Category Archives: Real Estate

Brave New U.S. Housing Policy

February 12, 2021- PlanGreen

To expedite building market rate housing, as well as more public housing, that is affordable to BIPOC communities and to young people, we need to lobby for TAX POLICY CHANGES that will shift our perceptions about “the American Dream”–away from homeownership and towards security, equity and legacy for all.  

HOUSING DOESN’T HAVE TO BE A COMMODITY

For the last few years, as long as the issue was housing, I could be found on Fridays at the Q&A microphone at Portland City Club Friday Forum.  I would ask: How can you square promotion of homeownership as a means of wealth building and reform of our housing system?  

An example of a Portland City Club Friday Forum recent ad for a housing forum. This one was 11-15-19. Image from XRAY-FM.

An example of a Portland City Club Friday Forum ad for a housing forum 11-15-19. Image from XRAY-FM.

Wealth building depends upon housing being a commodity to be bought and sold for a profit.  Rather, don’t we need to see housing as a social good that all have the right to access? If I could get away with a few extra seconds, I might add: The Community Land Trust, as it was originally conceived, is a NEW MODEL OF LAND TENURE that provides security, equity and legacy, but doesn’t promote housing as a commodity. Isn’t that what we need to be moving quickly toward?

Young people at this 2016 Bernie rally showed
great enthusiasm to transform healthcare.
We need to repeat that for HOUSING in 2021-2022!
Photo by PlanGreen

Housing has NOT gone away as an issue, but you wouldn’t know it from the last two cycles of Presidential debates, which had almost no questions of any substance about housing.  As a supporter of Bernie Sanders in 2016, I became irritated with my candidate when he virtually sidestepped local Portland TV reporter Laurel Porter’s question to him about housing affordability and homelessness. I had been attempting to get him to awaken his Millennial base to the idea that we did not necessarily need to continue the current system of housing. I tried hard to get my blog Housing Affordability: Put a Bern on It  to members of his campaign and to the candidate himself, but seemingly without success.  Since Bernie was Mayor of Burlington, VT when the largest Community Land Trust in the nation was started, he understands the potential of this new system of land tenure. He even told the CLT at an annual meeting that helping to get them federal funding was the best thing he had ever done as Mayor. As Chair of the Senate Budget Committee, he can still mobilize that base.

NEW OPPORTUNITY WITH SENATE FINANCE COMMITTEE

Sen Ron Wyden at Forest Grove Town Hall (with two reporters shown taking notes) lays out his tax reform priorities. They don't yet include HOUSING! Photo by Pamplin Media.

Sen Ron Wyden at Forest Grove Town Hall lays out his tax reform priorities. They don’t yet include HOUSING! Photo by Pamplin Media.

Now, young people through groups like Portland: Neighbors Welcome, Sunrise PDX, and NextUp now find that their Senior Senator, Ron Wyden, has become the Chair of the Senate Finance Committee. Peter Wong in a Jan. 21 article in the Portland Tribune lists the priorities for Tax Code reform that Senator Wyden laid out at a January Town Hall in Forest Grove. OR.  Corporate Taxes, Capital Gains, Energy, Health Care, and Infrastructure are priority areas, but HOUSING is not one of those priority areas—even though it is probably the largest expenditure in most Americans’ budget. (See comments for update.)

Image of front cover of Brave New Home: Our Future in Smarter, Simpler, Happier Housing by Diane Lind.

Nevertheless, that doesn’t mean that we,, shouldn’t try to plant the seed for profound change to US housing policy while Wyden is up for re-election. I loved the suggestions from Diana Lind’s  Brave New Home:Our Future in Smarter, Simpler, Happier Housing because they match so nicely to my own.  Lind began her book after the birth of her son because she felt isolated  and disconnected in her own single family row house–and this was before COVID-19.  She is Executive Director for the Arts + Business Council for Greater Philadelphia which hardly makes her seem like a radical.

