Buying Into Homeownership

It is not surprising that the main issue with housing is thought to be its lack of affordability. Following a real estate marketing campaign in the 1920s, homeownership transformed into what historian Rick Perlstein has called the middle-class “birthright” — a rite of passage to which Americans and Canadians “ascribe both moral virtue and high citizenship.”

Home buying is the most significant investment most Americans and Canadians will ever make. It is through the purchase of a home that the national dream is achieved, and it’s against the home that the good life — retirement, education — can be funded. In place of government-led housing efforts, Perlstein writes, putting “Americans in homes they owned themselves, enjoining more to join their ranks, became a crucial component of the American version of Keynesianism.”

The prevalence of renting in Canada initially meant that, throughout the majority of the last century, the country diverged from the United States in terms of its valuation of homeownership. In the final three decades of the twentieth century, however, Canada’s housing market became, if anything, more insane than that of its southern neighbor. In the past two decades alone, the value of the Canadian housing market has increased by 375 percent.

In both countries, ownership is now considered a cornerstone middle-class good, enjoyed by roughly two-thirds of the population. Per capita, Canadian homeowners are ahead of their neighbors to the south by a percentile or two. The political implications of this shift to homeownership are considerable. As Perlstein observed, “A social democracy that depended on homeownership was always a social democracy poised to swallow itself.” In this scenario, the market is the arbiter of the wealth of the home-owning class. Their stability and prosperity are therefore subject to the market’s vagaries and instability. Perlstein goes as far as to argue that this class would generally be “more interested in preserving home values than extending the circle of social solidarity.”

The reactionary politics that ensued from the increase in homeownership manifested in racist policies like redlining. These exclusionary policies were the result of fears — all of them myths — that neighborhood integration would sink property values. Today’s “NIMBYism” (Not In My Back Yard) is an expression of similar anxieties. It is the reason that NIMBYs fight densification and affordable-housing projects.

The politics of homeownership, however odious, has its origins in rational economic anxieties. This is especially true for average homeowners outside wealthy downtown cores. In lieu of strong public pensions — and as a source of wealth for average citizens in a depressive economy — homeownership has offered a perverse response to today’s big problems. Indeed, the drive toward homeownership is induced not simply through supportive government policies but by dint of our meager social safety net and floundering economy. Neoliberal governments have been happy to let the home function not just as a place to live but also a retirement plan, an alternative to a precarious and often predatory rental market, and a simulation of the consumer wealth effect.

What makes solving the present crisis so difficult is how head-spinningly connected everything is. The interdependence of these systems has made it impossible to enact effective reforms without also acting on economic areas. Consequently, the housing crisis is a problem that will not stop. The result, especially in Canada, is ever increasing market instability. Canada is currently 50 percent more dependent on housing than the US was at the height of the last bubble, meaning some kind of collapse — if only a partial one — is likely. The housing crisis presents us with a double bind. The Canadian government is aware that the housing situation is untenable. But lancing the bubble would create a collapse that would be political suicide for any governing party.

In the meantime, average people suffer under soaring home prices and rents. If there’s a silver lining, though, it’s that the madness of the situation — intensified recently by the pandemic — might help expose the defects in the story of homeownership. It’s time to recognize that homeownership — as surrogate for the welfare state — is the fig leaf that obscures solutions that give everyone, not just the deserving would-be homeowners who did all the right things, the chance at a decent life.

It’s a Landlord’s World

Few ventures have proved as reliability lucrative as property speculation in Canada and the United States: TikTok-adept real estate investors boast big earnings, putting an insouciant sheen on their speculative investment. Real estate investment trusts and fractional ownership — through which rental properties are chopped up into shares, transforming share owners into mini-landlords — offer more ways for people, even the unpropertied, to cash in on the crisis.

Historically, the housing market was the domain of the “small capitalist.” In the 2000s, however, as Jamie Shilton writes, housing transformed into a sector dominated by corporate consolidation and more aggressive “managerial techniques to reduce costs and increase revenues.” Where tenant activists mostly sparred with individual landlords in the past, they now faced off against multinational corporations beholden to shareholders.

Landlordism, Shilton points out, has always been a low-margin enterprise. Restrained by tenancy laws and requiring large capital expenditures, housing does not easily yield high returns. Cost cutting — by neglecting properties, for example, or evictions to bring in wealthier tenants — has long been a strategy to increase profit, embodied in the stereotype of the slumlord. This “profitability dilemma” — the problem of small profits relative to the size of requisite expenditures — still troubles residential landlords. However, the large scale on which today’s pension-fund or investment-banker landlord operates — with their enormous portfolio of properties — allows them to manage this problem through coordination and economies of scale.

