By Morf Morford

Tacoma Daily Index

There’s no single answer to our current housing crisis.

The convergence of rapidly increasing housing prices and ever-present homelessness in virtually every city in essentially every nation around the world has taken years, and a multitude of causes to get to the crisis point we now see.

This housing crisis was not an accident or a force of nature.

It was, and is the result of policies, priorities and actions from all of us.

Market forces, zoning, interest rates and demographic shifts are only a few sources of pressures that have acted, and continue to act something like gravity on our housing market.

Picture a balloon being squashed, stretched and distorted by a child and you have a reasonably accurate view of the pressures – and ultimate results – as expressed in our current housing market.

Solutions to our housing crisis will take as many forms – and approaches as varied and unpredictable as the many steps that got us into this seemingly intractable set of problems.

We won’t have one solution.

Our housing policies – from consumer preferences to zoning to tax deductions are concrete reflections of who we are and who we, as communities, neighborhoods and urban centers will be in the future.

Housing is expensive.

But one of the many ironies is that homelessness is also expensive.

Maybe even more expensive than housing.

Some programs, communities, even entire nations (like Finland – https://mymodernmet.com/housing-first-finland-homelessness/) have set in place what they call “housing first” policies and programs.

The assumption is that basic shelter is foundational to every other aspect of personal stability, safety and, as necessary, recovery and reintegration with work, school and social activities.

We all need a place.

Work, sleep, even mail or a library card are essentially impossible without a physical address.

And home is far more than a mailing address.

Housing is expensive because even the most basic housing is an investment – by an individual, by a developer or by a community. Zoning, civic planning, materials costs and interest rates all impact the final – and certainly the immediate – accessibility, financial or otherwise – for the average homeowner.

In the past ten years or so we have seen an unwieldy convergence of market (and other) forces most of us never expected to see – especially at the same time.

We have record low interest rates, an extremely limited number of housing on the market, and more recently, for a variety of reasons, dramatic increases in the cost of lumber and other building materials.

Under normal conditions, low interest rates would spur home sales.

And under normal conditions, limited housing inventory would impede sales.

Increases in the costs of building materials, under those same mythical “normal conditions” would lead to a slowdown in new construction.

As virtually every one of us knows, we, in almost every city and region, are seeing a building boom, a sales surge and an explosion in prices like we have never seen.

Mix in an early (and extended) fire season in the western states, volatile weather across the South and mid-West, an expanding work from home movement, an economy cautiously lurching toward some kind of equilibrium, and of course the worst pandemic in a century and you have a recipe for a housing market that defies any previous patterns or economic formulas.

Are these hyperventilated prices and housing sales a “bubble”?

No.

Or at least not in the usual sense.

Some real estate prices are dropping. From London to San Francisco to New York and Seattle, housing prices are dropping dramatically.

London, for example, from November of 2020 to February 2021 saw its housing prices drop by an average of over 4.5% each month.

In our area housing prices are going up by almost that much each month – if you can find anything on the market.

One of the easy solutions (and by “easy”, I mean that it seems easy) is the construction of new housing.

Yes, of course more housing, but what kind? And where? And for whom?

More luxury housing seems to be what we are getting the most – and what we need the least.

Housing takes time and land, resources and funding.

There is nothing simple about it.

But there’s nothing simple about homelessness either.

Here locally we just saw the demise of a program that, simply, even elegantly, solved many of the problems inherent in the many complexities of housing – especially home ownership.

Green Harbor Communities had a housing project in the works with a deceptively simple premise; keep the entry price for home ownership within range of the standard working family.

Under the before mentioned mythical “normal conditions”, this would be a given.

In today’s economy, not only is it more complicated, it is essentially impossible.

But widespread home ownership has always been a pursuit of neighborhoods, communities and, of course, most individuals.

Individual home ownership is almost certainly the most expensive – and resource demanding – form of housing, and the entry point, especially for first-time home buyers, can be daunting under even the most promising of circumstances.

Given the challenging, and largely unpredictable aspects of the real estate market of the 2020s, where bidding wars and cash-only offers have become routine, home buyers, especially those new to the market, are hitting a variety of obstacles, if not brick walls. One solution, in place for decades, if not centuries, in the United Kingdom, is lease-holding – where a home is leased (usually for 75-99 years) and the ownership reverts back to the holder after the lease expires.

Four out of 10 new homes built in England (and nine out of 10 new flats in London) in the past several years have been sold on a leasehold basis.

With literal ownership taken out of the equation, home sale prices can be vastly less – possibly even approaching those mythical days when a home could be affordable to a single-income household.

A little background on lease-holding can be found here – https://www.investopedia.com/terms/g/ground-lease.asp.

Lease-holding is not THE solution to the multi-layered complexities of our housing landscape, but it is a solution that works, and has worked for many over many generations.

It should be one option on our menu of housing opportunities.