Final Comments on the Wheeler Conference on Affordable Housing – "Misconceptions and Corrections"

On May 17-18, in Missoula, the Burton K. Wheeler Center for Public Policy at Montana State University http://www.montana.edu/wheeler held a conference on affordable housing. It brought home to me the fact that I had been laboring under six misconceptions. My guess is that I was not alone.

First misconception, that the issue of affordable housing is not very important. After all, more people than ever, somewhere on the order of 70%, own their own homes. It is not really an issue for the middle class generally, perhaps the main reason why it is given very little political priority. What I failed to realize is the magnitude of the problem. More than one in four American households spends more than 30% of its income (the usual definition of “affordability”) on housing and the gap between what people earn and what they can afford, as renters or owners, is growing rapidly, nowhere more than in Montana. Our state has the largest percentage of so-called “manufactured housing” in the country. Turning my back on all of this, I was an important part of the problem.

Second misconception, that the issue of affordable housing is basically one of social justice and therefore (on my conception of American democracy) basically a responsibility of the federal government. The federal government continues to play far and away the most significant role. In fact, our recent state budget expends no money for affordable housing. But what I have come to see is that this is an economic development issue as well, or rather, that in many cases social justice and economic development cannot be separated very sharply. Those who own their homes, who can afford to stay some time in a particular community, who can raise children in settled circumstances, are much less likely to turn to crime or drugs or other forms of abuse. This is to say, of course, that the affordability question has as much to do with the income level as it does with the housing cost, and that the Montana problem in particular has more to do with low incomes than it does with expensive homes.

Third misconception, that “affordable housing” is just a euphemism for “low income housing” (which is what it used to be called). The problem as I saw it earlier had to do with the barriers of poverty and race, income and access. There is no doubt that the problem is particularly acute at the lower end of the scale. As George Masnick of the Harvard Joint Center for Housing Studies pointed out, extremely low-income renters (who earn 35% of the median household income or less) spend 60% of their income on housing (which leaves $500/month for everything else). But there is also a middle-class affordability gap in Montana (where precise figures are difficult to come by) between median household incomes and median house prices of around $25,000, substantially more in our cities.

Fourth misconception, that Montana is typical of what’s happening nationally, and that there is not anything special about what is happening here, or with respect to which we can take local action. It often turns out that the problems the Wheeler Center takes up, methamphetamine addiction or energy policy, for example, are national in character. But there are two specifically Montana dimensions of the housing problem. One has already been noted: since incomes are generally lower here than elsewhere, the affordability “gap” is relatively greater. The other dimension is more striking, and has to do with what might be called the “Montana paradox.” The reason many, if not all, people come here is for the particular amenities Montana has to offer, among them the sense of freedom and open space, and yet the preservation of that freedom and space requires land-use regulation, and land-use regulation tends to drive up the price of land, and hence the price of homes. In an increasingly service-based economy such as ours, where wages are generally low, the gap between means and ends grows larger, and a new form of discrimination, on the basis of income and not race, is established. People want to “escape” from urban environments, and move away from dense neighborhoods, only to discover that it comes with a price.

Fifth misconception, that the problem of affordable housing is a housing problem. But it is much more than that, not simply an income/cost problem, but an educational, transportational, and infrastructural problem. Typically, the farther one is away from a large town, where most of the jobs are, the cheaper the housing is, but the greater the transportation costs. There is a bind. Moreover, development is possible only where adequate infrastructure exists, and adequate infrastructure exists only because (in most cases) government can provide it, and government can provide it only if it has the funds, and it has the funds only if it taxes the development that infrastructure makes possible. If there’s not a paradox here, at least there’s the appearance of a vicious circle. This is not to say that the circle can’t be broken, only that all of the pieces of the affordable housing puzzle must be assembled at roughly the same time.

Sixth and final misconception, that the problem of affordable housing has “a solution.” In many cases, those who participate in Wheeler Center discussions divide into “liberals” and “conservatives.” On this occasion, they divided into “pessimists” and “optimists.” It was discouraging that the most deeply knowledgeable people about the national aspects of the problem were pessimistic about its solution. At the same time, there were many signs of progress. Bill Tietz, former President of Montana State University and now Chair of the Wheeler Center Board, used to talk about “death by a thousand cuts.” It is more awkward, but perhaps in this situation we can talk about “life with a thousand band-aids.” I’m impressed by what is being done at a local level. If the affordable housing problem is to be “solved,” then it will be one community at a time. There seem to be at least two ingredients necessary for local solutions. One is a wide-ranging public-private partnership, not simply in a “feel good,” “let’s all cooperate” sort of way, but because the different public and private sectors have, as already noted, different things which they can and must contribute. The other ingredient is some consensus in the community on what it wants for itself, what it is willing to pay for, how much authority it is willing to give local housing authorities, the degree to which it wants to be segregated by income levels or displace trailer parks.

Dr. Gordon Brittan

Executive Director, Burton K. Wheeler Center for Public Policy

Montana State University

http://www.montana.edu/wheeler

May 18, 2007