A recent article, “Why The Housing Crisis Is A Problem For Everyone — Even Wealthy Homeowners” does a very good job of explaining why high urban housing prices are a problem for everyone. But it suffers from a problem in that it treats our housing problems as a one crisis when it’s at least three crises, plural.
One housing crisis, and the one that gets the least attention, exists in those places where housing prices are too low, but I’m not going to discuss that here. The second housing crisis afflicts low income people including the homeless, and that problem is that low-income people don’t have enough money to afford any housing unless it is really low price: as my Uncle Harry used to say, “Rich or poor, it’s always good to have money”, and they just don’t have enough money. The third crisis is that people are paying too much for housing. This isn’t an existential crisis–they can afford to pay for housing, but they are spending money on rent when it could be spent elsewhere more productively (this is rent extraction in the economics sense). It affects people from the low-middle stratum through upper-middle (though not gentry class). Obviously, Uncle Harry’s dictum applies here too–it’s better to be upper-middle than lower-middle, and the boundaries between lower-income and lower-middle are fuzzy, but the key point is that this isn’t an immediate existential crisis, such as choosing between food and rent.
It’s worth breaking apart problems two and three because they require different strategies. For low-income people, they need some kind of subsidy, whether it be public housing or rent supplements (e.g., Section 8). Building more housing (unless it’s subsidized public housing) won’t solve their problems, especially in a short time frame. Again, they can’t really afford to pay for housing–it’s a cash flow problem, not a supply problem. For the broad middle, the problem is housing is too expensive. This can be solved by public housing*, though in the U.S. context, we typically don’t believe in public housing for the middle-class–public housing is based in ‘pity politics.’* This is where building more privately-funded housing would help. Additional housing would lower prices, or at least, slow the increase of prices by adding more supply–and, as the linked article notes, that makes urban life more affordable for the middle class.
One problem with the politics of housing is that people who want to solve one of the housing problems often aren’t interested in the other problem, and so housing advocates are talking past each other (e.g., NIMBY DSA members, which, believe it or not, is a thing). Advocates of the poor don’t see increased private development as solving their problems–and to the extent that private development drives out lower income people, it worsens them. Meanwhile, those who want to lower prices for the broad middle–and there’s nothing wrong with policies that help the middle class–realize that public housing won’t help most of the households they’re concerned about.
It’s almost like an alliance or something would be useful.
*If I were El Supremo, I would have mixed public housing. Roughly a third would be for low-income. Around ten percent would be for government employees (including uniformed services), and the rest would be open to the public. If you want an integrated society, then you have to integrate housing at the microscale. Critically, people who aren’t low-income would be paying below-market rate rents–yes, we are giving middle class people (and even the wealthy too! Come on down, Jarvanka!) incentives to live in these communities. It would be better than the current structure of subsidies, including the mortgage interest deduction, which subsidize segregation by income and race.