I’d seen other authors question the mortgage interest deduction (MID) before (e.g., Matthew Desmond in Evicted and Richard Florida in The New Urban Crisis), but I believe Lind goes further when she questions the entire assumption that homeownership does or should present  a path to wealth building for most Americans.  She wonders why the government would continue its subsidization of homeownership when so many homes have now been bought up by multinational companies like Blackstone and affiliates. She also questions such a subsidy even though the mortgage interest deduction is one of the country’s largest regressive tax loopholes and even though student debt has changed the landscape of housing choices for young people. Lind travels the country exploring what people are doing for alternatives.

WE BUY UGLY HOUSES.COM HomeVestors: America's #1 Home Buyer. Photo by Mary Vogel/PlanGreen taken in east Portland, OR

WE BUY UGLY HOUSES.COM HomeVestors: America’s #1 Home Buyer. Photo by Mary Vogel/PlanGreen taken in east Portland, OR

Any system that pushes housing as an investment (hence a commodity) is bound to attract those who are ready to game the system. It should be no surprise that we see hedge funds, REITs and institutional investors buying up single-family housing and developing portfolios of thousands of properties. They comb sites like Zillow and the MLIS to find, renovate and flip undervalued properties. They buy billboards and post signs on lampposts.  Their size allows them to fix prices and this price-fixing becomes a primary reason for skyrocketing housing costs. Yet in Portland, and I believe elsewhere, these companies often face less resistance than new construction or redevelopment—even though they are likely to be bigger contributors to gentrification.

POTENTIAL ASKS TO SENATE FINANCE COMMITTEE

I’ve come up with these broad directives (with a nod to Diana Lind) that will need to be further fleshed out to be actionable:

  1. Actively transition our policies away from homeownership and single-family homes. 
  2. Investigate how best to subsidize people, rather than their property. 
  3. Regulate landlords and buyers who own hundreds to thousands of properties, while finding ways to leverage their scale for good. 
  4. Rethink zoning that privileges single family homes 
  5. Rethink the variety of ways the federal government incentivizes and rewards single family housing—e.g., IRS, FHA, VA, Fannie Mae, Freddie Mac. 

I’We might also explore our connections to members of the coalition that got the “Yes In My Backyard (YIMBY) Act” (H.R. 4351) passed in the US House in 2020 and help them to get an even stronger bill passed in the US Senate in 2021.  (See update in comments.)

SHIFTING PUBLIC OPINION

Evicted website https://www.evictedbook.com screen shot. Without a Home Everything Else Falls Apart.

Let’s team up with well-known authors such as: 

  • Matthew Desmond (Evicted: Poverty and Profit in the American City ) 
  • Richard Florida (The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class-and What We Can Do About It
  • Diana Lind (Brave New Home: Our Future in Smarter, Simpler, Happier Housing)

who can get media attention of all kinds: TV, radio, social media, newspapers, magazines, etc. Locally, we might team up with Sightline Institute Founder  Alan Durning who recently authored The Problem With US Housing Policy Is That It’s Not About Housing. Durning begins: Here, I sketch the hidden reality of federal US housing policies: they are about real estate appreciation, not housing. And I spell out how they polarize wealth, exacerbate racial inequality, cut productivity and job creation, speed climate change, and exaggerate the ups and the downs of the business cycle. He plans to next address how we might form a left-right coalition to shift federal policy.

THE BUDGET AS A MORAL DOCUMENT

Photo of US flag flying at US Capitol from Oregon Center for Public Policy blog. Pop-out says In 2021 Oregon can free up money to invest in Oregonians by disconnecting from wasteful federal tax breaks.

Image from OCPP.org/agenda links to their Disconnect from Wasteful Federal Tax Breaks blog.

Many of us–especially in my Boomer generation–find it difficult to rethink long-held assumptions and perhaps to give up some financial privileges. Some of the most introspective among us–such as those in Portland’s Interfaith Alliance on Poverty have been exploring the root cause of poverty and homelessness for the several years. 

