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By Howard Husock

America’s Trillion-Dollar Housing Mistake: The Failure of American Housing Policy.

Eye on the News

Howard Husock
Reinventing Affordable Housing
Tiny and cheap instead of large and expensively subsidized
July 11, 2012

Many will doubtless regard with skepticism the Bloomberg administration’s newly announced “micro-unit” pilot program. The administration is asking developers to submit proposals for the design and construction of an apartment building on a city-owned site in Manhattan; the city will adjust zoning restrictions there, allowing the winning developer to construct a building full of tiny, 275-square-foot apartments. In a country where plenty of homeowners have garages far larger than the proposed apartments—which would be not much bigger than an ATM lobby—there will be a tendency to see the micro-units as novelties similar to gourmet food carts, Central Park bike-rental wars, $500 Broadway tickets, and other aspects of life unique to the Big Apple. Instead, we should view these little apartments as a serious and significant step forward in the city’s housing policy. The Bloomberg administration is reinventing affordable housing in terms that make sense: denser and cheaper, instead of expensive and subsidized. And in doing so, the city is mapping the way toward ensuring that it continues to be a magnet for the talented young newcomers it needs.

Though it may look radical to allow apartments that must be smaller than any of Anna Wintour’s closets, the micro-unit idea is actually a rediscovery of what affordable housing used to be before it assumed its current form. Throughout the late nineteenth and early twentieth centuries, New York saw the construction of small, cheap housing, such as the Lower East Side’s tenement houses and Brooklyn’s thousands of three-story buildings (often with stores on the first floor and apartments on the second and third). It was the same in other cities. Philadelphia saw the construction of 299,000 row houses—small, connected single-family structures. Boston had clusters of “three-decker” frame homes. Chicago had a vast “bungalow belt.” Even Levittown’s small-lot split-levels were part of the same story. All sorts of private, unsubsidized structures offered the same deal that the proposed micro-units do: trading off space to save on the rent or the mortgage. They allowed American cities to grow and low-income newcomers to have homes.

For the last few decades, New York City has strayed from that tradition. For one thing, “affordable housing” now usually means new, expensive, deeply subsidized construction—large units for a lucky few, supported by higher rents for other tenants and tax credits for big developers. (Indeed, this has been the Bloomberg approach to date.) New York also embraced the ill-conceived policy of rent stabilization. Today, the city has more than a million rent-stabilized apartments (along with 180,000 public-housing units). That gives a large portion of the population a strong disincentive to move, lest they lose a good deal. Data compiled by NYU’s Furman Center for Real Estate and Urban Policy indicate that between 1990 and 2000, 35 percent of New York City tenants remained in the same unit—while in Los Angeles and Houston, just 14 percent and 10 percent did so, respectively.

In dynamic cities, residents move around and opportunities open up; in frozen cities like New York, talented newcomers are shut out. A recent New York Times article described the frustration of two young college graduates seeking a moderately priced place to live. “It was really difficult to even find a decent convertible one-bedroom apartment for less than $4,000,” one of the pair told the Times. Enter the micro-units, which will probably rent for $2,000 or so. They are of a piece with the Bloomberg administration’s plans for the new Cornell-led science and engineering campus on Roosevelt Island: the talented graduates of that school will need places to live, lest the city lose them to Shanghai and Bangalore.

As long ago as 1907, Jacob Riis, the first housing reformer, noted that setting housing standards too high threatened “to make it impossible for anyone not able to pay $75 a month to live on Manhattan Island.” To its credit, the Bloomberg administration has recognized that just as New York needs entry-level jobs, it also needs entry-level housing.

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