Encourage Affordability By Attacking Gentrification

If you want to take a difficult discussion and make it an impossible one, add affordable housing aspirations to the topic of land use planning. Short of Soviet-style price controls or saintly benevolence, there are no good ways to guarantee housing prices that enough people would consider affordable.

Helping citizens with education, retraining and employment opportunities to make more money has a better track record, but there too there are no guaranteed outcomes.

For decades, local governments piled affordable housing units into specific locations. Those neighborhoods quickly became unattractive and eventually uninhabitable. Housing remained affordable for the simple reason that nobody wanted to live there.

New York City lately has required skyscraper developers to add affordable units, but the mentality of “keep poor people away from us” continued. All the subsidized unit residents were given separate entrances — the “poor door.” Management barred them from using most of the buildings’ amenities.

If you let the free market do the work by making bare land cheaper, land speculators will swoop in. They calculate the gap between what the land costs today and what it’ll be worth tomorrow. Before long, competition bids up the price of land to where it was before government intervened.

Should we throw up our hands and give up the fight? Not quite.

Affordable housing is certainly a worthy goal. Recent academic work has shown that America’s widening wealth gap is being driven by a homeownership gap. Raising minimum wages helps a little. Controlling rent increases can help some too. But what makes a large and lasting difference is getting people into homes they own.

Once they step onto the equity escalator, their wealth can grow even if their salaries do not. Getting that first mortgage is the hardest.

Affordability, in a free-market economy, is like the personal virtue of humility. If you aim for it, you’ll miss it every time. It emerges only after you’ve wrestled with other issues.

Fortunately, affordable housing has an evil twin. It’s called gentrification. It drives residents out of neighborhoods they no longer can afford. The free market has gotten very good at promoting UN-affordable housing.

How can city planners combat gentrification? This is a wonderfully complex and intriguing question. If you grant (only some will) that market forces are always rational (a.k.a. “efficient”), then the question becomes: “How do you boost irrationality?”

We know that if one or two homeowners simply refuse to sell, the area grows differently. It becomes richer — socially, if not always economically. The diversity of incomes makes it a more interesting place.

What makes somebody simply refuse to sell, no matter what the price? It’s usually a mix of civic and family pride. How can we fuel that irrationality?

(Pride itself is thoroughly irrational, but we don’t need to go there right now.)

Here’s my suggestion. Heterogeneity is difficult to measure on the input end, so it’s difficult to manage. The surest path to an anti-gentrification program is a variety of housing sizes. Put a few 200-square-foot apartments above the garages of a few $400K houses and, bingo, you have diversity.

Portland is waiving system development charges for auxiliary dwelling units for the next year or two. A gentler approach is to scale SDCs and property taxes to the square footage. They’re hoping to encourage tiny houses, alley units, in-law apartments and other alternatives — but not too many of them. Neighborhoods rightfully want to protect their character.

Bend has an inventive approach. They are trying to combat a a different sort of blight. They may deny a rental license if another has already been granted within a 250-foot radius of the home. They hope to prevent vacationers from overrunning entire neighborhoods.

We can learn from our neighboring cities.

We will continue to give people reasons to love living here. Home values will appreciate. The equity gained from that first house — even if it’s only a few hundred square feet — can subsidize the next house.

Once residents step onto the equity escalator, the uphill climb toward prosperity and economic security becomes less arduous.

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Don Kahle (fridays@dksez.com) writes a column each Friday for The Register-Guard and blogs