Affordable Housing: Time for Some Real Solutions - Reclaiming the Commons

Mike Lewis's picture

It’s a sad case. In Vancouver a 50-foot lot on the west side with a single family home was only $1.2 million a year ago. Today it is $1.65 million. For the somewhat less pricey average two story Vancouver home, it would take 94% of the average families household income.

As for apartments, a small, 2-bedroom downtown went from $542,000 to $610,000, less than half the average house but still completely unaffordable for an average income family. Since the 1970s, real household incomes increased by 9% while the price of a condo has gone up 280%.

And the debate roars about what to do about it. Reduce red tape at city hall! Get rid of excessive charges on developers! Get government out of the way and let the market do its magic; there is not enough supply and too much demand.

The discussion is dominated by tinkering, much of it shaped by the interests of developers in maximizing profits and minimizing risks. For instance, one developer recently warned the city of Vancouver not to make any public land available on a low cost basis because it would be unfair to private developers.

I am not “expert” in housing but I know enough to know that fundamental issues are missing from the discussion. That is because I have been exposed to solutions that are creating significant stocks of permanently affordable housing.

Key to both is what I call an “ownership” solution. In many, if not most settings, the private property system is failing to deliver affordable housing. And I am not just talking about developers here. Many of us are implicated. Owning a house is a good investment, a way to make money well beyond recovering the price and a modest return on capital. There is some juicy potential for pocketing a bundle. The problem is that all that unearned profit pocketed on every sale puts the price of housing increasingly out of reach for us modest wage earners.

The route to reform highlighted here is two-fold: first, remove land from the market and put it under the ownership of a community land trust (CLT); and second, ensure owner-occupied housing on this land has a resale formula built into it to ensure equity gains are limited and affordability preserved.

It works. The article “Affordability Locked In” explains how the CLT model is delivering bottom line returns to households, to communities, and to taxpayers in the U.S. That is why an increasing number of municipal governments there are making CLTs a centrepiece of their affordable housing strategy.

The CLT is also the basis for the Mutual Home Ownership Society (MHOS), a new model now being pioneered in England and Wales. MHOS combines the CLT reform with tenant co-operative ownership of the building. A lease geared to income is fair while still providing members with some modest equity return. Find out more about that in a second article, “The Best of Three Worlds.”

It’s all part of the radical reuniting of the “I and the We” which Pat Conaty and I call for in our book The Resilience Imperative (New Society Publishers, 2012). Prepare to be excited by how, after 40 years of work, this “ownership” solution is taking off the America and the U.K., including some major, high-cost urban areas.

Here are some more out-of-the-box approaches to housing affordability:

  • Kirklees, UK: An area-based approach to energy efficiency, housing affordability, and jobs: How a city in Yorkshire has integrated an array of tools – credit, advice, incentives, rebates – to deliver savings to vast numbers of low- and middle-income households.
  • The Co-operative Land Bank: Another way to reduce the deadweight of land values on the development of affordable housing is for organizations or authorities to acquire land and reserve it for that purpose or other purposes.
  • The Housing Treadmill: By examining and questioning our invisible assumptions about housing we can design living arrangements that make our living less expensive financially and much richer socially and culturally.

If we can SEE the world just a wee bit differently (Socially, Ecologically, and Economically), new solutions can be forged. When markets are excluding more and more people, it is up to us to shape markets to ensure meet basic human needs are met and community well-being advanced. Shame on us is we fail to take up economically viable solutions that clearly demonstrate permanent affordability if both possible and practical.