It was fitting to be in London, as white-hot a real estate market as can be found in New York or San Francisco, for Lincoln Institute President George W. “Mac” McCarthy to set the record straight about affordable housing. As the first guest at the third annual CityLab Live breakout sessions, McCarthy had praise for the suite of strategies to bring about more balanced and diverse urban communities, including shared-equity housing, community land trusts, and inclusionary housing – in London, as much as 30 percent of new residential development is required to be affordable. But, he said, market-based solutions alone in the current context would take decades for cities to catch up to the housing gap, estimated by McKinsey to require $16 trillion to be closed by 2025.
Private developers will naturally follow the path of least resistance, catering to high-end demographics, McCarthy said in a conversation with Jennifer Bradley, director of the Center for Urban Innovation at The Aspen Institute, co-sponsor of the three-day symposium with Bloomberg Philanthropies and The Atlantic. “It’s a matter of political will,” he said, adding that “it’s really all about the competition for land and the markets for land.”
Seeking to debunk some myths about private investment in housing development, McCarthy shared the affordability calculator, developed by Cornerstone’s Rick Jacobus, author of the recently published report Inclusionary Housing: Creating and Maintaining Equitable Communities. By tweaking various elements in the prospectus of development projects – the cost of borrowing, subsidies, density bonuses, the cost of production, and zoning requirements such as minimum parking, the calculator shows how a significant portion of homes can be affordable while protecting a decent return for private investors. “This is an existence proof,” he said. “If we had the will, we can produce affordable units.”
The discussion was covered by Kriston Capps for CityLab, highlighting the affordability calculator and the notion of a moral element in the provision of affordable housing. “This makes the affordable housing conversation a little more legible,” said Bradley, adding that “housing is not just about finance – it’s about politics, design, and regulation.”
Singapore, where the homeownership rate is about 80 percent, is an example of a city able to take dramatic measures to rework the housing sector. “They’ve done it by taking land out of the equation,” McCarthy said, making “the entire city essentially one big community land trust.” He also singled out Champlain Housing Trust in Burlington, Vermont, as capable stewards of both affordable purchased homes and rentals in the region. (The same week as CityLab Live, the National Community Land Trust Network met in Louisville, Kentucky for its annual meeting).
Also joining the breakout session were Steve Adler, mayor of Austin, dealing with rapid population growth, increased housing costs, and London Deputy Mayor Richard Blakely, who shared the challenges of trying to integrate affordability in the city’s astonishing growth. London is also focused on land-based initiatives, getting more land to market, and applying covenants to ensure affordability. Sheela Patel, director of SPARC, brought the conversation to the global scale, reminding the audience that housing in the cities of the developing world is a matter of home-made scrap materials on a tiny spot of occupied land, where residents are constantly worried about eviction. Finally, Peter Rabley, director of investments at the Omidyar Network, also emphasized the importance of land in the housing equation, as well as incremental interventions to help poor residents make improvements at their homes and avoid eviction.