Globally, the housing sector attracts a tremendous amount of investment capital. Aided by low interest rates and cheap carrying costs, investors and funds of all kinds have been speculating wildly since the aughts, swallowing an ever-larger slice of a low-supply market. In both Canada and the United States, the result has been a squeeze on two fronts: fewer good jobs due to slackened business investment and soaring housing and rent prices. Both function as generational touchstones for millennials everywhere — evidence that something, somewhere, has gone terribly wrong.

Even the market’s biggest defenders admit the global housing crisis is out of control, especially Canada’s homespun iteration. Regular people, many of whom might have been homeowners in another generation, have been entirely priced out of the market.

In the face of this crisis, the political classes of both the United States and Canada have been largely silent. Social movements have thus far proved incapable of demanding changes outside of highly localized contexts. The solutions on offer are reheated nonsolutions — weak-tea taxes and toothless affordability plans. Assessing policy options from what’s on offer politically makes it easy to forget that there are real possibilities to consider in tackling the problem. The exceptions that do stick out — Bernie Sanders’s homes guarantee or Ilhan Omar’s “Homes for All” legislation — distinguish themselves in one important way: foregrounding social housing.

Stillborn Housing Plans

Catherine Bauer’s seat at the New Deal table rocketed the young urban planner and activist into prominence in 1937. Shocked by the ravages of the Great Depression and inspired by European initiatives abroad, Bauer traveled the United States working with the American Federation of Labor (and local unions like the American Federation of Hosiery Workers) to organize workers’ housing projects and a labor-led housing movement. The young activist’s 1934 book, Modern Housing, contained her vision for housing: high-quality homes built for “use rather than profit,” existing outside speculative markets, and affordable for everyone. After traversing the country to enlist the support of union brass, her political clout grew, later earning her the confidence of Franklin D. Roosevelt. The first draft of the nation’s entrance into public housing — the 1937 Housing Act — was written by Bauer herself.

The Housing Act was a giant step forward, but it was far from perfect. As Edward Goetz famously observed in New Deal Ruins, “the program that emerged was importantly compromised in ways that significantly constrained its implementation.” Dwellings were “forced to conform to rigid cost and financial controls” and thus often limited to the very poor. Without diversity in income levels, most public housing projects — although not all — lacked the social power and financial support necessary to thrive. These projects fell into disrepair, making them easy objects of derision for their political opponents. Bauer made a prescient observation about this possibility in her career. As Gail Radford summarizes: “Housing programs focused solely on the poor would be politically unpopular and fail to prosper. [Bauer] instead hoped to enlist a broad spectrum of Americans behind direct federal support for the kind of housing they wanted for themselves.”

Government housing arrived in Canada decades after it came to the United States. Pushed by World War I veteran activists, the federal government provided some housing for soldiers returning from the front in the 1920s. There was also construction on a small number of low-income rentals in the 1930s, but major public housing programs did not occur in the country until after World War II. The first major Canadian public housing project aimed at the urban working poor was Toronto’s Regent Park complex in 1947, followed by Montreal’s Habitations Jeanne-Mance in 1959.

Housing provision broadened more systematically in the 1960s, thanks to the steady postwar economic growth of capitalism’s golden age and its rapid urbanization, population growth, and labor-left power. A soaring population created much higher demand for rental housing than in the United States, creating a greater likeness between Canada and European countries. As a result, both public and private rentals expanded massively in the 1960s and ’70s. Still, significant federal supports bolstered the buying capability of prospective homeowners. Keeping with global trends in the 1970s and 1980s, Canadian homeownership increased, leading to reduced middle-class rental demand.

Social housing throughout the postwar period, although woefully inadequate to the scale of actual need, enjoyed the status of relative political feasibility. “Although the vast majority of federal government assistance in housing would be directed to homeowners, financial institutions and developers,” historian Sean Purdy writes, “there was a short political space in the late 1940s through the 1960s in which state investment in low-income housing was considered a viable option.” In his essay for Where the Other Half Lives, Jason Hackworth notes that activists and academics perceived Canada’s cooperative social housing projects as a success, owing to “local tenant management, mixed incomes, and integration with the surrounding community.”

These projects countered the perception of public housing as crime-ridden ghettos. The success of social housing projects is highly reliant on the presence of an income range among residents — wealthier tenants help “subsidize” their less wealthy counterparts. Variegated income also helps fight off, as Paul E. Williams writes, “segregation, poverty concentration and often virulent opposition from nearby homeowners.”

Social Net Retrenchment

Despite the success of Canada’s social housing experiment, the 1990s saw this model come under attack. Jean Chrétien’s government assumed power in the fall of 1993 amid a punishing recession and wasted no time catering to the needs of the investor class. Urging fiscal thrift amid the downturn, the administration removed $10 billion a year in transfers to the provinces earmarked for social programs — the most severe cuts ever made.

