Public housing needs to make a comeback - in the US and Canada

May 22, 2023

It’s no surprise that the debate about how to solve the housing crisis has become one of the most contentious issues in city halls, state legislatures, and on your Twitter timeline. Thanks to rising mortgage interest rates, persistently high rents, and inadequate housing availability, finding an affordable home is harder than it’s been in decades.

Much of the recent debate has focused on reducing barriers to housing construction through a process called upzoning, or allowing developers to build more and more densely. Upzoning, for example, could allow homeowners to add rental cottages behind their houses or allow developers to construct midrise apartment buildings near transit where previously only single-family homes were allowed. Some on the left, once reflexively skeptical of developers, are now agitating to lift regulations on them. Others remain highly skeptical.

Consider the dimensions of the current discourse around housing. As homeowners fight off new housing construction in the name of protecting the aesthetics of their neighborhoods and their property values—which, it so happens, upholds long-standing race and class exclusion—the path forward for renters has become the subject of bitter dispute. The YIMBY camp, for “Yes In My Back Yard,” generally argues that upzoning will unleash constrained supply to meet backlogged demand, lowering prices. Other anti-YIMBY groupings contend that upzoning is a stalking horse for gentrification, and that unleashing market forces will only result in more housing for the wealthy and displacement for the poor. This is a simplification of the debate, as there are at least a dozen, if not more, sides to it.

Research generally shows that upzonings, particularly large ones, eventually result in additional housing and reduced rent growth. But the typical effects of upzoning are rather modest, especially in the short term. Because upzonings mostly rely on the private sector to get housing built, even in the most development-friendly locales, like Houston, developers don’t always build enough. In particular, developers overlook homes that are affordable for the low-income people who need it the most; these are less likely to be profitable. And in the absence of rent control, many renters won’t be able to afford private-market units—no matter how many of them are built.

In other words, the case for upzoning is relatively solid but deeply underwhelming as a standalone position. The upshot is that everyone is at least partly right: Upzoning can address the shortfall in supply. But it won’t come close to solving the housing crisis alone. Re-enter: public housing.

Generally thought of as only for the very poor, government-funded and publicly owned housing—sometimes called social housing—would guarantee affordable housing for people across income ranges by adding to the national housing supply and offering new opportunities for vibrant, mixed-income neighborhoods.

State and local governments can take on this task by building millions of homes themselves, particularly for poor and working class people, that private developers won’t construct. These public and social housing projects can ensure permanent affordability, support mixed-income neighborhoods, and bring new assets onto public balance sheets.

The federal government created the public housing program during the New Deal, using federal funding to stand up local housing authorities, inspired in part by a campaign from organized labor and progressive housing experts to create high-quality homes for broad swaths of the population. In many ways, this program was successful, ultimately housing 1.4 million families. Today, people often spend as long as a decade on waiting lists for units—evidence that public housing remains highly in demand.

But, wanting to prevent competition with the private sector, policymakers imposed income restrictions, which forced many tenants out of their units if they achieved higher wages and left public housing with a narrow and politically vulnerable population base. The federal government, having restricted public housing to just the poorest of the poor, eventually cut off funding for new projects altogether in the 1970s. Local authorities often didn’t have the resources to keep housing in good condition—and many projects became unfit for human habitation. Ultimately, the federal government presided over the demolition of hundreds of thousands of units.

Since then, we haven’t stopped investing in new subsidized housing; the federal government devotes billions of dollars to the Low Income Housing Tax Credit, which supports more than 100,000 units of new and renovated affordable housing each year. But relying on tax credits has major disadvantages—private investors must take up credits, which is complicated and expensive; the government has failed to keep the program accountable as construction costs have risen; and subsidies are inadequate to make a large number of units affordable for families with low incomes.

As a result, organizers and policymakers are advocating for new investments in mixed-income, public housing—social housing—that can serve everyone who wants or needs it. Those proposals are beginning to take shape as actual housing policy that can be implemented hand-in-hand with upzonings designed to attract more market-rate development (best complemented with rent control). YIMBY, meet PHIMBY: Public housing in my backyard.

This new generation of public housing departs from earlier investments in several ways. First, it would largely be funded at the state and local level. Second, the housing is intended not just for the very poor, but rather for a wide swath of residents, which could compliment public subsidy to finance more construction.

Vienna and even Singapore offer long-standing models for social housing, with the majority of each country’s population in comfortable, high-quality, public, cooperative, or otherwise subsidized homes. After decades of retrenchment, cities like London and countries like Spain and Portugal are reinvesting in publicly owned homes as well.

Some domestic models have begun to reappear too. In Montgomery County, Maryland, the Housing Opportunities Commission quietly initiated a program to build mixed-income public housing that uses a cross-subsidy financing system: the market rents paid by more affluent tenants to subsidize affordable units in the same building. In Seattle, voters approved a ballot initiative to create a social-housing authority. A majority of city council members in Washington, D.C. have proposed doing much the same. Legislation is currently under consideration to develop public or social housing in Hawaii, Maryland, Massachusetts, California, and New York City.

One brilliant thing about pursuing a new generation of social housing at the local and state levels is that it provides an alternative to federal funding for public housing, which has been declining for years. Indeed, thanks to the federal Faircloth Amendment, passed in 1998, local public housing authorities are prohibited from using federal dollars to expand their stock of traditional public housing. Ultimately, we need better federal policy and significant subsidies to build out a new public housing system at scale. But we don’t need to wait on a gridlocked federal government to take action.

States and localities will no doubt confront their own revenue shortfalls as the economy cools. The Montgomery County financing model is one solution that comes at very little cost to public coffers. But to achieve the affordability we need in terms of both depth (serving the very poorest) and breadth (the percentage of subsidized units in a development), additional public subsidy will be needed.

The good news is that subsidizing public housing is one of the best possible uses of scarce government dollars during a downturn. By generating jobs in construction, public housing development acts as a countercyclical stimulus measure, boosting employment in a critical sector with significant multiplier effects across the entire economy. Reducing the share of income that poor and working-class people pay to rent does the same, putting cash in the pockets of the people most likely to spend it. We already spend far more subsidizing wealthy homeowners through the mortgage interest tax deduction than we do funding affordable housing; we have an opportunity to flip the script.

What’s more, housing is responsible for roughly a fifth of all energy-related emissions in the United States: the public sector can take the lead in decarbonizing the sector by building zero-emissions homes.

One of us, Daniel, is a co-chair of Reclaim Rhode Island, a local tenant organizing and housing justice group. The organization is working to get the first state-level contemporary public housing developer passed into law by the time Rhode Island’s legislative session ends in June. House Speaker Joseph Shekarchi, a moderate, is also a self-described pragmatist: he has praised mixed-income public housing as “an ‘out of the box’ idea that I believe needs to be pursued further.” What was for decades unthinkable may soon become inevitable—at least it must if we are to solve this crisis.

The housing crisis is not just an economic and social crisis but also a crisis of ideas. Much of the population find themselves shut out of homeownership and struggling to find affordable rentals. The American dream of homeownership, the bulwark of economic security, has slipped out of reach even for many in the middle class. It has become plainly obvious that the old model of housing isn’t working; with public housing, an old idea needs to be treated as new again

[Top photo: The Wohnpark Neue Donau housing project in Vienna, Austria. Niiice. © C.Stadler/Bwag]