Chair, Les Wardenaar, has an eloquent “Commentary On The Budget As A Moral Document” in the January 2021 issue of the Alliance newsletter showing that he has given some deep thought to the Alliance’s series on the topic over the last few months.. He especially cites OCPP Executive Director Alejandro Queral’s presentation (Oct 2020) on the Oregon tax structure and the benefits that many of us gain from it at the obvious expense of those with lower income. That prompted him to ask himself the question: “how much of my personal finance and with it my lifestyle am I willing to sacrifice to make the system more just?”  Wardenaar goes on to conclude:

As one of my Alliance friends put it, “The Budget as a Moral Document” ultimately demonstrates that we—as Portlanders, as Oregonians, as Americans– are deliberately choosing to perpetuate social and economic injustice. We choose to force people to live on the streets. We choose to provide a sub-standard education for many of our children, thus impacting their chances of lifting themselves up. We choose to put “people of color” into a chasm of inequity that only a small minority could ever climb out of. And we make those choices year after year after year. 

Many more in the Boomer generation are even more fearful–without being quite so introspective and soul searching as those in the Alliance. Some reinforce each others fears in neighborhood associations where they attempt to block change.

HOUSING JUSTICE: CLIMATE JUSTICE AND PUBLIC HEALTH

Housing Justice is Climate Justice is a meme embraced by BIPOC advocates in Oregon and many supporters such as those in Portland: Neighbors Welcome, Sunrise PDX, and NextUp 

What if, rather than bemoan the change to our single-family neighborhoods, we embraced it instead? Ever larger American homes have become a huge factor in climate change at the same time they have led to increased loneliness. And public health officials are recognizing that loneliness is the new smoking or worse–equivalent to 15 cigarettes a day! As homes have become bigger they have led to increased emissions from heating and cooling, more furniture and appliances to fill the space and more fossil fuel to travel further distances–all with a carbon cost. “Why isn’t there a more robust public conversation about how living differently–more affordably, more communally, and more simply–could strengthen our society, economy, and health?” asks Lind.

An equitable housing policy at the federal level needs to be a policy that will expedite building market rate and public housing that is affordable and available to BIPOC communities and to young people. That will happen only when we shift our perceptions about “the American Dream” away from homeownership and towards security, equity and legacy for all.  

Our Future in Smarter, Simpler, Happier Housing could be around the corner–we first need to permit it, fund it and build it! And the fearful may then want to get on board.

Screen capture  of Twitter site by PlanGreen

UPDATE May 19:  While preparing a slide presentation for the PLACE Initiative Climate Summit, I found out that the Senate Finance Committee held a Tax Inequality Hearing on April 20, 2021. The first person to testify was Dorothy A. Brown, author of  The Whiteness of Wealth and tax law professor at Emory University. 

Also see my slide show embedded in my post of May 20. I’m working on including the text that goes with the slides.

What’s Next Portland? Real Estate in the New Economy

A version of this blog first appeared in the Portland Business Journal shortly after the ULI What’s Next event on March 7, 2012.

The Oregon Chapter of the Urban Land Institute promoted their breakfast seminar based on ULI’s most recent publication: “What’s Next? Real Estate in the New Economy“: A paradigm shift is unfolding over the course of this decade, driven by an extraordinary convergence of demographic, financial, technological and environmental trends. Taken together, these trends will dramatically change development through 2020

Walking over to the event at the Nines Hotel, I thought about what I hoped to learn.  ULI is a national, even international, thought leader in the real estate industry.  The advertised intent of the seminar was to examine how our region is postured to remain competitive in the 21st century.  I had more short term goals.  I wanted to know how ULI and local business leaders foresee the Portland region and the state getting out of the building slump (and consequent unemployment for planners, urban designers and other built environment professionals) we have been in since 2007.

From an examination of name tags, the audience for this event were largely lawyers, a few planners and a few commercial real estate consultants.  I didn’t see any developers that I recognized—albeit my recognition field is limited.

After a string of men from ULI’s national office in Washington, DC offering their wisdom over the past two years, it was refreshing to have a woman as keynote speaker.  Maureen McAvey started off her talk with the proposition “This is not just another real estate cycle but a fundamental change.”  She went on to make her case through a litany of demographic factors she claims are leading to new trends, e.g.:

  • Gen Y is the largest generation in American history—80 million strong and still growing and
  • The Boomer generation is living longer–“If I retired at 65 and lived to my mother’s age—98—I’d have more than 35 more years to do what?”