Provincial governments replicated the cuts and kicked social programs down the line to municipalities to figure out for themselves. Rolled into broader attacks on labor and the poor, the backlash to these mounting cuts became unignorable: volcanic social unrest erupted over the next decade, particularly at the provincial level. Ontario became the site of major public-sector strikes, demonstrations, and riots. Activists lobbed Molotov cocktails at the Ontario legislature; the cross-province Days of Action nearly snowballed into an all-out general strike.

During this period, the whole of Canada’s welfare state suffered, but the damage inflicted on social housing programs was especially severe. In 1972, local governments built over thirty thousand units; in 1998, this number dropped to less than three thousand. Ownership affordability from the 1990s through to the 2000s marked social housing’s exit from public debate.

US public housing, already handicapped by its being tailored exclusively for the very poor, fared even worse coming out of the postwar decades. Under President Gerald Ford, a housing voucher program was introduced under Section 8 of the Housing Act, which publicly subsidized tenants in privately owned buildings — a shift that brought higher rents, easier evictions, and more discrimination by landlords. Successive administrations expanded on this shift in housing provision, transferring subsidies from housing supply (public housing and building enticements) to demand (rental assistance).

Ronald Reagan slashed billions from both public housing and the voucher system, and stimulated private development of affordable housing through tax credits (the Low Income Housing Tax Credit is the source of most US social housing to this day). Aiming to “end welfare as we know it,” Bill Clinton followed his predecessor’s lead. His “One strike, you’re out” policy mandated evictions of tenants whose units were sites of crime scenes and introduced stricter tenant screening.

Leveraging the rhetoric of “renewal,” Clinton’s HOPE VI legislated the demolition of housing projects (often with insufficient plans to replace them), displaced countless tenants across the country, and shrunk public housing stock. Clinton’s reforms enacted the very opposite of what they promised and resulted in a net loss of social housing. Future administrations failed to meaningfully reverse course on the direction set by these reforms.

Of America’s 123 million households, only 1 percent — 1.2 million — now live in social housing. Of Canada’s 10 million, only 628,700 live in social or “affordable” housing. All other tenants, in turn, are forced into the private market.

Red Vienna

While social housing in Canada and the United States has been hobbled by cuts and privatizations, overseas, Vienna’s robust vision of social housing, dating back more than one hundred years, lives on. Spurred to action by the rampant poverty created by World War I — and in the teeth of powerful and lawless land barons — the Social Democratic Workers’ Party of Austria (SDAPÖ) capitalized on a wave of working-class radicalism and transformed the city into “Red Vienna.” Major reforms were enacted — including public health and childcare — as well as perhaps one of the world’s most durable affordable housing regimes.

By the end of war, tight rent controls, instituted prior to the Red Vienna period, sharply disincentivized private building, causing land values to fall. The government bought the abandoned property on the cheap or took on new development itself. In 1922, with the help of a radical labor movement, the party embarked on a titanic effort to build sixty thousand publicly owned units, serving over two hundred thousand people across four hundred gemeindebau (municipal buildings). The SDAPÖ soon added tax-financed cooperative and nonprofit housing to the mix. They complemented this expansion with ample green space, pools, shared facilities, and communal areas for recreation. “The workers and employees who settled here,” wrote journalist and poet Heinrich Holek in 1926, “apparently spare no expense in order to make their environment as beautiful and pleasing as possible.”

Today 60 percent of Vienna’s residents live in nonmarket housing. Income requirements aren’t restrictive; in 2019, couples whose combined income was as much as $92,000 a year were eligible. Incomes, writer Jonny Ball points out, are not “continually assessed . . . so pay progression throughout a resident’s career does not jeopardize their right to remain in public housing.”

Housing agencies draw on leading architects, artists, or occupants themselves to design the city’s accommodations. City planners are careful to incorporate green and recreation spaces into new developments. The system is not without challenges or problems, but its simple philosophical underpinning has helped insulate the city from the global housing crisis. “Our policy,” Viennese housing director Kurt Puchinger recently remarked, “is based on the basic statement that housing is a human right.”

Not only does the large stock of social housing keep most people in high-quality homes; it also exerts downward pressure on rents in the private market. As a percentage of GDP, Austria’s public pension investment is one of the world’s highest. This dedication to pension provision reduces individual reliance on investments to secure a decent retirement.

