What do we want future Seattle to be? If we want our city to be welcoming, diverse, creative, affordable, and with a local economy that builds well-being for everyone, then how do we get there?
Our assessment of the problem in parts one, two, and three deserves more data analysis and rigorous testing by public agencies before a clear picture of the best solutions can emerge. Until we understand better how these three intertwined factors––a growing debt bubble, rapacious global capital, and Wall Street predators––are preying upon our tech growth to escalate our housing prices, we won’t be able to aim our solutions effectively. We’ve all been caught off guard, and this is happening so fast. We need to analyze the dynamics more precisely.
It is worth pausing, though, to touch back on how we let ourselves get blindsided by these changing dynamics in the first place. Our first blind spot is our belief––as a society, and as a government––that housing is a product the free market will provide to all except the very poor. This framework keeps the affordability debate in a constrained arena of land use and zoning policy, and housing production dependent on pleasing the profit-driven real estate industry. It also makes us view funding for public housing as charity for the disadvantaged instead of an effective investment to balance an economy.
Second is the insistence within neoliberalism that money is only an exchange medium, with no effect of its own. When you see folks nodding along with “The housing crisis is of course only a question of supply and demand,” that is the core misconception right there. This statement leaves us blind to the huge impacts of excess capital invading a local market and also ignores the most obvious fact of all: money is stored wealth, and wealth is a form of social power. Money is not neutral.
The notion that the housing market is a natural system that must be left alone to magically find its own balance is bullshit, and we can plainly see plain IT IS FAILING. Believing no one should manage the market leaves it vulnerable to the predatory capture by those with more money than the rest of us: Wall Street, elite investors, and global hot money. They are colonizing our housing and real estate for their own purposes, unrelated to the needs of Seattleites. Expecting the “market” to solve a problem the “market” is causing seems naïve; look at Vancouver’s insane median home price of $1.3 million to see where that path might lead. This approach leaves the rest of us desperately bailing water against a rising tide.
While we need to do everything we can right now to build more housing for folks who want to live here, how do we do that without feeding the cost-escalation frenzy? How do we distinguish between healthy local demand from predatory demand that primarily want to extract our rents or inflate home values or park money? How do we provide enough housing for the growing number of us who make minimum wage, and the growing number who are already rent-burdened? How do we keep housing accessible to millennials and the people of color still excluded due to racialized wealth inequality? How do we add more affordable housing quickly without cannibalizing the affordable housing we already have? How do we slowly deflate a local bubble without a full-on housing market crash, which would destroy lives and livelihoods?
We need muscular solutions that confront the macro causes. A rich toolkit of approaches can address different facets of the problem concurrently. Some of the solutions we need are in motion already, but just need a massive influx of political will and funding to scale up. Others are new. In Seattle, we have tremendous combined power when we decide confront a challenge like this. If we work in union, and rally our considerable resources toward a common goal, there is nothing we can’t accomplish.
1) Increase the funding for and production of public housing ten-fold, and quick. Taming the escalation of privately owned housing is going to be hard in the short term, but providing an alternative is something we know how to do. If we had 10 times the amount of public housing, it would do two fundamental and powerful things. First, it would provide housing to many more folks in our community. Second, its lower and controlled rents would limit rent escalation in the private sector rental market.
Many of the world’s great cities don’t have an affordability crisis. If you look at why, the stand-out reason is that they consider housing as a human right.
Germany offers the most compelling vision of what we could achieve and how. Their approach is fascinating because it’s so foreign to what we know as normal, while in other ways their economy feels similar to ours. Matt Phillips writes: “Economists think German housing policy struck a much better balance between government involvement and private investment than in many other countries.”
This article, with the BEST title––“In the world’s best run economy home prices keep falling because that’s what home prices are supposed to do”––makes clear that a government can keep housing costs stable and affordable if it wants to.
Vienna and Singapore also offer pictures of what is achievable when a city prioritizes investing in housing for people. In Vienna, 60% of people live in social housing, and in Singapore 82%. And these are capitalist societies. The approaches are quite different, and neither offers a perfect match for our immediate challenge, but they together show how having a strong proportion of housing in public ownership can keep the overall housing market affordable.
Shareable: “Vienna’s public housing program modulates the private housing market. Because so much of the city’s total housing stock is city-owned or subsidized, private landlords compete with social housing for the same tenants, and cannot afford to inflate rents. At the same time, the fact that a majority of the population lives in municipal or subsidized housing means that the social stigma attached to public housing in the United States does not apply.”
