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http://www.earthrights.net/docs/housing.html
What Affordable Housing Problem?
By Walter Rybeck
To CGO Conference, Albuquerque, New Mexico, July 2004 Let me say emphatically that America has NO AFFORDABLE HOUSING PROBLEM. By the time I finish my talk, I hope this startling remark (to help you wake up this early in the morning) will not appear as ridiculous as it may seem to you at first glance. Squatters All Like all creatures -- goldfinches, squirrels, butterflies, cicadas -- we humans are squatters on this planet. We all need a part of earth for shelter, nourishment, a work site and a place to raise the next generation. Otherwise we perish. Villages in "primitive" societies accommodated everyone's need for a place to reside and live in dignity. Compare "civilized" society. Some people squat on thousand-acre ranches and at different places each season -- penthouses in Manhattan, the French Riviera, castles in Scotland. We heard Allen Ridley tell us a mere 40 families squat on 7 percent of New Mexico's land. While a select few squat in luxury, those at the bottom of the heap haven't a square inch of space to call their own. Carrying bags of everything they possess, the homeless squat on sidewalks, under bridges, in condemned buildings, and in public parks (unless police chase them away), often sitting ducks for predators. The bulk of Americans, meanwhile, are so well-housed that they barely see the homeless. They easily avoid looking across the Grand Canyon-sized chasm that exists between them and those suffering from literally no place to squat. Those few who cater to the homeless deserve society's inestimable praise and gratitude. There are three main categories of street people.
These issues spurred my research described in a 1988 report, "Affordable Housing -- A Missing Link." Evidence from the Census Bureau, Bureau of Labor Statistics and other sources over a 30-year period revealed the following average cost increases of items that go into the building and maintenance of housing:
The answers would be obvious except that, so far, I have not mentioned what happened to the price of the land that housing sits on. Many of those who talk and write about housing conveniently overlook the fact that housing does not exist in mid air but is attached to the land, and that the price of this land has gone through the stratosphere. In contrast to those 11- to 14-percent annual increases in housing-related costs, residential land values nationwide rose almost 80 percent a year, or almost 2000 percent over those three decades. To cite a few state examples, residential land prices in 30 years rose 1501 percent in Maryland, 1737 percent in Texas, 2806 percent in New Hampshire. [1]
[1] It's been suggested that this study of housing
and land prices be updated, but it would be almost
impossible to duplicate now. It relied in large part on
the data- rich Census of Government studies begun in the
1950s and continued every five years, showing taxable
property values of land and buildings nationwide and in
every state. The administration of President Reagan (his
funeral oratory might almost excuse one for calling him
Saint Reagan) killed this Census Bureau series. Reagan's
team also erased years of my own work under Congressman
Henry S. Reuss of Milwaukee to create a national land
price index. Certain landholding interests apparently
want to keep the public in the dark about the behavior of
land and housing markets. A close friend in Bethesda bought a house and lot there 40 years ago for $20,000. Two months ago he sold the property for a cool half million. That 2400 percent increase was entirely land value. The buyer immediately demolished the house to put up a larger one, so he clearly paid half a million for the location value -- the land value -- alone. Strange Signals from Housing 'Experts' Officials, civic leaders and commentators who bemoan the lack of affordable housing nevertheless applaud each rise in real estate values as a sign of prosperity. Seeing their own assets multiply through no effort of their own apparently makes them forget the teachers, firemen, police and low-income people who are boxed out of a place to squat in their cities and neighborhoods. A Question and an Answer How did America once have so many livable cities -- compact, easy walking, pleasant streetscapes and a housing mix for a wide range of income levels -- in short, like Albuquerque is trying to recreate in a central neighborhood? Did they have charrettes? Federal, state and local subsidies? Housing vouchers? Minimum low-income housing requirements? No. From the time of America's founding into the early 1900s, the federal government had almost no presence in cities. There were no income taxes or sales taxes. Guess what? States and localities in that dynamic era relied almost wholly on the property tax. This curbed extreme land speculation. Many of our Founding Fathers, George Washington included, had amassed huge estates. But the property tax induced them to sell off excess lands they were not using. When immigrants like my grandfather came here penniless, they could, after a few years' work, save enough to buy or rent space in a city -- even Manhattan -- for their own candy store, tailor shop and the like. Naturally and almost automatically, this easy access to affordable land spawned the kind of neighborhood variety that we learned Albuquerque is trying to recreate. Albuquerque would be well advised to reduce its taxes on income and sales, to get rid of New Mexico's onerous gross receipts tax, and shift to a tax that fosters progress -- a tax on location values. To get big results and get them fast, the city might be tempted to do this quickly. But attempting a rapid change from the present regressive system could arouse such opposition that it would never fly. One of the many virtues of a tax on land values is that it can be introduced gradually. Cities that take this incremental approach report that homeowners-voters-taxpayers hardly notice the change. What's important in modernizing your taxation is not the speed of change but the direction you choose. If you keep the present tax system with its disincentives for compact and wholesome growth, you will experience the treadmill effect that has been so familiar in so-called urban and housing "solutions." You will have to keep running faster and faster with patchwork remedies to keep from sliding backward. A caution. Revising taxes as proposed here will not end the need for housing subsidies, at least not in the short run, but it will do three things that should greatly reduce subsidies.
Thank you.
The author, Founder-Director of the Center for Public
Dialogue, was formerly Washington Bureau Chief of Cox
Newspapers; Assistant Director, National Commission on
Urban Problems; Editorial Director, the Urban Institute,
a D.C. think tank; and special assistant on urban affairs
to two Congressmen, Rep. Henry S. Reuss of Milwaukee and
Rep. William J. Coyne of Pittsburgh.
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