John Petro

After the Bubble: A New Direction for Housing

The housing bubble provided some clear indicators that there is something wrong with our current patterns of housing development. The suburban sprawl model that fueled the growth of many Sunbelt economies, from South Florida to Phoenix to southern California, sputtered out, leaving foreclosed homes, half-finished developments, and never-filled strip malls in its wake. It is difficult to determine cause and effect, but it is clear that the financial crisis had its roots in the wave of foreclosures that has swept the country.

But, according to Joel Kotkin, once the dust settles we should just continue on our current trajectory. Kotkin believes that a "renewed quest for homeownership could underpin a sustainable recovery."

However, there is nothing sustainable about our current housing model. It has real costs on our pocketbooks, our economy, and our environment. The Economist seems to agree.

The Economist mentions that the housing bubble destroyed about $4 trillion in wealth before concluding, "[Policymakers'] efforts in the past few years seem to have weakened, though not destroyed, the best arguments for treating home ownership as something to be encouraged: that it increases people's savings and creates better neighborhoods for everyone."

Kotkin doesn't take kindly to this type of advice. He sees this type of critique as a way for "new urbanists", "big-city theoreticians", and even "the fashion police" to force people out of their leafy bungalows and into drab apartment blocks. He seems to be defending homeownership, but really he's defending suburbs.

So this is where Kotkin confuses his argument. He mixes up the concepts of homeownership versus renting and suburban sprawl versus transit-oriented development.

I've argued before that we need a more balanced housing policy, one that looks at renting as a viable option for building wealth, but not that we should restrict access to homeownership. I've also argued that we need to be building higher-density housing developments in order to increase affordability, link households to jobs, and to tackle climate change.

Luckily, some members of the administration have also sensed that the wind has changed direction. Earlier this year, HUD and the Department of Transportation announced a partnership that would "help American families gain better access to affordable housing, more transportation options, and lower transportation costs." The focus is on coordinating federal transportation and housing investments in order to drive down the two highest costs for households, their housing and their transportation.

However, the need for diversity in our housing stock isn't just an affordability issue or an environmental issue. It's also a matter of providing choices for individuals and families. Would more Americans choose to ditch the car and take transit if that option is available? Yes. Would more Americans choose to live closer in to the central city and cut down on their commuting time if more housing was available in central neighborhoods? Yes. Would this lead to a cleaner environment? Yes. Would it lead to a healthier populace? Yes.

Would it lead to, as Kotkin surmises, "declining living standards and a return to feudalism"? No.

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Posted at 10:32 AM, Jul 01, 2009 in Urban Affairs
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