A Singapore plan for public housing

Instead of social housing, have the government build housing and sell it to people cheaply

"Pigeonholes at Bukit Ho Swee" by Philippe Put, CC BY-ND 2.0

Ross Barkan recently wrote an op-ed calling for a large expansion of public housing. He’s broadly right — this would be a good thing to do. But there are a number of significant obstacles that stand in the way.

Cost, cost, cost

The biggest obstacle to a big expansion of public housing is construction costs. Building things is incredibly expensive in America, and that includes housing. From an L.A. Times story in April 2020:

California leads the nation in the cost of building government-subsidized apartment complexes for low-income residents. A Times analysis of state data found that apartments cost an average of about $500,000. In the last decade, the price tag has grown 26%, after adjusting for inflation.

The notoriously high price of land and the rising cost of construction materials are part of the reason. But The Times found that numerous factors within the control of state and local governments also are to blame, including opposition from neighbors and rules that compel developers to meet labor and environmental standards that often exceed what’s required for luxury condominiums.

Public housing would undoubtedly suffer from the same exactly cost problems as the government-mandated affordable housing described in the piece.

Much of this is political. The same NIMBYs that make it hard to build private housing and subsidized housing will also make it hard to build public housing. Delays, appeals, interruptions, and lawsuits will send costs soaring and push timelines years and years into the future. On top of that, public housing construction will be subject to political scrutiny that private developers can partially avoid — people will insist that public housing is built using highly paid labor, and so on. Many of these same problems plague our infrastructure.

This incredibly cost will make public housing very expensive to build. That in turn will raise either the amount of rent that government will have to charge for the housing, or the amount of tax revenue that it has to raise to subsidize it. The more public housing becomes an ongoing cost center, the more likely it is that funding will be cut off or rents raised in the future.

There’s a reason they’re called “The Projects”

Another obstacle to public housing is that there are strong forces that will try to turn it into a tool for racial segregation and concentration of poverty. This is basically what happened the first time we did a big public housing program, as Barkan notes in his article. Megaprojects like Chicago’s infamous Cabrini-Green Homes essentially became giant holding pens for poor Black people, isolating them from wider society and leaving them bereft of resources to resist the encroachment of crime, drugs, and other social ills that tend to accompany concentrated poverty.

America’s public housing was so bad that economists have found that demolishing these projects and replacing them with Section 8 housing vouchers led to improved outcomes for kids who were displaced from the demolished projects — better employment, fewer dropouts, fewer arrests, etc.

If you find that tearing down housing projects improves the lives of the kids from those projects, you should really think twice before you try public housing again.

Barkan declares vaguely that “these are fixable problems”. But are they? The biggest reason NIMBYs fight so hard to avoid dense housing construction in their neighborhoods is that they don’t want to live next to poor people. How would public housing change that? San Francisco residents fight tooth and nail against subsidized affordable housing developments; they’d fight tooth and nail against public housing too. In addition to the aforementioned cost overruns, this will cause some local governments to compromise by putting public housing all in one place, or separating it from the neighborhoods of the most politically active and powerful homeowners. And voila — we’re back to Cabrini-Green, and another generation of government-sponsored poverty concentration.

A Singapore Model for U.S. public housing

Singapore’s housing model, which Barkan briefly mentions, is pretty neat. Let’s talk about how it could be adapted to fit the U.S. context, and then later we’ll talk about why it helps solve some (but not all) of the aforementioned challenges.

Singapore’s Housing Development Board units are not exactly public housing in the traditional way we tend to think of it — i.e. social housing, owned and rented out by the government at below-market rates. Instead, the government builds condominiums, then basically sells them to people cheaply. Actually, what the government sells are 99-year leases, which at the beginning of the lease basically function the same as ownership (but which run into weird problems as the least approaches its end). Anyway, you can resell your lease, which is similar to reselling your home, so it functions a lot like homeownership — you actually build wealth as home prices rise. Through a complex system of taxes and managed housing price appreciation, plus the initial discount at which the properties are sold, Singapore carefully controls the rate at which the pseudo-homeowners build wealth. Meanwhile, the condo complexes are managed and upkept by smaller government unites called town councils.

