Affordable Housing Institute : US

January was an intellectually busy month:

 

Happy villagers anticipating AHI blogs

 

Housing-related new analysis.  I offered a gloomy prediction about France (Riots that bloom in the spring), some possibilities of the building of New New Orleans (Hope on the bayou?, Moving on, moving out? and a February postscript, Economic gangrene setting in?), plus an all-too-common developing world tragedy (Nairobi’s building codes).  Meanwhile, having tweaked Fannie Mae in December, I had to tweak its most implacable and evidence-resistant critic, the Wall Street Journal, in GSE’s: with enemies like these:

 

The Journal’s editorial board reacts to AHI

 

I concluded with an exhortation to enact directive regulatory legislation:

 

The GSEs should be focused on pushing down the affordability boundary, both in homeownership and in rental.  Every time the remaining market proves capable of handling an income band, the GSEs should vacate the space and go lower.

 

Along the way, I distinguished between Laminar and turbulent legislative environments, characterized the current one, and used that to observe the relative effectiveness of various democratic institutions around the globe, including this comment:

 

Viscosity is tied to complacency.  When legislators are complacent, they are cautious.  Political courage is born of political desperation, which is why catastrophe is a fundamental precondition of reform.

 

So much for the ‘negotiated compromise’

 

Housing markets, home prices, and workforce housing.  The US housing ecosystem continues to offer fascinating tidbits both of market movements short-term (Recession’s canary?) and long-term (House prices, the long view), a dismally inescapable economic equilibrium (Minimum-wage people can never afford market housing), and what happens when prices rise and bottom-end stock is removed from supply: No room of one’s own: homelessness in America, with this observation:

 

In America, homelessness is predominantly an urban phenomenon.  Even though there are more poor people in rural areas, few of them are homeless, because land is cheaper, building costs are lower, and rural areas are much more tolerant of ’substandard’ homes.  Self-built housing is a proud tradition in rural America, as anyone knows who drives the old US highways in preference to the interstates.

 

In urban areas, without that substandard supply, the cost to create new very-low-income housing is staggering [and homelessness results].

 

Primers and background.  I started an occasional but soon-to-be-lengthy series on real estate taxes, whose incentives and economics are remarkably poorly appreciated by those who pay those taxes: Real estate taxes: basic budget algebra, and Real estate taxes: the states of play, including this observation:

 

The key insight here is that aggregate real estate tax rates are set simply to cover the locality’s budget.  There is no ‘fair,’ ‘equitable,’ or ‘normal’ real estate tax rate.  It all depends on two things:

 

·         How much the locality wishes to spend

·         How much local voters are willing to tolerate as their individual tax burdens.

 

A’s for affordable, B is for bank, C is for condo,

 

Housing program design and administration.  Having, in December, considered two disparate cases of policy enforcement (NFL football and Terrell Owens, Enforcement most sublime: Part 1, Part 2, and Part 3, do’s and don’ts; and the World Bank and Chad, Enforcement: the Chad pipeline, Part 1 and Part 2), I connected the dots into a synthesis highly relevant to affordable housing program design: Pay Before Performance: the enforcement conundrum, including the ‘clawback hostage problem’:

 

In Pay-Before-Performance cases, it takes exceptional care to avoid having toothless clawback provisions.  The World Bank has no such remedy available to it.

 

The clawback hostage problem.  If capital seeks to recapture (or, in Anglo-speak, claw back) its funds, it faces the problem that reclaiming the money normally hurts not the malefactor but the beneficiaries. 

 

I connected this up to the four kinds of money, and showed which are more and which less vulnerable to this abuse.

 

Step right up and fund a developer

 

Urban policy and land use.  After positing a strong connection between love of greenfield and housing unaffordability (Petrifying greenfield), I spent some considerable time reviewing Bob Bruegmann’s insightful and compelling Sprawl: A compact history, in a pair of two-part posts: Sprawl: everything you know is wrong, Part 1 and Part 2, and Sprawl and cities, Part 1 and Part 2. 

 

Look under ’sprawl’ in the dictionary and you’ll find an AHI blog post J

 

I also snickered from the sidelines at real estate brokerage’s monopoly defense (Brokerage’s baby bang), unearthed the real reason some folks in New York City prefer co-ops to condos (Living clubs), and had my 15 minutes of fame: the DAS interview. 

 

Previous months in review may be found here: Month in review: December 2005.

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