Published by Strong Towns

Each financial crisis — Savings & Loan in the 1980s, the subprime mortgage crisis in 2008 — led to even greater centralization of housing finance, as short-term fixes reinforced the dominance of national lenders and government-sponsored entities. The repeated cycle of risk, collapse and bailout has made housing a primary vehicle for financial speculation rather than a stable, accessible market for homebuyers.

Today, the product isn’t a home; it’s the promise to pay contained in the mortgage note. The buyer isn’t an individual or a family; it’s a financial institution acquiring that mortgage note and the decades of promised payments.

The innovations and efficiencies of scale we see in the housing market today are innovations in finance, not in home construction. These financial innovations have not been good for homebuyers or for affordability.

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Ironically, the one-dimensional efficiency of financialization has created a massive gap in the real market for homes. Large financial institutions are eager to fund single-family homes in bulk or large apartment complexes that fit their investment models, but they have no interest in small-scale, entry-level housing. A so-called "efficient" housing finance system has, in reality, left little to no capital available for small, incremental projects — like converting single-family homes into duplexes, adding backyard cottages, or financing small starter homes. This is despite the overwhelming demand for entry-level housing.

Greenfield sites are not the solution for housing affordability, even if it’s an easier political sell than increasing density in existing neighborhoods. Housing needs to work for nondrivers, whether that’s people like me who can’t drive, people who can’t afford to drive, young people or older adults (on average, Americans will spend the last seven to 10 years of their lives being unable to drive). When driving isn't an option for so many people, building more car-dependent communities isn't a solution.

When I see advertisements for greenfield developments, especially ones that are built with “new urbanist” ideals, I think back to my year in North Carolina. Southern Village wasn’t just an exurban housing development: The “Village” featured a town square with an organic grocery store, a small gym, and even a restaurant or two. But it definitely wasn’t possible to get everything you needed without leaving, and leaving meant navigating the highway.

For people who can drive, being able to reduce their driving trips because there’s a cute coffee shop nearby might feel great, but for people who can’t drive like me, places like Southern Village feel more like a desert island than the intended suburban paradise. Without enough transit, and often with only a highway shoulder connecting the development with all the other places a person might need to go, these places necessarily exclude people who are physically or financially unable to drive. Because, sometimes, you need more than a coffee shop or a cute grocery store.

Really punchy 20m intro to the Robert Putnam / Ray Oldenburg thing from Mike Pasternock at Strong Towns.

People are lonely. Is it because we are addicted to our phones, or is that a symptom of larger design choices we made when building our places? We cover some of the general concepts related to social infrastructure an try to evaluate what to do next.

What do housing, transit and lifestyle statistics have to do with loneliness and unhappiness, you might ask. Well, I don’t think it’s a reach to suggest that separating people physically also leads to emotional and psychological separation. Moreover, the implements that make sprawl-induced physical separation work on a societal level — cars to contract long distances and digital media to ameliorate the effects of social isolation — deepen loneliness and unhappiness on the personal level. These implements also make people sedentary, directly relating to the fact that 73% of the total American population is overweight and 42% is obese, per the CDC.

One of the biggest issues is population density. At the risk of oversimplifying, it’s a lot harder to socially isolate when there are people around you.

We’re screwed if housing prices keep going up. We’re also screwed if they go down.

That’s the trap.

It should be obvious by now that the housing crisis is a complex, multi-faceted issue. There is no one silver bullet for addressing it. Unwinding the trap in a way that doesn’t cause a new Great Depression is going to take a lot of different changes working together in order to shift to a housing market that is responsive to local needs, rather than to global capital flows and national fiscal and interest-rate policy.

We need to rapidly add more housing at affordable price points. We also need to avoid crashing the current housing market. We need to encourage investment in our communities, increasing local economic productivity, without allowing all the profits to be siphoned out to faraway global investors. And we need to do it without adding more infrastructure liabilities to our already struggling cities.

What that will look like is more people doing home-to-duplex conversions, building backyard cottages, allowing more small businesses to mix into our residential neighborhoods to create local jobs while eliminating productivity-killing commutes, and growing local financing options.

This is just great.

Housing is an investment. And investment prices must go up. Housing is shelter. When the price of shelter goes up, people experience distress. Housing can’t be both a good investment and broadly affordable—yet we insist on both. This is the housing trap.

Public works departments know how to fix a dangerous stroad. We put it in a five-year capital improvement budget. We do a big study of the conditions. We mock up several design alternatives, and we hold public workshops where we ask constituents for their feedback and preferences. We send out (typically useless) surveys. A design is selected by the city council, and over the next couple years, it’s built.

The end result of this approach is typically very pretty. There are curb bulb-outs planted with flowers. There are flashing beacons and refuge islands at newly painted crosswalks. The street is calmer, it’s safer, and it actually feels better to drive on, as well as walk along. It’s hailed as a big step forward, a boon to the neighborhood’s quality of life. Everybody is happy. This example from South Minneapolis, of a nasty stroad rebuilt after a deadly crash and public outcry, is typical of my experience.

Okay. So, we know how to do that. Now do it 1,000 times.

The “1,000 times” problem may actually be the primary reason why we can expect local governments to be resistant to adopting an approach like the Crash Analysis Studio as policy. If you truly acknowledge that a deadly crash is not a fact of life, but an anomaly that shouldn’t have happened, and a condition that should be corrected, then you suddenly have a to-do list a thousand miles long.

Nobody is going to say out loud, “We can’t come close to fixing all of them, so it doesn’t make sense to acknowledge that there’s an urgent imperative to fix any of them.” But I’ll bet a lot of traffic engineers have thought it.

Eliminating single-family zoning was part of a broader package of reforms deliberated by Alexandria’s city council known as the Zoning for Housing/Housing for All initiative. While most council members welcomed the reforms, lawns across the city have been littered with “anti-zoning” signs for months in anticipation of the vote. Some residents assumed that by eliminating the codes that restrict what can be built how and where, the city would lose its charm.

Others point out, however, that the pride of the city, Old Town, would not be able to exist within the restrictive zoning that has defined Alexandria for the last half-century. Originally laid out in 1749, Old Town follows a grid pattern and is beloved for its multi-story brick buildings housing a mixture of commercial uses as well as medium-, low-, and high-density residential opportunities. By contrast, the majority of Alexandria is zoned exclusively for low-density, single-family residential housing. In fact, it’d be illegal to replicate Old Town in most of Alexandria under the current zoning regime. 

When we replaced our traditional pattern of development with the Suburban Experiment, there were some unforeseen consequences. Why did we do it, and how can we fix it?