Why haven’t we pursued this sensible approach in America? This excellent story explains how our country abandoned public housing as a broad strategy not because it didn’t work, but because lots of private interests lined up against it. We never gave it a chance in the US; the private real estate industry has long fought to prevent, defund, or severely limit successful programs with smear campaigns and political power. “The story of American public housing is one of quiet successes drowned out by loud failures,” says historian Ed Goetz.
What if we had been investing in expanding social housing for decades? What if our government, right now, started prioritizing social investment in housing over pumping money into the banking industry? Seeing the successes in other places shows it’s a totally solvable problem in a capitalist society––IF we decide government should provide housing for residents the same way we decided it should provide us clean water and safe roads and affordable electricity.
Maybe this is our transformative moment to make that shift in Seattle. Given that millennials seem to have much less interest in home-ownership (perhaps because so few of them have the financial wherewithal to buy), given that young people are getting crushed by rent-gouging landlords, maybe our cultural stigma against public housing is evaporating already? What lefty Seattleite can sleep at night, knowing the indifference with which our system is preying upon the young and financially vulnerable? What if we took up the challenge to build thousands of attractive public apartments targeted for young people? Maybe the zeitgeist is already here.
The heroes at Seattle’s Community Housing Caucus laid out dozens of ideas on how to expand and speed the provision of public housing. Their excellent proposals are here in this treasure trove of constructive solutions. THIS should be the blueprint for our city’s work plan.
Their report shows the programs we need already exist, the funding mechanisms are set up, and skilled leadership is ready to go. What we need is to coalesce the political will to fund this work. There is some good news on that front: King County just freed up their bonding capacity to be used for non-profit housing projects, Yay! We voted YES last week on increasing Seattle’s Housing Levy, Yay! We need to keep going on this path, with a lot more urgency. Let’s reexamine every parcel of public land for its housing potential, since land cost is one of the biggest obstacles for housing providers. Let’s remove the bureaucratic barriers that prevent smaller infill projects. Let’s especially identify the best additional funding sources ––for instance a capital gains tax, high earners income tax, and increased Real Estate Excise Tax for luxury homes. Let’s enlist the help of our family foundations and philanthropists to triple their funding for non-profit affordable housing. Let’s throw everything we have at building and buying housing to keep in public or non-profit ownership, before we displace any more of our neighbors.
2) Assemble more robust data about these new dynamics, and start convening with other global hot-money cities to identify viable solutions. We need to shine the klieg lights on corporate and foreign activity in our housing market to get a much clearer picture of what is happening here. What commercial entities are buying homes? Who are owners of the shell companies and LLCs? How much affordable housing have we lost to upgrades or teardowns? What properties are occupied vs. left empty? What neighborhoods are hardest hit by displacement? Transparency can help identify the nastiest players. The City of Seattle and King County should be tracking all this data, watching changes in real time. This will help us understand what specific factors are at play in Seattle, and orient us toward the tools that prove viable to reduce demand and safely reverse speculative price escalation. London and Vancouver and Miami and New York and Sydney, let’s talk. What solutions are you pursuing?
3) Put up immediate defenses against the influx of Wall Street and global capital. The excess capital idling in our global economy operates with the efficiency of heat-seeking missiles when it finds a target, and our hot housing market is just sitting here vulnerable and defenseless. What can our city and county government do right now to deflect their interest and protect our housing stock? How about instituting an owner occupancy requirement? How about requiring all shell companies to fully disclose ownership? How about inventorying all our affordable housing and demanding a one-for one replacement in any proposed redevelopment (something that should have happened with Hope 6, a Federally funded program which demolished big chunks of our public housing stock without replacing a lot of it, and thereby displacing thousands of families, most of whom were black)? How about instituting a policy––and building a civic culture––of selling to human Seattleites who need a place to live as a first priority? (The stories of people already doing this––selling their home to a human family for $100k less than the competing offer from the anonymous shell company––are heart-warming.) What can we do with tax policy to make real estate less attractive for non-occupants? We need to make our region appear undesirable and even unstable to these rapacious predators.
4) Expand tenants rights against displacement and eviction. Getting uprooted, especially for those of us already hanging on by a thread, is beyond traumatic. Tenants are already organized and fighting for stronger protections, so let’s all support their efforts. If you’re not a member yet, join the tenants union and help strengthen their political muscle. Rental regulations that secure stronger rights for tenants are crucial, and we need powerful advocacy pushing back against the big money that has too much sway in this debate already.
5) Expand the tools that increase local ownership, especially collective ownership at the lower cost tiers. The more housing stock that local folks own, the broader the base of ownership, the more money stays in local circulation, the better. That may sound obvious, but it’s worth saying, given the growing number of rentals where our rent checks are extracted from our local economy, flushed away forever into the coffers of Wall Street hedge funds or REITs. We need a diverse and broad base of home ownership, meaning more local people get the benefits of financial security and more of the returns on investment are re-circulated locally.