Breaking the Spell

Could social housing enjoy a renaissance in Canada and the United States? Replacing individual and investment-fund landlords with public ownership and tenant control is simultaneously unthinkable and a totally obvious response to the twenty-odd years of rentier profiteering. Pulling off such a seemingly radical scheme on a mass scale appears impossibly daunting, but examples at home and around the world have already furnished us with examples, showing us what a more just housing system might look like.

“Most of the homeownership ideology is really destructive politically and socially,” says Samuel Stein, whose 2019 book, Capital City, examined gentrification in New York City. “But there is something about having more control over the place where you live, and you can have that without necessarily being an individual property owner.” He points to Mitchell-Lama, a popular cooperatively run housing program in New York City known for its tenant management and affordable rents. The success of mixed-income cooperative projects calls to mind the fundamental truth in Catherine Bauer’s observation about the success of nonmarket housing projects: they’ll fail to prosper if they do not produce housing we’d all want for ourselves.

But alternatives can’t be won, nor scaled up, on their blueprints alone. In places like Vienna, the expansion of government housing was less a product of technocratic policy debates than about who in society got to choose the course of political action, and with what power. We’re a long way from Red Vienna here, no doubt, but we don’t have to wait until the state has been seized to exact concessions. Waiting for the right moment is, in fact, foolish. The stability of the Keynesian postwar arrangement has evaporated and the housing sector has transformed — it is now deeply integrated into the web of financial markets. But the new complexities don’t make resistance impossible.

Intensified by the deadly pandemic, the housing crisis has spurred an increase in political consciousness and action. Rent strikes are threatening investor returns and tenant activists are physically preventing evictions from being carried out. States, meanwhile, are stepping up in ways that were unimaginable prior to the pandemic.

“I think the government measures that were put in place to protect people created an expanded constituency of people who were holding on to their housing because of government support,” Stein says. “There’s a tremendous number of people who are either getting public rent relief during the pandemic or who aren’t being evicted because of moratoriums. And with all of that looking to expire, there are even more people who see government action as the only thing that can prevent them from being evicted.”

It may be premature to claim that neoliberalism is over, but austerity appears to be out of vogue. What’s more, the pandemic showed the world that the tremendous wealth in Canada and the United States both can be directed, when governments are pushed, toward the common good. That’ll be necessary, as Paul E. Williams writes, because “to fully exit our current disaster and move toward something resembling a fair society, we must do three things: plan, spend and build. We must become the developer.”

Marshaling our collective wealth to plan and build, via public agencies, will help ensure decent dwellings for all. This must entail more than just fair rents. It will require moving away from unaffordable micro-units in condos whose floor plans look like circuit boards and toward beautiful, well-designed spaces. Urban density may require small living spaces, but that doesn’t mean we should solve the problem by making apartments into human filing cabinets.

Winning mass social housing that is both desirable and beautiful necessarily involves conceptualizing the home foremost as a place to live — as a human right — not an investment. As much as this idea seems common sense, it requires a tectonic shift in thinking. Winning mass social housing will require more than just sticking it to BlackRock — an easy-to-hate avatar of the present crisis. It will require dismantling the ideology of ownership and the policies that make it so lucrative.

The conclusion we can draw from Perlstein’s observations is that social welfare rooted in public programs will prove themselves to be more durable than those rooted in an individualized (and hazardous) housing market. The “housing crisis” — naturalized by stories that rely on the explanation of affordability to make the problem intelligible — can only be overcome by mobilizing the idea that we must build better housing for everyone. Only then can we begin to disentangle housing from retirement and wealth.

Rejecting the idea of mass homeownership doesn’t mean reducing our expectations and resigning nonowners to precarity. It means the opposite. It means increasing our expectations by retooling our social understanding of what constitutes housing. Anxieties about retirement and inheritance would be deeply ameliorated by the knowledge that loved ones will have housing provision in the absence of family investments in housing! Housing must be removed from the matrix of the market. The wealth and comfort represented by individual housing assets must be redistributed more equitably through public programs.

Formidable opponents, of course, stand in the way: real estate capital, institutional investors, and ownership bias. “I don’t know what capital does if we succeed in de-commodifying huge swaths of urban housing,” Stein says. “If we close off that option for huge amounts of investors, they are going to put that money into something else — and that could be housing in other countries, or something else in the same country. I don’t know.” Solving the crisis thus also demands a more holistic understanding of the problem posed by the housing market. The first step is creating a broader understanding of how private housing is tied to the absence of decent public pensions and, especially in Canada, our ongoing reliance on housing to drive economic growth.

The fight for mass social housing, then, is embedded in a bigger question, perhaps the big question, about the kind of world we want to live in. Answering that requires long-term vision; winning it requires a seismic shift in power. That’s a daunting task given labor and the Left’s relative marginality, but the current crisis might contain the possibility — the embryo — for such a project.