It’s not often that national news and policy affects us directly, but there’s at least one issue that affects everyone: housing. The US has built in incentives to sprawling houses for decades, and a recent report estimates this subsidy at $450B a year. The Atlantic Cities published an excellent summary of this report this Tuesday that’s worth reading.
Smart Growth America’s report counted 50 federal programs that lean on the real estate scales in some way, whether through tax credits like the home mortgage interest deduction, loan guarantees through the Small Business Administration or Federal Housing Administration, or grants for low-income housing. The report did not count investments by so-called “Government-Sponsored Enterprises” like Fannie Mae and Freddie Mac. It didn’t include non-direct spending on things like transportation or water infrastructure that also has a major impact on real estate. And it didn’t include federally owned real estate (of which there is a lot)…
Stepping back and looking at the whole collection, it’s clear that the federal government has favored many types of development at the expense of others, often with weak or outdated logic. The government dramatically favors homeowners over renters. Its support is heavily skewed toward single-family homes over multi-family developments (the FHA, for instance, funneled just one-tenth of its $1.2 trillion in loan guarantees over the past five years toward multi-family housing).
The mortgage interest deduction – a program first created in 1913 with the ostensible aim of boosting homeownership – curiously encourages investments in second homes. As we’ve written before at Cities, that massive tax break also primarily benefits upper-income households, despite its billing as a boon for the middle class.
In another story published in the Atlantic on the same day, it’s estimated that sprawling development will kill off tens of millions of acres of forest in the US by 2050:
Scientists at the U.S. Forest Service and partners at universities, non-profits and other agencies predict that urban and developed land areas in the US will increase 41 percent by 2060. Forested areas will be most impacted by this expansion, with losses ranging from 16 to 34 million acres in the lower 48 states. The agency highlighted the results of a new study in a press release issued last month.
And forests aren’t the only land we’re losing:
In 2010, a study by the American Farmland Trust found that 41 million acres of rural land had been permanently lost in the preceding 25 years to highways, shopping malls, and other development. The rate of recent farmland loss at the time of AFT’s report was an astounding acre per minute.
Bringing this all back to a local discussion, let’s look at for-sale housing inventory in King County:
Another record low for inventory, dropping below 4,000 single-family homes for the first time on record.
The next building cycle will probably come sooner rather than later, and if we get federal policy right maybe we can build up instead of out, saving the farmland and forests that help make this region great.