Housing prices in California are outrageous and have been for decades. One of the reasons our region has been growing so fast is that people are being priced out of housing in Los Angeles and Orange counties, and all that does is cause traffic to balloon and puts a strain on our infrastructure. This has led to increasing calls for rent control. I can understand this desire, and am not unopposed in principle, but favor a few other options being tried first, especially as rent control has in the past led to unintended negative consequences for working families. The rent is too damned high, though, and if it cannot be made more affordable in other ways, then our hand may be forced.
First off, we should work actively to raise wages. This means not only the minimum wage, but some policy-based incentives for companies to raise salaries of workers overall. Housing prices have risen much faster than inflation or wage-growth rates, and if we start pushing to get wages more in line with actual productivity levels, even expensive housing will be more affordable.
But prices would still remain high, and we should find methods to push that down. One way to do so is to ensure that units are not left vacant. This could also help with the homelessness issue, in fact. I would like to see a debate on the idea of a tax or fine levied on units left vacant, especially in tight housing markets. As to rent control overall, I think the state has proven less than adept at managing such things, but so have the markets – some compromise should be explored.
In addition, we should investigate ways to encourage home ownership, as we used to do in past decades. One good way to pursue that is with a non-profit lender, as with some Postal Banking arguments. If home loans are easier to get for those with past credit problems or records, we can put more homes into the hands of people, allowing them to build equity and increase their net worth. These are conversations that need to happen, as trusting in the markets to solve the problem has led to steadily-falling home ownership rates, ever rising rents as a proportion of income, and a far-too-high homeless population.
I am also keen to see a housing guarantee put in place. Land is often the most expensive part of building a new house, so the federal government could use existing public lands or acquire new ones, then contract to have homes built on that land. It should not run such homes, as public housing has a poor reputation overall, but rather sell such homes directly, without profit, to the poor. They would own the house, but not the land beneath it, making it a more affordable starter home. Having accumulated sufficient equity, the owner could sell the home to someone else and buy a new one. And in the meantime, the existence of such cheaper homes could have a beneficial impact on pricing for lower-income housing.
As to homelessness itself, at present too many regions force people to solve all their problems whilst still being homeless, and the evidence is overwhelming and clear that this is bad psychology and bad policy. Not only do people have an easier time getting back on their feet if housed first – 80% of individuals thus treated swiftly return to being self-sufficient and productive members of society – but the policy is actually cheaper, and would save the taxpayer money. We spend more money treating the homelessness issue than we would if we simply gave apartments to the homeless! That makes it not only a more ethical position, but one that is more fiscally sound.
Photo courtesy U.S. Air Force