- Subsidizing market prices to make housing affordable in the US is a losing strategy. We can look to a better way in Vienna, on display for over a century.
- The quest to provide “affordable housing” in the US is crippled by one fundamental reality– too much housing in the market sector and too little in the social sector permanently protected from rising prices.
- Thanks to enlightened planning since the 20’s, Vienna has managed to provide affordable urban housing without triggering either gentrification or suburban sprawl.
“This article appears in the Spring 2018 issue of The American Prospect magazine. Subscribe here.
The quest to provide what has come to be called “affordable housing” in America is hobbled by one fundamental reality. Too much housing is in the market sector and too little is in a social sector permanently protected from rising prices. The result is that supply and demand relentlessly bids up market prices. Government is required to provide deeper and deeper subsidies to keep rents within the bounds of incomes, so fewer and fewer people get any kind of help. This is true whether the form of public subsidy is tax breaks, direct subsidies, vouchers, or deals with developers to set aside some percent of units as affordable. In most cities, the median rent far exceeds what median incomes can afford. In cities with hot housing markets, homeownership is even further beyond reach for those who do not already own homes, exacerbating competition for scarce apartments.
The idea of having a permanent sector of social housing, protected in perpetuity from market pressures, has a bad reputation in the United States, in part because of misleading stereotypes about public housing. But other forms of social housing are being depleted as well, including middle-income projects built with tax breaks, such as Stuyvesant Town and Peter Cooper Village in Manhattan, which were sold to the highest bidder and converted to market housing; and government-subsidized buildings from the 1960s through the 1980s, built under federal housing programs but allowed to be converted to market-rate apartments once their original mortgages were paid off or the 20-year subsidy contract expired…”
See full story here.