I had been wondering when ULI would jump on the jobs bandwagon in a big way. This was the event!  Both in her presentation and in the book, McAvey asked “Where the hell are the jobs?” (resisting her editors plea for more sedate wording).  Even lawyers are outsourcing parts of their business as never expected.  Social Security in 1945 each worker was supported by 42 workers, in 2009 just 3.

Lumina Foundation found that young people in US do not have enough education to compete.  Between now and 2018 Oregon is expected to create 59.000 jobs – but there will not be enough workers with post secondary education to fill those job needs.  America is significantly de-funding its education.

McAvey believes there are some bright spots.  Business and professional sectors and education of all types as well as health care and medical have grown phenomenally. “America is still wildly entrepreneurial and leads in venture capital” she claims.  This is partly due to the creative culture and substantial capital reserves.

The Housing Outlook she presented was similar to what I have heard for the past few years: Apartment living is on the rise. Six million new renter households may be formed between 2008 and 2015, requiring 300,000 new units annually compared with just 100,000 produced in 2010. “But can the industry deliver that amount for the rents at which people looking to rent can afford?” she asked.  Meanwhile, more single-family homes are being occupied by renters, changing the feel and politics of suburban communities.

Seventy-five percent of households in Portland do NOT have children under 18; 47% are non-families, she said. Twenty-somethings on tight budgets prefer places to congregate with friends—in parks, bar scenes, restaurant clusters, and building common areas—and can tolerate smaller living spaces, McAvey claims.

The Regional Panelists consisted of Jill Eiland, Corporate Affairs Manager, Intel Corporation; Keith Leavitt, General Manager of Business Development and Properties, Port of Portland; Sandra McDonough, President and CEO, The Portland Alliance, Wim Wiewel, President, Portland State Universtiy

McAvey went on to ask a softball question of most of the panelists—and most  responded in predictable ways, e.g., Keith Leavitt feels that we need to continue and expand efforts to export wheat and other grain to the world as well as electronics.  “There is a boom in new port developments along lower Columbia River,” he said.”

Sandra McDonough believes that we are hampered by tax policy, physical infrastructure and regulatory framework – a lot of it from the 70’s [referring to Oregon’s land use laws]. “We do not have enough sites for new industrial users,” she maintains.

Wim Wiewel feels we need to move beyond the sad state of education funding from legislatures (not only here, but across the country) and partner more with industry—and with local government.  He was excited to announce “We are working with the Mayor and the County on an Urban Renewal Area for Education.”

McAvey’s question for Jill Eiland was a little more challenging.  “Is Intel going to follow Amazon’s lead and start building highly urban campuses?”

Although I spaced out during Eiland’s answer, she later told me that “Intel has now invested more than $20 billion in Oregon since 1974.  We continue to invest and grow our manufacturing and R&D capacity here.  The Hillsboro site remains Intel’s largest and most comprehensive site anywhere in the world.”  I interpret that to mean don’t expect Intel to move into downtown Portland, or even downtown Hillsboro, anytime soon.

I heard recently that Metro Council Members were cautioned not to talk about climate change.  Governor Kitzhaber and Mayor Adams didn’t mention it in their recent State of the State/State of the City speeches at City Club either.  It seems that ULI got that memo too.

I was a bit baffled to attend an event on trends that made no mention—only guarded allusion to—the two big trend topics of the day in my world: climate change or growing income inequality!  While ULI played up this event as being about a paradigm shift, their Oregon panel members gave only predictable answers that did not reflect much awareness of that shift–none of that Oregon leadership that we witnessed in the last century.  It would seem that we are resting on our laurels rather than embracing the shift. I left with more questions than answers—but eager to read the copy of “What’s Next? Real Estate in the New Economy” that ULI so generously provided to attendees.

Mary Vogel is founder and principal of PlanGreen, consultants on walkable urbanism.  She is a Board Member and Advocacy & Alliances Chair of the Congress for the New Urbanism Cascadia Chapter where she helps to shape climate change policy.  She is also a member of the progressive business alliance, VOIS.