America's Trillion-Dollar Housing Mistake: The Failure of American Housing Policy

by Howard Husock

For more than seven decades, the American government has acted to provide housing for the poor. In America's Trillion-Dollar Housing Mistake , Howard Husock explains how, as with so many anti-poverty efforts, low-income housing programs have harmed those they were meant to help while causing grave collateral damage to cities and their citizens. Public housing projects, Mr. Husock writes, are only the best-known housing policy mistakes. His book explains how a long list of lesser-known efforts―including housing vouchers, community development corporations, the low-income housing tax credit, and the Community Reinvestment Act―are just as pernicious, working in concert to undermine sound neighborhoods and perpetuate a dependent underclass. He exposes the false premises underlying publicly subsidized housing, above all the belief that the private housing market inevitably fails the poor. Exploring the link between private housing markets and individual self-improvement, he shows how new and expensive public efforts are merely old wine in new bottles. Instead he argues for the deep but unappreciated importance to American society of economically diverse urban neighborhoods, and he demonstrates the historic and continuing importance of privately built "affordable" housing, from the brownstones of Brooklyn to the bungalows of Oakland and, in the present day, houses built through Habitat for Humanity. Bearing witness in the tradition of Jane Jacobs, Mr. Husock describes and laments the deadening effects of public and subsidized housing on the economies and vitality of American cities.

Genres: Urban Studies

256 pages, Hardcover

First published September 23, 2003

Reviews

[Kaethe]

Buildings interest me. I have no idea how this title came to my attention in the first place, but when pruning back my TBR list I decided to make an effort to read a copy after 10 or 15 or whatever years.

Did not make it through the introduction. "Everyone knows" is the start of the second sentence. Husock is pretending that what "everyone knows" is so obviously correct that proof is unnecessary. If you're trying to make a case that the US public housing efforts of the past 80 years are ALL wrong, I'm going to need some actual data, not some cocksure assertions.

Apparently the market can provide housing just fine. Plus, isn't Habitat cool?*

So even though it's a tiny little text, unhindered by references, and, presumably any actual evidence, I do not have time for any bootstraps bullshit.

*The market hasn't kept pace with population and although Habitat has some good points, they aren't solving the problem

[Frank Stein · Rating 4 out of 5]

This book is a fascinating attack on America's government-subsidized low-income housing industry, which by Husock's calculations has cost the country almost a trillion dollars over the past fifty years, and has done much positive harm to American cities and the American underclass.

Everyone knows about the nightmare that typical public housing became during the post-war period, but Husock goes beyond that to examine other, less acknowledged policies. Husock interviews working class minorities who vigorously protest the movement of new Section 8 housing voucher tenants into their neighborhood, and the consequent crime and disruption they bring to previously stable neighborhoods (some of which are up to 25% Section 8 tenant inhabited now). He also discovers the outrageous overpayments by HUD's Section 8 section to landlords (their rental prices are geared towards the "Fair Market Value" of a metro area, and so are often wildly inflated for the poor areas Section 8 tenants move too). Husock also shows that the much touted HOPE VI program costs up to 300,000 for a small row house that the private sector builds for a third of that, and that the celebrated mixture of tenants causes the upper-income housing in these development to lose up to half their value (in one Chicago development almost 400,000 of lost value per apartment). This robs cities of both the property taxes they need and the well-off residents they want to attract who can improve the economy of the region.

Husock also shows how the new 1995 regulations for the Community Reinvestment Act (which changed vague subjective assessments to numerical quotas on lending) encouraged zero-down payment lending to under-qualified borrowers. The new regs also allowed negative comments from "community groups" to influence a bank's CRA rating, which meant that these groups could now shake-down the banks for billions of dollars for shady enterprises that often enriched "non-profit" owners but bankrupted investors. ACORN shook down Bank of New York for a $760 million "donation" towards its coffers. New Jersey Citizens Action got $13 billion from First Union. The Boston Neighborhood Assistance Corporation of America, the biggest player in this game, got $3 billion dollars in "donations" just from Bank of America when it wanted to merge with Nationsbank. Its leader, Brian Mark, explicitly calls himself a "bank terrorist," (or at least he did before 9/11), and advertises how low-income people sent to his non-profit developments have to pledge to assist the organization in five "actions" or "mobilizations" against banks annually. This is worse than plain government subsidies, it is stealing from private banks to give to political organizers to further increase their own political power base.

Husock also attacks the claims of "Community Development Corporations" (CDCs) to be independent and private. It is a complicated pyramid scheme but he unravels it. He shows that much of CDCs investment comes from the Low-Income Housing Tax Credit (dating to 1986) where the state allocates tax credits to CDCs to sell, often to banks who buy them mainly to get improved CRA ratings. (Following?) CDCs then raise money through state housing finance agency low-interest loans, and then they rely on government Section 8 housing grants to pay back these loans with the government-guaranteed rents. It's a perfect circle of government funds, with the supposed community involved at no point whatsoever. These groups advertise that they are run by community volunteers, but even their maintenance and administration is generally contracted out to large property management corporations. The CDCs simply pocket a "general contractors fee." Again, a plain simple way to shovel government funds at government-favored groups.

All of this ranges from shady to straight corrupt, and Husock isn't shy about showing it. Luckily its not all critiques. He shows how Charlotte's time-limited public housing program with counseling has helped single parents move on with their lives, and how Habitat for Humanity has build a genuine low-income volunteer system that doesn't rely on government handouts. Overall the book could have been better sourced and organized, but his stories are compelling and convincing.

This book was written long before the present housing crisis, but it shows how our government shoveled billions of wasted dollars at bad investments for shady political reasons. It's not the only explanation for our present crisis, but its one piece of the puzzle.

[Michael Connolly · Rating 3 out of 5]

The most interesting chapter was the one on Habitat for Humanity. They select only families of good moral character. Also, the people own rather than rent, so they are motivated to keep the property in good condition. This is a much better solution than the urban housing projects.