by Edward J. Dodson, Cherry Hill, NJ
Among activists involved in anti-poverty
initiatives, there is a deep commitment to expanding
opportunities for home ownership as a primary path to
individual wealth building. The statistics tell the tale:
the amount of equity (i.e., the difference between what one
owes to mortgage lenders and market value) in a residential
property represents the majority of net worth enjoyed by
most households in the United States. While the percentage
of households who have reserves invested in corporate
stocks, in corporate and government debt, or in money
market funds is relatively high, only a very small
percentage are able to live off the cash flows and "capital
gains" generated by such investments. The great majority
of people depend on wages to meet ongoing expenses and
save far too little to sustain a similar lifestyle during
their retirement years. A growing percentage of people
will not be able to retire because of their financial
circumstances.
Furthermore, households who are renters
tend to have the lowest net worth - even when they have
incomes comparable to others who are home owners.
In the United States, far more people categorized
as members of a "minority group" are renters than the
population of citizens of European heritage. Conventional
wisdom is that prejudice and discrimination are the primary
reasons why this situation exists. While a continuing
factor, a more important fact is that people who have
arrived in the United States with little or no financial
resources or marketable skills are trying to compete in a
dysfunctional market that (as Henry George observed) has a
wedge driven between those already in the game and those
trying to get onto the playing field. Although Americans
of African heritage have lived here for generations,
institutional and cultural discrimination has imposed
enormous obstacles in their path as well.
For a very long time, many neighborhoods in the
nation's large cities experienced rapid conversions from
being primarily owner-occupied to absentee ownership. The
process began in the 1950s in conjunction with the
construction of our highway system, the movement of large
employers to suburban locations, and the conversion of
farmland and open space into housing subdivisions. Older
homes in the cities began to suffer from deferred
maintenance, rapid turnover of ownership from one absentee
owner to another in pursuit of tax sheltered investments
and the greatly reduced purchasing power of lower income
minorities concentrated in these older neighborhoods. The
long battle against urban blight resulted.
Beginning in the late 1970s, many neighborhoods
characterized by unique or historic housing began to
attract young, "urban pioneers" who found suburban living
not to their liking. Gradually, higher income households
returned to these city neighborhoods. They were able to
invest (or borrow) the large sums required to renovate and
return to single-family use properties that a half century
or more ago were acquired by absentee owners and divided
into numerous apartments. Lower income working families -
first those who were renters - were forced to relocate
from these neighborhoods. An increasing number of the poor
have become even more marginalized. If they are very
fortunate, they are able to purchase new housing the
construction of which is heavily subsidized by government
and foundation grants. If they are less fortunate, they
compete with other marginalized families for access to
available subsidized rental housing or market rate rental
housing. As the housing and community investment
professional views the situation, the appropriate public
policy response is to make home ownership a viable option
for all but the lowest income households.
One of the most important lessons the planning
establishment has learned is that large-scale,
high-density, high-rise publicly-owned housing creates more
problems than it solves. Decent, affordable housing is an
essential component of any initiative to help people "pull
themselves up out of poverty," but is only one of many. The
objective must be to create and strengthen the idea of
community as a place where people can live, work and play
in relative safety and with access to public and private
amenities.
After many decades of disinterest on the part of
the nation's financial institutions (resulting in few
investments), there is a resurgence of new construction of
housing and other types of development in neighborhoods
previously written off as unworthy of investment. Much of
this activity has come about because of
public/private/philanthropic partnerships and a remarkable
process of community-based organization. Despite these
efforts, however, the number of housing units lost to
physical deterioration and abandonment is far greater than
the number being renovated or constructed. The combined
efforts of all the players, of all the subsidies, of all
the grant programs, of all the "sweat equity" initiatives,
falls far short of the need.
The number of households living in homes they own
(even though their equity in the home and underlying lot
might be minimal) is higher than ever before in the history
of the United States. Some 68 percent of U.S. households
are in the game, are the recipients of the wealth-building
subsidies attached to the private appropriation of location
rent. Yet, the number of people who are homeless and the
number of people who have few or no options but to live in
squalor is also higher than ever before.
As GroundSwell readers well know, there is only one
way to move from programs of mitigation to a program of
permanent solution: communities must collect the values
created by expenditures for public goods and services and
by aggregate private investment. This is a message that
needs to be communicated to the proponents of programs and
initiatives that seek to lift people into the rent-seeking
class rather than focusing on changing the rules of the
game.
--------
Ed Dodson may be emailed at EJDodson@comcast.net