The United States could do something like this, but it would require some changes:

• First of all, the U.S. government doesn’t own a lot of the land in the desirable metropolitan areas — the San Francisco Bay Area, Greater Los Angeles, etc. — where rents are punishingly high. State or local governments would have to acquire this land, either through scooping up distressed properties at auctions, or by creative use of eminent domain.

• Instead of 99-year leases — which are probably a bad idea even for Singapore — U.S. governments would just sell the properties. True homeownership instead of pseudo-ownership.

• Instead of condo complexes being managed by town councils, they would be managed by condo boards, or possibly by housing co-ops when available. Co-ops could also rent some portion of the units at cost to poor families who couldn’t buy condos even at the government’s discounted prices. Governments who wanted to subsidize affordable housing could use these co-ops to do it. This would be true social housing.

• The U.S. wouldn’t be able to tightly manage property owners’ wealth trajectories like in Singapore, but by consistently building housing in probably-desirable locations and selling it at a discount to first-time homebuyers, it could make sure that most homebuyers build a decent amount of wealth over their lifetime.

• Instead of giant condo towers like in Singapore, the U.S. would probably build smaller, cheaper, low-rise wooden apartment buildings.

Call this the Modified Singapore Model.

This approach is kind of similar to what we did with the G.I. Bill for the WW2 generation — except instead of a one-time thing, we’d follow up on it, building new cheap homes for every successive generation. Housing as the vehicle for middle-class wealth building is currently pretty broken, but a system like this would make it less broken.

The Modified Singapore Model helps with some of the problems — but not all

One problem that the Modified Singapore Model might help with is politics. Leftists often join with NIMBYs in opposing market-rate housing, or even affordable housing that doesn’t meet their stringent standards. But government-constructed housing, especially if it were called “public housing”, might tickle their ideological pickle. Breaking the alliance of urban progressives and NIMBY homeowners would deal a blow to the anti-housing coalition.

A second benefit of the Modified Singapore Model would be that government-built housing developments would tend to be much more mixed-income. While few would go to the wealthy, many units would be purchased by young people looking to grab the first rung of the ladder to the middle class. Mixed-income housing developments would be less scary to local NIMBYs, which might make them fight less hard to block them. They would also tend to have fewer of the deleterious effects of America’s 20th century Cabrini-Green style social housing. Poverty would be dispersed instead of concentrated, which would lower crime while also improving outcomes for the poor.

Finally, the Modified Singapore Model would free government from the burden of owning and operating the housing it built. That would stop it from becoming a political football — once the government built the housing, it would be privately owned.

So this model of “public” housing would be well-adapted to America’s particular needs, challenges, and pathologies. But there are still some problems it wouldn’t automatically solve:

1. NIMBY restrictions on housing construction — zoning, height limitations, parking minimums, setbacks, and so on — would still have to be overruled by state governments. This would be just as challenging as it is for private housing development, or possibly even more so, given public housing’s bad reputation from the 20th century.

2. Cost would still be a problem. Even if state governments could intercede to block the appeals and challenges that NIMBYs use to cause delays and cost overruns, and even if the government could use eminent domain and auctions to acquire land cheaply, there would still be the issue of government construction being forced to use more expensive labor and obey stricter environmental standards than public construction.

3. Many middle-class Americans would still not want to live around poor Americans. This would lead to a thousand intense, sordid little battles at the level of the housing development over how many units to rent out to poor tenants, with aspiring middle-class homeowners fighting to minimize the number of their poorer neighbors. You can take the Americans out of the ‘burbs, but you can’t take the ‘burbs out of the Americans.

So the Modified Singapore Model is not a panacea for what ails American housing. The hard problems of NIMBYism, prejudice, and government dysfunction will still be present, even if “public housing” looks more like an ownership society. But if we want to do public housing, something like this Modified Singapore Model is probably the way to do it.

Update: Matt Yglesias disagrees.

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