Our ‘Third World’ of Housing Have-Nots Needs Action

More and more low-income Americans are destined never to get that crucial initial foothold in the housing market, and therefore face a lifetime of uncertainty in meeting their shelter needs.

Three fundamental causes are responsible for this crisis of affordability in housing:

--The rapid decline in the number of low-cost housing units available for purchase or rental. Since 1978, more than 2 million low-cost units have been removed from the inventory. Yet the National Assn. of Housing and Redevelopment Officials has estimated that nearly 8 million additional units will be needed by the year 2000.

--The collapse of the housing programs of the federal government. Part of the federal role has been to make it easier for families to “own” a first home. It has done this through providing financial subsidies, maintaining a pool of public housing, and so on. Since 1978, however, the federal government has virtually pulled out of this housing program. In that year federal authorizations for housing were 7% of the total budget; now they amount to 0.7%.

--Significant changes on the demand side of the housing equation, such as the rise in the number of people living alone.

But in cities like Los Angeles, housing scarcity has also been aggravated by very high rates of in-migration. Behind the conspicuous glitter of the city’s First World housing is a Third World of housing have-nots.

The combination of diminished supply, declining subsidy and inflated demand has been lethal. The low-income end of the housing market is characterized by a chaotic scramble for such scarce, expensive housing units as are available. The “housing market” for many poor people is increasingly composed of friends’ couches, illegal garage conversions (housing an estimated 40,000 families in the Los Angeles region), old cars and vans, cardboard boxes, tents and, most alarmingly, the sidewalks.

A fresh approach to housing policy is needed in this country. It is realistic to assume that money will be in short supply for some time to come. But let there be no doubt about it, tax dollars will have to be spent to solve the crisis of affordable housing for low-income people.

The most cost-effective and politically expedient way in which to spend these dollars is to mobilize the resources of private individuals and the property development industry.

Private individuals are important through their role in what housing analyst Bill Baer has called the “shadow market.” This is the process by which the existing housing stock is expanded through subdividing, merging and enlarging units, as well as by transforming nonresidential structures (such as garages) into housing. The shadow market accounted for no less than 21% of the increase in the U.S. housing stock between 1973 and 1980. As a consequence, new construction is becoming less dominant as a way of adding to the stock of housing. During the 1950s and ‘60s, about 90% of additions to the housing stock came from new construction. By 1980, this had fallen to 73%. The shadow market is good at producing low-cost units for renters and owner-occupiers. The private individuals who operate it should be encouraged to produce even more units.

Second, efforts have to be made to mobilize the private construction and development industry to provide affordable housing for low-income households. There is already some evidence that the conscience of industry leaders has been pricked by the scale of the homelessness and affordability problems. There is also a sense among industry analysts that the production of affordable housing is likely to become the next wave in development trends and priorities. We need to make every effort to reinforce and capitalize on these expectations.

But there is no escaping the requirement that the federal government must take action to solve the housing crisis that it helped to create. The existing stock of public housing should be retained and renovated. (The estimated cost is $9 billion.) Efforts have to be made to preserve what little remains of the low-income housing stock. This includes moratoriums on the demolition of single-room-occupancy hotel units, as well as an extension of the subsidies on the 1.9 million privately owned low-income units built with federal subsidies in the past two decades. (More than 115,000 of these units will be decontrolled in California in the next three to five years; rents and other costs will then rise to market levels even though income levels of occupants most likely will not.) In addition, without an extensive new construction program, there is no option but to broaden the housing allowance subsidy through the existing voucher systems. In the short term at least, this would go some distance toward repairing the rental market, because a fair rent would then be assured for landlords with low-income tenants.

The homeless are only the visible tip of America’s housing crisis. Beneath the surface lies a dense, tangled mass of poverty, hardship and intense public and private indifference. Instead of addressing the crisis, we are in the process of creating permanent shortages in the housing market. Hence, what began as a housing crisis may soon be translated into an economic, political and social crisis of much more damaging proportions.