More backyard cottages would be great path to increasing locally operated rental housing. These apartments spread throughout residential neighborhoods are a constructive part of the solution, but we need to remove a few obstacles, like parking restrictions. Mike O’Brien has figured out a good balanced policy. See here for a discussion of the issues.
Co-ops and community land trusts are two excellent models that offer an alternative path for homeownership. Co-ops are ownership structures that provide collective and democratic ownership of multi-family projects, offering residents housing stability and permanent affordability. Coophousing.org explains how it all works. We need more incentives, more technical assistance, and more bridge loans to get more of these going.
Similarly, with a community land trust, land is purchased and held by a non-profit trust that can co-develop and operate housing as a long-term renewable lease. The price of the housing exists independently of the rising cost of land, so housing prices are lower and far less volatile. Either arrangement means the housing is priced outside the private market, largely protected from cost escalation, and can remain affordable permanently.
Funding community land trusts that buy urban land for non-profit housing and facilitating development of––or conversions to––more co-op housing are both excellent fits for our region’s generous philanthropists and family foundations who want to help.
6) Vote for candidates who understand macroeconomics. It’s a tragedy of our time that we have nearly abandoned the creative art of managing our economy to work in the public interest. Even good progressives can become so overwhelmed by prevalent neoliberal ideology and so constrained by the strait jacket of our self-imposed austerity it can feel like we are reduced to begging for bandaids at a time when we should be leading the revolution. We can all see the rules guiding the economy have been written to benefit banks and the already wealthy, at the expense of everyone else. We have to rewrite the rules so the economy works for everyone, not just the 1%. The meteoric rise of Bernie Sanders’ candidacy and ongoing appeal of his platform mean we are hungry for leaders who know how to do this NOW.
For market economics to work, whether at the local or the national level, the wealth a society creates has to stay in active local circulation. We need bold leaders with courage who can rein in Wall Street, and know how to redirect the mighty power of the Federal Reserve to stop inflating a private debt bubble, and can fill the coffers of housing development funds, and can make public tuition free again, and can remove some of the debt burden weighing down so many of us, and can level the playing field for small business, and can organize investment in infrastructure, and can establish 21st century capital controls and industrial policy, and can close off-shore tax havens, and will repair the injustice of centuries of racial wage theft and exclusion from wealth building, and can fix the tax code to limit hoarding and increase circulation. No more begging for scraps after the economic table is set, progressives! We need leaders ready to craft a new New Deal that builds broad prosperity, working at every level of government.
Want to continue to educate yourself and fully shake off the neoliberal fallacy we’ve been living in? Want to creatively explore what planks should be in the progressive economic platform? Here are some thinkers we should pay attention to, who offer an alternative future vision and map out how to rebuild an economy that works toward the well-being of everyone:
Ann Pettifor wrote the book Just Moneyand is active on Twitter. @AnnPettifor
Dean Baker of the Center for Economic and Policy Research; wrote The End of Loser Liberalism, explaining how we progressives can stop ceding the terrain of economics to the right. @DeanBaker13
The New Economic Foundation; a UK think-tank promoting a more inclusive, just, and sustainable economy. They explain our perverted housing market better than anyone.
Thomas Piketty wrote the masterwork Capital in the 21st Century, explaining how global capitalism works now and how screwed we will be until we institute policies that effectively rebalance the rate of return on investment with the rate of increase in wages.
Ha-Joon Chang is a rare economist who delights in explaining of all this stuff accessibly. To understand why neoliberalism is the wrong track and what other healthier macroeconomic alternatives might look like see especially 23 Things They Don’t Tell You About Capitalism.
Steve Keen, he talks really fast, but watch interviews with him; no one can explain how seriously scary the debt bubble is like he can. He’s also connected to Alan Harvey and the local Seattle project pushing for the reform of economics.
Joe Stiglitz and friends at The Roosevelt Institute. Their Rewrite the Rules project is the heart of the movement to build public will around a new economic vision and practical solutions.
The vision of housing for everyone in Seattle is in our sights. We understand the root causes of the problem, and why current approaches are not working. We can see plenty of warnings urging us not to delay action any further. We know that we need immediate action to keep young people, people of color and working families in our city. We have identified many possible tools that can help arrest the problem, and know the tools are within reach. The homelessness crisis is shaking everyone out of complacency; the unaffordable and cruel city we are becoming is not what anyone signed up for. Let’s pick up the tools, test which ones prove most effective, support the heroes already at work, and solve this challenge together.