Episode 3: Public Housing

One of the Corporal Works of Mercy is to shelter the homeless. This imperative stems from Isaiah 58:5-10 where the Lord tells us, through Isaiah, how we are to worship him:¹

⁵ Is that the sort of fast that pleases me, a day when a person inflicts pain on himself? Hanging your head like a reed, spreading out sackcloth and ashes? Is that what you call fasting, a day acceptable to Yahweh? ⁶ Is not this the sort of fast that pleases me: to break unjust fetters, to undo the thongs of the yoke, to let the oppressed go free, and to break all yokes? ⁷ Is it not sharing your food with the hungry, and sheltering the homeless poor; if you see someone lacking clothes, to clothe him, and not to turn away from your own kin?⁸ Then your light will blaze out like the dawn and your wound be quickly healed over. Saving justice will go ahead of you and Yahweh's glory come behind you.⁹ Then you will cry for help and Yahweh will answer; you will call and he will say, 'I am here.' If you do away with the yoke, the clenched fist and malicious words,¹⁰ if you deprive yourself for the hungry and satisfy the needs of the afflicted, your light will rise in the darkness, and your darkest hour will be like noon.

What would it mean for our faith if we practiced this as a society? The abundant resources we have access to in the 21st century should allow us to shelter the homeless on an unprecedented scale. After all, if we aren't able to shelter the homeless, then what is the purpose of all of this wealth? With that in mind, what is the most effective way to carry this out?

In their 2022 book, Homelessness is a Housing Problem, Clayton Page Aldern and Gregg Colburn convincingly argue that rates of homelessness are related to absolute rent levels and rental vacancies.²Homelessness rates are correlated with absolute rent levels. This means that for every $1,000 increase in rent, we would expect a 0.4% increase in the homelessness rate. By decreasing absolute rent levels, we can reduce levels of homelessness. What is the most effective way to decrease absolute rent levels?

Increasing the housing supply reduces rent prices.³ This finding makes intuitive sense. When the supply of a good, such as housing, increases, we would expect that the price for that good would decrease. Of course, there are many complicating factors. Reducing the cost of building housing can be a way to generate more private-sector housing development. For American cities, there are a few ways to reduce the cost of private real estate development.

Reducing regulatory burdens that require time and money spent on delays including the following: permits and hearings, zoning laws that prohibit certain housing from being built, parking requirements that dictate the cost spent on an amenity that affects the built landscape around it, and the cost of labor and materials in the local market. Currently, the government subsidizes private development. The Low-Income Housing Tax Credit (LIHTC) is a program created by Congress in 1986 and administered by State and local agencies. It gives private developers $10 billion a year to build guaranteed affordable low-income housing for 35-50 years.⁴ This offers only a temporary solution if not enough housing winds up being built. Instead, building housing directly would solve the problem more quickly and efficiently.

A new approach to eliminating homelessness is the "Housing First" model. In "Housing First" systems, homeless people are given housing without having to solve their other problems first. The idea behind these programs is that housing is a foundational requirement for human beings. Only with the stability of permanent housing are people able to then address any other problems. The data shows that these programs work: studies show that permanent housing solutions can have housing retention rates of 98% over the course of a year.⁵ These programs are not just effective at combatting homelessness, they also provide significant cost savings for localities. Providing homeless people housing reduces their use of emergency services. One study showed savings on emergency service expenses of $31,545 per person over the course of 2 years with another study showing savings of $23,000 per year per person compared to a traditional shelter program.⁶Providing housing to those that need it is better for both those in need as well as a more cost-efficient service provision method. How many people would a program like this help?

The city I live in, Houston, already practices such an approach. Through such an effective program, homelessness has decreased 63% since 2011.⁷But with housing costs increasing and wages stagnating, that number has been on the rise in recent years. At any given moment, about 3,270 are experiencing homelessness in the Houston Region.⁸ Homeless people are not the only ones struggling with housing, however. Despite having a reputation as an affordable city, a majority of renters in Houston and Harris County are cost-burdened according to a 2023 report by the Kinder Institute for Urban Research.⁹ With about 2.3 million people and 60% of households being renters, that amounts to about 700,000 rent-cost-burdened people in the City of Houston.¹⁰ Moreover, evictions have hit a high of 80,000 even as 20% of the housing in Houston and Harris County were graded as "below-average".¹¹ The City of Houston has Alleviating housing costs would significantly improve the lives of a majority of Houston residents. What would be the price of a program to reduce housing costs?

To answer that question, we need to know the value of a few variables: average square feet of living space needed for a person, the cost of building per square foot, and the interest rate. For a rough estimate, we assume that the minimum space needed for a person is 600 square feet. The average cost to build an apartment per square foot is $350.¹² Multiplying these gives us the cost to build housing for one person: $210,000. Taking the number of homeless people and cost-burdened renters in the City of Houston mentioned above, the total cost would amount to $686.7 million and $147,000 million, respectively. The City of Houston is able to borrow at around 3.8% interest.¹³With a 30 year mortgage, the yearly payments would amount to $38.4 million to provide housing to all homeless people and $8,219 million to provide an affordable unit to every single cost-burdened renter. These would represent 0.62% and 132.9% of Houston's budget.

An affordable housing unit would not have to be provided for every single cost-burdened renter, however. If enough affordable housing units are built, downward pressure would be put on private market rents. In the meantime, while public housing units are built, the City of Houston would be increasing the amount of assets it possesses. This would allow the City to build capacity to provide further housing wherever it is needed. Initial bond apportionments from the City would be able to grow into a self-sustaining enterprise. If the program proves successful, more funds could always be allocated. Not only would this build communal assets, but it would also decrease costs for over-burdened households. We calculated how much revenue would need to be generated to fund these programs above, but how do we know at what point the market would be saturated?

3.5% of single-family rental homes in Harris County had corporate owners.¹⁴The ownership structure of these homes and corporations makes it very difficult to find out exactly how much any corporate landlords own. Greater transparency in real estate ownership would allow for more informed decision-making. Knowing the beneficial owners of real estate in Houston and Harris County would give greater insight into how concentrated land ownership is in Houston. Moreover, having access to corporate landlords' records would give the City greater knowledge into up to date rental prices, sizes, and vacancy rates. Collecting up-to-date market information in neighborhoods throughout Houston would give the Housing Authority greater ability to predict market trends. Some might ask, however, if all of this construction by a government entity is possible.

One of the greatest examples of government-sponsored home-building on such a scale is the city-state nation of Singapore. The Housing & Development Board (HDB) in Singapore was created in 1960 and now has more than 1 million units.¹⁵ The HDB was initially created to improve living conditions amongst Singaporeans living in slums, but quickly expanded to providing housing for the lower-middle and upper-middle classes. Nowadays, more than 80% of Singaporeans live in one of these apartments with 90% of those owning the apartment.¹⁶ This demonstrates the power that localities have to provide affordable, quality housing to its citizens. Neoliberal trends have since reduced some of the affordability. Starting in the 1990s, the Government of Singapore began encouraging these apartments to be treated as investments. While this has increased the wealth of the owners of the apartments, it decreases the affordability for Singaporeans trying to break into home ownership. When treating housing as an investment, price appreciation becomes the main policy goal. This, however, necessarily reduces affordability for non-owners. Singapore provides an excellent example of what is possible while also providing lessons on how to preserve affordability.

A public housing program on this scale would not just be able to provide housing to the homeless, but also relieve a significant cost burden for a majority of Houstonians.