Social Housing of Europe as a Solution for Publicly Funded Housing Affordability in the US

Social Housing of Europe as a Solution for Publicly Funded Housing Affordability in the United States

Emily Fitzsimmons University of Oklahoma RCPL 5033: Sociology of Housing Dr. C. Aujean Lee December 15, 2021

1 Introduction Housing unaffordability is nothing new, but it is worsening substantially in the United States as costs rise while wages remain stagnantly low. In the past, the US government has used project-based public housing to address the lack of housing, but this was an incredible failure due to systemic racism, lack of funds, terrible design, and poor management. Since then, the US has relied on subsidizing housing through Section 8 Housing Choice Vouchers and incentives for developers, but these come with their own problems, namely the lack of supply to meet the need for affordable housing. One possible solution to the affordable housing crisis in the US is to look to the long-used and proven strategy of publicly funded housing in Europe, which is known as social housing. Social housing consists largely of project-based publicly funded housing, like public housing in the US, but has been successful due to the higher standards of quality and quantity, more balanced public-private partnerships in ownership and management, and mixedincome complexes. Though there would be considerable political opposition to social housing in the US, it could still be possible if government officials emphasize the economic benefits social housing could have on a community in addition to the social benefits it would provide. The past and current methods of public housing simply do not work well and have left many disenfranchised, but the social housing strategy of Europe has been proven to work and could be a solution to publicly funded housing affordability in the US. Context As both income inequality and housing supply worsen, housing affordability in the United States continues to grow out of reach for many. Low-income renters, in particular, are encountering issues in finding and paying for housing: A minimum wage worker must work 79 hours each week – double the full-time 40-hour work week – in order afford the average one-

2 bedroom rental unit at market rate. Specifically accounting for spatial differences in cost, fulltime minimum wage employees can afford a one-bedroom rental unit at market rate in only 218 of the nation’s 3,006 counties (National, 2021). Part of this issue is that wages are too low, but another factor is the increase in rent. With most new housing construction consisting of luxury apartments and homeownership decreasing due to cost, the demand for affordable apartments is increasing, allowing landlords to inflate their prices. As of 2016, median rent for newly constructed rentals was $1,478, which is half the median renter’s income per month. Overall, almost half of renters spend 30% or more of their income on just rent, and over 25% spend 50% or more of their income on rent (Dreier, 2018).

Considering the significant effects that housing can have on a person’s mental and physical health, access to resources and opportunity, and ability to maintain or improve their socioeconomic status, housing is a human right. Therefore, it is the government’s responsibility to compensate for the market failure to provide quality, affordable housing. For many years now, the main methods of achieving this has been through Section 8 Housing Choice Vouchers and incentives to private developers. Section 8 Housing Choice vouchers area a good tool for housing affordability in that they can reduce concentration of poverty and provide low-income renters with more housing types and choices; however, among many issues of housing quality and discrimination, there is also a severe lack of vouchers and Section 8 housing supply for the high demand. For both Section 8 and traditional public housing, the waitlist is typically years long (“Public housing history,” 2019). According to the US Department of Housing and Urban Development (HUD), there are currently about 1.2 million households residing in public housing, all of which are managed by only 3,300 housing authorities (“Public housing,” 2019).

As a result, many people who need public housing are unable to get it, and those who do get it

3 often experience challenges in finding quality Section 8 housing as the overwhelmed housing authorities cut corners in approving landlords.

Before Section 8 Housing Choice vouchers, subsidized housing in the US largely consisted of project-based public housing, which is widely regarded as a major failure due to its use as a tool of segregation by race and income. Public housing in the US first began in the 1930s as part of the New Deal response to the Great Depression. The introduction of public housing was an important step for the US, especially for the time, as it did help house many people affected by the Great Depression. The foundational idea of public housing as social justice advocates presented it was to provide the basic human right of housing, particularly to those facing financial hardships; however, instead of using public housing as a tool for social equity as it was intended, the federal government used public housing as a tool for segregation, furthering social inequity for generations of people (“Public housing history,” 2019).

During the New Deal era, the federal government demolished low-income, racially integrated neighborhoods in order to build racially segregated public housing complexes. The public housing units for whites were built and maintained at a higher quality, had better services, and also allowed a wider range of incomes so that poverty was not as concentrated. By contrast, public housing for Black people was poorly designed, poorly built, and poorly maintained, and they were more severely income restricted so that poverty was hyper-concentrated.

