The phrase “housing shortage” is gaining traction in America’s political discourse. As it does, leftists have devised plans that they say will alleviate the “crisis.” Unsurprisingly, all these schemes feature a massive increase in the government’s role in this vital area of daily life.
An Affordable American Dream?
The goal of homeownership for all has a long history. Indeed, many of the earliest English settlers came to North America to own the land they farmed. Homeownership is one reason why Americans have resisted radical Marxist ideas.
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Currently, there is a shortage of “affordable” housing in the United States. Although an exact number is impossible to calculate, a recent study by the Pew Charitable Trust estimates it at four to seven million housing units.
However, the term “affordable” is problematic because it can mean so many things to different people. Indeed, how this shortage manifests itself depends mainly on an individual’s or a family’s specific situation.
A Problem Affecting All Ages and Classes
The issue may be recent, but the problem is timeless. Young people leaving the parental nest always needed to find a place to live. A familiar pattern developed. They rented cheap apartments or small houses and saved up a down payment for a real house. For generations, that plan worked.
Today, however, inexpensive rentals are scarce. Indeed, Pew’s figures indicate that “half of renters [are] spending 30% or more of their income on rent.”
The problem is not exclusive to the young. Couples starting families find few homes in their price range. Established families wanting to relocate can get good prices for their old homes but must pay far more to find a new place. Those needing “assisted living” face astronomical costs to live in apartments that offer those services.
This is not a simple problem. However, liberals think they can solve it. Their tools are familiar—government money and socialist ideas.
California’s Plan
California’s housing prices are the highest in the nation. According to Forbes, its median home price is $787,000.
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The state’s legislature passed a plan it dubbed “Dream for All.” Governor Newsom just vetoed the bill because it was insufficiently funded, but its logic illustrates the leftist perspective well.
This plan would have loaned twenty percent of a home’s price (up to $150,000) to purchasers. The loan would be interest-free. It would be paid back to the state when the new owners sell the house. At that point, the state would also receive twenty percent of the house’s increased value.
Much controversy surrounded the program because its benefits would be available to “undocumented persons” as well as the legal population. However, that issue is the tip of the iceberg.
“Solutions” that Solve Nothing
California’s plan had several problems. First, it would have aggravated the housing shortage. Thousands of people who don’t have the money to consider purchasing a home would join the already-too-large pool of homebuyers.
Second, the plan would inflate home prices, making a bad situation even worse.
Third, such a program would cost the state billions of dollars. According to the Hoover Institution, California has nearly six million rent-paying households. If even half of that number (three million) tried to take advantage of this plan at an average of $100,000 each, the total cost would be $300 billion.
Meanwhile, in the State of Washington
The State of Washington adds injustice to government overreach. It calls the plan the “Covenant Homeownership Program.” Seattle television station KOMO reported that “Eligibility requirements stipulate applicants must be at or below 100% of the local median income and fit into one of several minority groups, including Black, Hispanic or Native American.”
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The “Washington State Covenant Homeownership Program Study” by the National Fair Housing Alliance and three other organizations explains the title.
“The term ‘covenant,’ in the context of the Act, refers to the racially restrictive clauses inserted into property deeds and used in neighborhoods throughout Washington to exclude people from purchasing homes based on their race, ethnicity, or religion.” According to the organizations, the Act “represents a new commitment to correct this injustice and others, including the promotion of segregation, the use of exclusionary zoning practices, redlining, lending discrimination, and the lack of adequate state regulation and oversight to prevent discrimination.”
Adding insult to injury, the program will be funded by a new $100 recording fee applied to all real estate transactions. Fundamentally, this is a “reparations” program designed to benefit its privileged groups at the expense of everyone else.
Local radio host Jason Rantz summed up the program’s likely effect. “It is a classic example of the misguided, feel-good policies that perpetuate division rather than solve the problems they claim to address. Indeed, this is nothing more than a racist home loans program.”
Expensive and Doomed to Fail
Not to be outdone, Senator Elizabeth Warren of Massachusetts proposed a nationwide program. The “American Housing and Economic Mobility Act of 2024” would use a total of $547.5 billion to “build nearly three million new housing units.” This massive expenditure, the bill claims, would bring down rents by ten percent.
Of course, the bill includes increased taxes. “To offset the cost of this historic effort, the bill returns the estate tax thresholds to their levels at the end of the Bush Administration and sets more progressive rates above those thresholds.”
History refutes liberal hopes. The American Enterprise Institute (AEI) notes, “From the thirties to 2008, Congress passed, and the President signed into law, no fewer than 43 housing, urban renewal, and community development programs. Despite the promises of each, these initiatives have consistently fallen short of making housing affordable.”
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AEI’s report specifically mentioned two examples. Both should be seared into the national memory.
Urban Renewal and the Affordable Housing Mandates
“Urban renewal” had its beginnings in President Harry Truman’s Housing Act of 1949. The idea was relatively simple. Localities could use federal funds to purchase and demolish “blighted” neighborhoods. The government would then turn over the newly cleared land to private developers who would construct low-rent housing units.
The program failed miserably. Vibrant neighborhoods were often replaced by ugly modern high-rise “public housing.” The buildings’ corridors quickly became havens of crime, with residents as virtual prisoners. Quickly, “the projects” came to be seen as a last resort for those without other options.1
The “affordable housing mandate” was part of President Bill Clinton’s “Putting People First” agenda. Regulators pressured banks to make “subprime” mortgage loans to buyers whose ability to repay the loans was questionable. The second Bush Administration continued the policy.
Over time, the influx of new buyers forced home prices up, even though general inflation rates were low. Rising prices fed speculation, which drove them up even faster. According to US Policy Metrics, “By 2008, roughly half of all outstanding mortgages in America were high-risk loans.” Then, the “housing bubble” burst, triggering the massive economic disaster of 2008-2009, labeled by some financial journalists as the Great Recession.
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By now, it should be painfully evident that government intervention in the housing market is counter-productive. However, for dedicated leftists, fixing the obvious problem is far less important than gaining power and promoting their agenda. In their minds, private property is a public disgrace. By turning housing into a “right” provided by the government, the radicals want to repeat their success in the healthcare debate.
They must not be allowed to win this battle.
Photo Credit: © Marcin Rogozinski – stock.adobe.com