Guest columnist Julio Alves: The remedy to our housing pandemic

  • Julio Alves CONTRIBUTED PHOTO

For the Gazette
Published: 7/30/2020 1:37:42 PM

Housing is health care — that’s one takeaway of a report put out by the National Low Income Housing Coalition, Out of Reach 2020, which comes amid a global pandemic. “Governments and health officials at all levels have told residents to stay home,” the authors write. “Not everyone, unfortunately, is stably housed in a safe and adequate environment.”

That’s putting it gently. In no county in no state in the United States can a full-time worker earning the prevailing minimum wage afford an unexceptional two-bedroom apartment without spending a lot more than 30% of their income on housing, according to the study. And in only five counties can they afford a one-bedroom apartment. In Massachusetts, the third most expensive state in the nation for housing, they (say, a single mother) need to work 111 hours per week to afford this two-bedroom apartment, or to find a job that pays $28.08 per hour. The most they can afford working a 40-hour week without becoming housing burdened is $663. In Northampton, this apartment rents for around $1,460, a $797 difference.

As with everything else, the housing market is harshest on people of color, who earn less than their white counterparts at every income level, are more likely to be renters, and already spend a greater percentage of their income on housing than their white peers. Nationally, a white median-wage, full-time worker can afford a one-bedroom apartment at the fair market rate without becoming housing burdened, whereas their African-American and Latinx counterparts cannot. Even at the median wage, none can afford a two-bedroom apartment.

Despite this dire, longstanding housing pandemic, government mainly continues to apply the same hopeless remedy — incentives for private sector development, a response that’s neither effective nor commensurate with the scope of the crisis. Private development has shown itself to excel only in creating housing for the rich, often at the expense of housing for poor and working people. It has shown no interest in solving the housing crisis for the rest of America.

What can government do? For starters, it can stop subsidizing private sector development and instead use its extensive resources to create more homes for poor and working people. Only government has the power to end a pandemic. Some say that government should stay out of the housing business. To them, I say, government is and has always been in the housing business — just not for us.  

During the Great Recession, for example, the Federal Deposit Insurance Corporation (FDIC) signed over billions of dollars of real estate assets (homes!) to investment groups, perhaps most notoriously to a group headed by our Treasury Secretary Steve Mnuchen. (This story is vividly told by Aaron Glantz in his recent book “Homewreckers.” ) At a so-called “auction,” Mnuchen’s group, the only bidder, walked away with California’s IndyMac bank, including all its real estate assets, for literally nil. Arguably, they were even paid to take the deal, as the FDIC also committed taxpayer money to cover losses on foreclosures and to pay for legal fees, foreclosure costs and the like. After plundering IndyMac for five years, Mnuchen then sold it for $3.4 billion to yet another real-estate vampire.  

This debacle was only an appetizer to one of the greatest siphonages of wealth in American history. Throughout the Great Recession, the government consistently auctioned hundreds of thousands of homes to big-time investors for pennies on the dollar, and only to them, as the particulars of these sales disqualified individuals, affordable housing nonprofits and even municipalities from bidding. Consequently, just between 2007 and 2010, the typical white family lost 11% in wealth, the typical African American family 31% and the typical Latinx family 44%.

Now we have COVID-19. Overcrowded, substandard and nonexistent housing have surely contributed to the spread of the virus, and now widespread unemployment is creating new worries about evictions and foreclosures. Whatever happens, let’s make sure our elected officials support tenants and homeowners. Imagine for a second what our lives might be like now if instead of giving away hundreds of thousands of homes to investors during the Great Recession, the government had given homeowners loans so they could stay in them, or took the homes and rented them back to the owners to be bought back or sold at a later date, or sold or gave away the homes to cities, towns and nonprofits to turn into affordable housing. Had that happened, perhaps we would not now be living in a state where a worker has to earn $73,890 to afford a two-bedroom apartment.  

COVID-19 has shown us the importance of federal leadership and taught us that pandemics are most effectively confronted by smart, fact-based solutions commensurate with the scope of the crisis. Nothing short of that works. We have a housing pandemic and must treat it as such. In this election year, advocate for increased, sustained support of the national Housing Trust Fund, Housing Choice Vouchers and public housing. We need more affordable homes, not more investment properties.

Julio Alves lives in Northampton.

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