Soon after, the post-WWII suburban boom occurred, drawing many of the middle-class white households living in public housing to extremely affordable single-family homes outside of the urban center. These homes were subsidized even more than public housing so that mortgages were easily accessible, down payments were nonexistent, and monthly payments were cheaper than the rent in public housing – for white households, that is. The federal government

4 maintained explicit segregationist policies disallowing insurance for mortgages for and property sale to Black households. Likewise, a large majority of these subdivisions had racially restrictive deeds that prohibited resale to households of color. As a result, the middle-class, white families moved out of public housing, getting access to better schools, services, and the opportunities to build wealth while low-income people of color were limited to public housing complexes that were increasingly losing funding and falling into severe disrepair (Rothstein, 2012). As of 1984, nearly all public housing complexes were still segregated by race in 47 major metropolitan areas in the US, and the complexes housing white families still had better amenities and were better maintained (“Public housing history,” 2019).

Over the decades, public housing has been largely phased out because of the purposeful failures of government to maintain quality, affordable housing for low-income people of color.

Now HUD focuses on non-project housing assistance programs, such as Section 8 Housing Choice Vouchers, homeownership plans, HOPE VI, Moving to Work Demonstration, Resident Opportunities and Self Sufficiency, and incentives to developers to provide units at below the market rate (Lewis, 2013; “Public housing programs,” n.d.). However, HUD largely relies on Section 8 housing vouchers, which do help deconcentrate poverty but fall short in many ways, including meeting housing needs, enforcing anti-discrimination laws, and even following the laws of Section 8 housing requirements. Coincidingly, many subsidized units that were constructed using incentives to developers have reached their required time for affordable pricing and are now being converted to market rate housing, decreasing the supply of affordable apartments (Dreier, 2018). Public housing was undoubtedly a failure and left unforgivable scars on communities of color; Section 8 Housing Vouchers and private incentives are an improvement but are also still problematic. Perhaps a solution to housing affordability can be

5 found internationally, where social equity and quality of life is higher: Specifically, I propose social housing as an alternative to public housing and a complement to Section 8 housing vouchers.

A Possible Solution Like many social policies, public housing in Europe, known as social housing, is very different than public housing in the US. The main difference between the two rest on income restrictions, housing quality, and property management. First, in the US, public housing was originally built and managed by the federal government but was eventually passed to local housing authorities that are too underfunded and unequipped to meet housing needs. By contrast, social housing is typically constructed on public land, after which the local government either hires a private company to manage the complex or sells it to a private company; either way, the complex is managed under strict government oversight. This maintains a more equal publicprivate balance compared to public housing management in the US, which relied entirely on the government, and housing affordability incentives to developers, which rely too heavily on the private sector to provide a basic human need (Schweitzer, 2020).

Similar to Section 8 Housing Choice vouchers and low-income housing incentives to developers, social housing emphasizes mixed-income housing as a way to deconcentrate poverty.

Like incentives to developers, social housing does this by reserving a portion of the building’s apartments for low-income renters; notably, however, social housing reserves about half the building’s units for low-income people, unlike affordable housing incentives in the US, which typically only requires that a very small percentage of the units be reserved for low-income renters. Because social housing is mixed-income, the renters paying market rate rent help subsidize their neighbors who need lower rents, and the landlords are able and more motivated to

6 maintain the complex to higher standards, which prevents the underfunded, low-quality public housing that has occurred in the US (Schweitzer, 2020). Mixed-income housing also promotes diversity, equity, and relationships between different groups as well as an overall more active space since there are many different people performing different roles and activities throughout the day.

Lastly, the quality of social housing is much higher than public housing due to stringent architectural and livability standards that the private company must meet both in order to meet government guidelines and to attract that mixed-income demographic. They are built well and in desirable areas with amenities and access to transit, schools, and other resources. Moreover, the government builds thousands of new units annually to ensure that supply meets the growing demand, so the rents remain steady as well (Schweitzer, 2020).

