento, both those that have been enacted and those that have been proposed, are real estate bills rather than housing bills. They will do little to make housing more affordable but will serve the Urban Growth Machine’s goals at a time when growth levels in California are at historic lows.
People in California are voting with their feet and cars. The exodus of corporations and people is not necessarily a bad thing from a human goods perspective. In some ways, it represents a course-correction from the impacts of having overconcentrated opportunity in a few “winner” megacities, to the detriment of other areas.
Instead of doubling down on policies which both ignore and deny real people’s choices of housing and lifestyle, Sacramento should be placing a greater focus on choice, affordability, and sustainability, while strengthening communities, employing the kinds of anti-speculation policies outlined above. Of course, strong pro-housing policy could include a number of other measures: expanded subsidies for affordable housing; expanding broadband access throughout the state to increase opportunities in less expensive areas; meaningful rent stabilization policies; and using public banks to work in tandem with housing trusts and land banks to create community-based affordable housing.
These are approaches that can help address the underlying social and moral ills of racism and income inequality, two of the major root causes of housing and spatial inequality. In contrast, policies advocated by WIMBY-supply siders would make things worse by attacking local democracy and fueling ever more speculation. Instead of scapegoating cities in an attempt to justify state preemption, Sacramento should acknowledge that homes with gardens are not inherently “immoral,” “racist,” or “evil.” Living in a single-family neighborhood is a lifestyle choice, one of many that people make and one of many we should allow Americans of all stripes, colors, and dancing skills to make.
If housing is a human right, then let us do what is right for human beings rather than for corporations and speculators. If housing is a human right, then let us reject WIMBY-ism and, remembering that the word “by” means “town” or “village” in Swedish, instead focus on being CIMBY’s, those whose goal is to create “Community In My Back-Yard.” If housing is a human right, then let us also recognize that, beyond housing, we need to create homes for people and we need to understand just how sacred the concept of “home” is.
This editorial was previously published by New Geography and is being reprinted with the generous permission of its author. John Mirisch is a City Council member of Beverly Hills, having previously served several terms as Mayor of the City of Beverly Hills.