AHI: United States » Affordable Housing Innovations

Shifting economies, shifting tenures, and preservation

David Smith — Sat, 15 Jan 2005 20:35:27 +0000

A home is both a physical space and a tenure configuration. The former is very hard to change, the latter sometimes surprisingly easy, as apartments can be sold off as condominiums:

Another [Boston-area] developer plans to capitalize on a hot condo market by selling off its rental apartments to home buyers.

Of course, the same box built as condo’s can instead be forced to operate as rental:

When the building opened in the late 1980s, the plan was to sell its units as condos, but a local economic downturn killed that plan, so the original developer rented out the condos it couldn’t sell, said Michael Girard, an Apartment Realty broker.

All of this is driven by a combination of …

… demography and market economics:

Meanwhile, the rental market has also been hurt by a local economy creating new jobs at a slow pace. That narrows the pool of renters. One result is developers converting rental apartments into condos.

and interest rates:

Low mortgage rates have made buying condos more affordable, fueling conversions of rental apartment buildings into condos. According to Freddie Mac, a large purchaser of mortgages, the average for a 30-year fixed-rate mortgage was 5.81 percent last week. At those levels, Restifo said, “It can be cheaper to own than to rent.”

Changing tenures does not eliminate homes from the supply – a box before is still a box after – but housing has huge impacts on labor mobility:

Recent European data indicate that countries where a large proportion of the population lives in owner-occupied housing are experiencing higher unemployment rates than countries where the majority of people live in private rental housing, which might suggest that rental housing enhances labor mobility.

Housing diversity also influences labor flexibility, and household formation and expansion:

A tighter regional housing market and higher unemployment rates strongly reduced the probability of setting up home with a partner and slowed departure from the parental home.

A robust housing ecosystem with healthy communities thus has:

Multiple physical configurations
Multiple tenure options
Diversity of configuration and tenure within neighborhoods and metropolitan areas

As a result, among the valid public-policy reasons for new affordable housing production is specifically to create configuration and tenure diversity and options within a large and ever-changing evolutionary complex system. That’s an even stronger argument for preserving existing affordable housing.

A home is both a physical space and a tenure configuration. The former is very hard to change, the latter sometimes surprisingly easy, as apartments can be sold off as condominiums:

Another [Boston-area] developer plans to capitalize on a hot condo market by selling off its rental apartments to home buyers.

Of course, the same box built as condo’s can instead be forced to operate as rental:

All of this is driven by a combination of …

… demography and market economics:

and interest rates:

Changing tenures does not eliminate homes from the supply – a box before is still a box after – but housing has huge impacts on labor mobility:

Housing diversity also influences labor flexibility, and household formation and expansion:

A tighter regional housing market and higher unemployment rates strongly reduced the probability of setting up home with a partner and slowed departure from the parental home.

A robust housing ecosystem with healthy communities thus has:

Multiple physical configurations
Multiple tenure options
Diversity of configuration and tenure within neighborhoods and metropolitan areas

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When does public property become a private good?

David Smith — Wed, 05 Jan 2005 15:00:05 +0000

You might think that a public street is a public way, but what if its abutters maintain it? Even in an ostensibly civilized environment — Boston, the Hub of the Universe — tempers flare to the point of blows and vandalism when it comes to that most precious of commodities, a shoveled-out parking space. For those of you unfamiliar with Boston, it snows heavily here, and parking spaces are at a premium–they add $20,000 to $50,000 (or more!) to the price of a house. Since many folks park on the street, when it snows, to recover access to your car, you shovel, and if you shovel, you feel you ‘own’ the space:

“People who shovel themselves out have a moral right to that spot. They have invested their sweat equity.”

and you mark that with a trash barrel, a sawhorse, or a folding chair:

Beginning with a nor’easter that struck the day after Christmas, dumping up to a foot of powder, parking-strapped residents followed a decades-old practice in shoveling spaces in front of their homes and reserving them with barrels, lawn chairs, orange construction cones and even a toilet.

Once you own the territory, you fight to defend it, against other parkers:

“I know of only two incidents over a 10-year period where someone’s car was vandalized,” he said. “I condemn and deplore that type of behavior, but most people don’t go out and slash tires. They may go get a shovel and bury that car under as much snow as they can surround it with.”

(With all due respect to City Councillor Jimmy Kelly, I had more than two incidents during the few years I had to park my car on these mean streets.) And you defend your space even more fiercely against the city:

“We have more cones and barrels than the city has trucks to haul them away,” said longtime City Council member and South Boston resident James M. Kelly, invoking the language of insurrection to draw a line in the snow.

This little parable has, of course, obvious parallels in affordable housing and economic development. Human beings are primates; we mark our territory with scent glands, excretia, fences, and walls. And for us to care about territory, we have to feel we ‘own’ it. As Hernando de Soto has shown, the transformation from squatting to homesteading takes time:

The same was true of the United States in 1783, when President George Washington complained about “banditti … skimming and disposing of the cream of the country at the expense of the many.” These “banditti” were squatters and small illegal entrepreneurs occupying lands they did not own. For the next one hundred years, such squatters battled for legal rights to their land and miners warred over their claims because ownership laws differed from town to town and camp to camp. Enforcing property rights created such a quagmire of social unrest and antagonism throughout the young United States that the Chief Justice of the Supreme Court, Joseph Story, wondered in 1820 whether lawyers would ever be able to settle them. Do squatters, bandits, and flagrant disregard of the law sound familiar? Americans and Europeans have been telling the other countries of the world, “You have to be more like us.” In fact, they are very much like the United States of a century ago when it too was a Third World country.