On June 11 the 21st Century ROAD to Housing Act passed without Donald Trump’s signature after clearing the House (390 to 9) and Senate (89 to 10) with wide bipartisan support, according to CNN. The bill seeks to increase the housing supply in the U.S. by offering a mix of provisions that aim to increase housing supply and homeownership. While federal reforms are necessary, they cannot actually solve the housing shortage in Madison, Wisconsin or anywhere else in the U.S.
The largest reason the bill will not, in fact, solve the housing crisis is because construction and zoning is always a local affair between residents, local government and developers. This web of relations relies on the cooperation between all parties to allow new construction of housing, which is too often waylaid by homeowners and residents obstructing development that would benefit all residents of Madison.
Boogeymen private equity companies like BlackRock, which famously leverages the housing crisis to deliver profits to investors, are often cited for driving up housing costs. However, this is simply not possible at the national scale, given that there are around 150 million housing units in the U.S., according to the St. Louis Federal Reserve. Their strategy is a result, not a cause, of the current housing crisis, much to the aggrievement of people looking for an easy scapegoat for larger problems that plague housing.
Other scapegoats, like developers, the threat of gentrification and the conspiracy that landlords are intentionally keeping apartments vacant to drive up prices are simply not main causes of high housing prices. Studies have shown that redevelopment of neighborhoods with mixed-income housing become more affordable than they were previously. Landlords simply cannot afford to keep units vacant, as they do not have enough control of the market to inflate prices on their own. Regardless, the actual vacancy rate in Madison is only 4.8%, according to the City of Madison. In a healthy market, this rate is supposed to be between 5 and 7%, and we have moved closer to that number. As the percentage of vacancies increase, renters gain leverage because of the loss of revenue that a landlord faces with empty apartments.
Gentrification is a deeply misunderstood and often definitionally confused term, used to levy charges of racism toward developers and incoming residents. The misconception: when neighborhoods create housing catered toward higher incomes, lower income residents will be displaced as their neighborhood no longer caters to their housing needs. This is exactly backward. Gentrification, under the definition of displacement of lower income residents by higher income residents, occurs when housing stock is low, not increasing. Studies show that new housing being built lowers local rents and decreases evictions and involuntary displacements of lower income residents, according to Harvard and The Eviction Lab.
In Madison, criticism toward luxury apartments asserts that these do not help drive down housing costs and are instead occupied by previously non-residents to the city. Research from the VATT Institute for Economic Research shows this is not the case, as most of this housing supply is occupied by higher-income residents and opens up middle and low-income housing supplies for residents, helping to reduce overall housing costs.
Housing is not just an issue of affordability. It is a climate, welfare and safety issue for refugees from Republican dominated states. Cities have far lower emissions per capita than the surrounding suburbs and exurbs and will be key to mitigating future harm done to the climate, according to the University of California-Berkeley. Homelessness is intrinsically linked to housing affordability and to increases in mental illness, drug use and death according to Pew Research and the CDC. Individuals and families are fleeing from persecution by red states to blue states and cities, according to Advocate. If we want to live our values, we must create a place for them in our cities and states.
To actually lower housing costs in Madison, the most impactful measure would be lowering barriers to construction, regardless of the type of housing. Ideally, infilling Madison with denser housing options like duplexes, apartments and mixed-income housing options would be the best option to attack high housing prices and provide a mix of housing options for residents.
To accomplish this, local opposition must be overcome. Too often, homeowners and local residents believe that their right to high home equity gives them the right to prevent new construction. This is a flat lie. The only thing that provides the homes with equity is the collective spending of tax monies at the local, state and national level, that provide all the services, from roads and parks, regulations around sewage treatment and the very existence of property rights.
For homeowners, the increase in housing prices has sent home equity soaring. Homeowners have leveraged this power to handcuff local governments and clog public forums to prevent new housing construction in their neighborhoods, and further drive up the values of their homes.
With Madison in a critical shortage of housing, it is crucial to focus on the tried-and-true strategy of increasing the housing supply, to both lower prices and provide residents with adequate housing. Concerns that seek to depress new housing construction are not often coming from those who would stand to benefit the most from solving the housing crisis, or marginalized voices, but from those who are already benefiting from the housing crisis and stand to gain even more from its continuation.