Barriers to Social Housing Shifting from public housing to social housing in the US would meet several major barriers, namely upfront expenses on the government and taxpayers, the strong anti-socialist culture, and a heavy reliance of the US economy on housing and homeownership (Reisenbichler, 2016; Schweitzer, 2020). Construction and land acquisition of any kind is expensive; building high-quality social housing with access to amenities will incur a high cost on public funds, which will, in turn, result in a rise in taxes. The overall political US climate is deeply against raising taxes and even more against anything labeled socialist; these two points of opposition will make shifting to social housing very difficult for government officials. Moreover, there will be considerable opposition to funneling resources away from homeownership to renting as the US economy is heavily dependent on housing and homeownership (Reisenbichler, 2016). The real estate and banking industries would summon considerable resources and lobbyists to prevent

7 publicly funded housing that would make renting more affordable and attractive for a range of income types.

To overcome these challenges, I would suggest emphasizing the economic benefits that building social housing could have on a community, including external cash flows from construction, jobs for local residents, and the private development that would move in due to the public investment in the area. Although the social benefits are the main goal of social housing, people in the US tend to focus more on economic growth rather than social sustainability, so framing social housing in a more fiscal view could help overcome opposition. Once there have been some successful cases of social housing in the US, it should become easier to divert funds to more social housing without having to focus on the economic perspective as much.

Conclusion To summarize, it is the government’s duty to ensure that people have their basic human rights so that they can live healthy, full lives, and this should include quality, affordable housing.

The past and current systems of publicly funded housing in the US have not only failed to meet the need but also left damaging scars on families and communities. The US needs a new strategy, especially as income and housing inequality continue to worsen; one possible solution is social housing, which has been the strategy for publicly funded housing in Europe for about a century.

Unlike public housing of the US, social housing in Europe has proven to be so successful, that in some cities, the majority of people live in government-subsidized housing (Dreier, 2018). Social housing is successful because the public-private partnerships involved are more balanced, housing complexes are mixed-income, and both quality and quantity are prioritized. Shifting from public housing to social housing in the US would require overcoming considerable political opposition, especially since it is a socialist idea; however, focusing on the economic benefits of

8 social housing could help it happen, providing the growing low- and middle-income classes with the quality, affordable housing they deserve.

9 References Dreier, P. (2018, April 16). “Why American needs more social housing.” The American Prospect. Retrieved Dec. 1, 2021, from https://prospect.org/infrastructure/america-needssocial-housing/.

Lewis, R. (2013, May 3). “Let’s go from ‘public housing’ to ‘social housing’.” The Washington Post. Retrieved Dec. 1, 2021, from https://www.washingtonpost.com/realestate/lets-gofrom-public-housing-to-social-housing/2013/05/02/2f96427e-b1a7-11e2-baf75bc2a9dc6f44_story.html.

National Low Income Housing Coalition. (2021). Out of reach: The high cost of housing.

Washington, DC., National Low Income Housing Coalition. Retrieved Dec. 1, 2021, from https://reports.nlihc.org/oor.

“Public housing.” (n.d). US Department of Housing and Urban Development. Retrieved Dec. 1, 2021, from https://www.hud.gov/program_offices/public_indian_housing/programs/ph.

“Public housing history.” (2019, Oct. 17). National Low Income Housing Coalition. Retrieved Dec. 1, 2021, from https://nlihc.org/resource/public-housing-history.

“Public housing programs.” (n.d). US Department of Housing and Urban Development.

Retrieved Dec. 1, 2021, from https://www.hud.gov/program_offices/public_indian_housing/programs/ph/programs.

Reisenbichler, A. (2016). A rocky path to homeownership: Why Germany eliminated large-scale subsidies for homeowners. Cityscape: A Journal of Policy Development and Research, 3(18), 283-290. https://www.jstor.org/stable/26328288.

Rothstein, R. (2012, Oct. 11). “Public housing: Government-sponsored segregation.” The American Prospect. Retrieved Dec. 1, 2021, from https://prospect.org/article/public-

10 housing-government-sponsored-segregation/.

Schweitzer, A. (2020, Feb. 25). “How European-style public housing could solve the affordability crisis.” NPR. Retrieved Dec 1, 2021, from https://www.npr.org/local/305/2020/02/25/809315455/how-european-style-publichousing-could-help-solve-the-affordability-crisis.