Looking to global examples to address housing crunches in expensive cities

Housing is a very difficult issue to address at the national level. Can the United States look to examples abroad?

Photo by Mike on Pexels.com

Some suggest that Japan is the model to follow. There, rental prices have largely remained flat over the last 25 years, according to data from the country’s statistics bureau. The reason is that the government controls zoning nationally and is more open to development in the number of houses it allows to be built. Just over a third of Japanese citizens rent the homes they live in, protected by a 1991 law called the Act on Land and Building Leases, which makes it difficult for landlords to end leases or prevent a tenant from extending their rental contract…

So where else should we be looking, if not to Japan, for the model to fix the broken housing market in large parts of the west? One option is Singapore, where public housing is built in specially designed communities and sold to individuals with a 99-year lease below market value. Selling on that property is highly restricted to reduce profiteering, but it can happen after five years of ownership. Nearly four in five Singaporeans live in public-sector housing, according to official statistics. “Prices can never get beyond regular working families,” says Ronald. “They have this virtuous circle, and it makes it interesting to think about the role of regulating housing.”…

Until late January 2022, housing developments in Germany were subsidized by the government below market rates for the first five years after being built. “It means tens of thousands of units every year come onto the market, keeping rental prices lower and preventing scrambles to buy a property,” he says.

A similar model exists in Austria and Switzerland, where the split is roughly 55 to 45 percent (in favor of renting in Switzerland, and owning in Austria), compared to an average European home ownership rate of 70 percent. When you get to the Austrian capital, Vienna, the home ownership rate is just 7 percent.

All of these sound like they would require some fundamental changes to housing policy in the United States. This might include:

  1. A stronger national policy. This could be through programs available everywhere or guidelines that all states and municipalities have to follow.
  2. A stronger emphasis on renting.
  3. More government involvement in the construction of housing and/or longer-term government oversight of housing units.

None of these options would be particularly popular in the United States or easy to implement. Here are quick explanations why for each option above:

  1. A national policy would come at the expense of the power of more local governmental actors. With real estate being so much about location, could a national policy truly address all of the different situations? Americans expect to be able to control or at least provide input into the use of land around them.
  2. Homeownership is ingrained in American life as part of the attainment of the American Dream. This is ensconsed in zoning policy, supported by politicians and policies for decades, and Americans can be suspicious of renters compared to homeowners. Renting is more common in some areas compared to others but it is not seen as the ideal among Americans.
  3. Public housing has never been fully supported in the United States. The government’s active role in housing is often viewed as negative unless it is supporting homeownership.

This does not mean that the housing landscape in the United States cannot change. The need for more housing and more affordable housing is acute. But, changes will likely take decades and sustained efforts.

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