Those Who Fail to Learn from History Are Doomed to Repeat It: Lessons in Housing History

By: Sharon Wilson Géno, NMHC President

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As we approach Election Day, I am reminded of the Winston Churchill quote, "Those who fail to learn from history are doomed to repeat it." There is no doubt that we are at a pivotal time in U.S. housing history. Multiple economic and policy shifts over the last few decades have resulted in what is now widely understood as a national housing shortage. Multiple polls during this hotly contested election cycle have ranked "housing" as the No. 2 or No. 3 issue of concern to voters. It is no wonder that politicians at the federal, state and local levels have proposed various "solutions" to the housing crisis, trying to "one up" their opponents.?? Much of the housing debate in the political arena ignores over 100 years of U.S. housing policy history. We have faced housing crises at various times during the last century — from the public health epidemic caused by unsanitary housing conditions at the turn of the century, to the need to jump-start housing production after World War II, to the National Commission on Severely Distressed Housing, to the mortgage crisis. Yet, at each moment, we have largely reacted by putting in place mostly top-down federal programs focused on the issue "du jour" without ever going back and creating an integrated housing policy framework that can better ensure all of our citizens have access to housing options that meet their needs at various points in their lives. ?

The critical and pervasive housing needs we now face are, in large part, the result of our bad experience with the crisis-driven, piecemeal approach to housing. The current attention on housing has given us a once-in-a-generation opportunity to restructure our housing system so it works better now and in the future. If we are to be successful, however, it is important to take stock of the lessons our housing history has taught us:?

1. Social/Government Housing Models Are Not a Panacea?

Recent calls for the U.S. to adopt a "new social housing model" run by government-sanctioned non-profits to develop and operate housing for people of modest means ignores the fact that this is effectively how the public housing program was originally designed. However, to the detriment of those it served, the program failed because it relied on public administration rather than partnering with the private sector who could help design and maintain higher-quality, sustainable housing that appeals to the community. Without private capital and market discipline that fueled the redevelopment of public housing beginning in the mid-1990s, over 3 million units of taxpayer-funded housing designated permanently for people of modest means would have been lost.?

2. Accomplishing Big Things Requires Public/Private Partnerships?

Throughout history, our government has never tackled a big problem without leveraging needed expertise and resources from the private sector. The Manhattan Project, the Hoover Dam, the first moonshot and countless other examples loom large as seminal moments of great advancement. When private companies collaborate with the government to finance and develop affordable housing, it allows the government to leverage private capital and expertise. Examples that have relied on public/private partnerships include RAD, the Section 8 Housing Choice Voucher Programs and the Low-Income Housing Tax Credit (LIHTC). We need to work together to streamline these existing programs and identify new and more efficient ways to make it easier for private capital to invest in housing, particularly affordable housing. The need for housing is so great that we know government alone cannot fund it.?

3. All Levels of Government Need to Work Together?

Much of our housing policy has been driven at the federal level and in response to emergency situations. Given that these programs did not always work well in every community, we have seen states and localities develop their own programs in earnest over the last two decades creating more complexity and inefficiency. Any new comprehensive housing policy framework should carefully recalibrate the roles of the federal, state and local government so it is more streamlined and better serves the needs of citizens in every community.?

4. Price Controls and Excessive Regulation Are Not Effective and Have Detrimental Side Effects?

Generations of research in the U.S. and across the globe has shown time and time again that long term price controls and increased regulation, and specifically, rent regulation, hurts renters. Increasing the supply of housing requires investors—including teacher, firefighter and union pensions—to see housing as a good investment. History teaches us that the two markets in the U.S. where rent control has been implemented long term—New York City and San Francisco—have for decades been the most expensive and constrained rental housing markets in the country. Long term, over regulation has proven to constrain housing supply and limit renter choice, especially for those who struggle most to get housing. ?

5. Demand Side Programs Are Only as Good as Available Supply?

Federal, state and local governments have long provided rental housing subsidies, as well as homeownership subsidies. While these solutions can be helpful particularly for qualified modest income households, they are very market sensitive, and history has shown us that they work best in markets where there is available supply of rental or homeownership units at the price point the subsidy program will allow. Data shows us that over time, when housing markets become tighter, these programs become much less effective. In short, demand side solutions are a supplement, but not a substitute for increasing housing supply.?

6. Ensuring Rental and Homeownership Policies Are Better Balanced?

We have greatly incentivized homeownership through the mortgage interest deduction and state and local tax breaks. Arguably, overemphasis on homeownership partially fueled the Great Financial Crisis. At the same time, we have made the development and operation of more rental housing increasingly costly through federal, state and local regulation, as well as less advantageous local tax structures. This imbalance has been one of many factors resulting in our current housing shortage of both homeownership and rental units. Any new housing framework should more equally incentivize the creation of rental and homeownership housing, so more Americans have a greater variety of housing choices. ?

Housing is not a "red" issue or a “blue" issue—it is a human issue critical to our ability to maintain a civil society and grow our economy. If we are truly set on building a new and better course for housing policy, we need to rise above partisan politics and learn from our housing history, both good and bad, lest we squander this moment to create a stronger America now and for generations to come.?

Based in Washington, D.C., the National Multifamily Housing Council (NMHC) is where rental housers and suppliers come together to help meet America’s housing needs by creating inclusive and resilient communities where people build their lives. We bring together the owners, managers, developers and suppliers who provide rental homes for 40 million Americans from every walk of life—including seniors, teachers, firefighters, healthcare workers, families with children and many others. NMHC provides a forum for leadership and advocacy that promotes thriving rental housing communities for all. For more information, contact NMHC at 202/974-2300, email the Council at?[email protected] , or visit NMHC's website at?nmhc.org .