Let’s get rid of private housing.
Plenty of time and effort have lately gone into analyzing a host of related crises—homelessness, unaffordable urban real estate, devastating gentrification, and a housing bubble whose burst landed us in the Great Recession. But the explanations tend to be incomplete, the attributions shortsighted, and the policies rearguard. For every liberal who insists that deregulating zoning laws will curb skyrocketing urban housing prices, there’s a conservative who blames the 1977 Community Reinvestment Act for the housing bubble, and none of them is anywhere near the mark.
The true culprit is so deeply embedded in American notions of wealth, rights, and property that we cannot see it for the terrible economy policy it is: private housing. Real estate as a store of private wealth is the rotten tree that sprouts these diseased branches, and the solution is to quit pruning twigs and chop the sucker down.
I’ll propose some models and policies that can do the trick, but first—what is private housing, exactly?
First off, it is mostly land. That is, real estate is the most valuable asset form in the United States, and the majority of that value is not that of the building itself, which depreciates until it requires renovation, but of the “unimproved” land it sits on—the location. Imagine a skyscraper filled with sumptuous luxury condominiums, located in the center of Antarctica: However many millions had gone into its cutting-edge furnishings, without a community (parks, transit options, schools, shops, etc.) around to situate it in a desirable location, that building would be worthless as a real-estate investment. These community resources are reflected in what is commonly called “land value,” but is more precisely the price of the location. Rather than flowing to the community that created it, however, it is captured by individual real-estate owners.
More fundamentally, though, what we call private housing is actually public land that government has set aside for private purposes. Land, save the bits beneath one’s feet, can’t be “possessed,” as a phone or a shirt can. What a “land owner” possesses is a deed—a voucher one may redeem with the government to marshal violence (through policing) to exclude all competing claimants. The government established this location-exclusion program, designating pieces of nature as being solely for the use of the deed holders, and devoting its violent capabilities to enforcing that designation. In the 19th century, the government enacted homesteading laws to allow frontier settlers to claim indigenous lands as their own. If those deeds were challenged, the federal government sent troops to back them up. Or look at the 20th century, when the government funded highways and commuter transit—the Federal Housing Administration extended loan guarantees to new housing developments in order to create a massive suburban private-housing stock. The entire apparatus by which housing is privately “owned” is created by the government’s decisions to subsidize or protect certain interests.