America’s affordable housing crisis is showing no signs of slowing. Our many piecemeal attempts to solve the crisis have over and over again proven ineffective. Politicians continue proposing strategies to merely cope with our dysfunctional housing system instead of effectively addressing the system’s dysfunction itself.
We need a comprehensive plan that identifies and effectively addresses the underlying roots of our dysfunctional housing system. What follows is the basic foundational blueprint for federal legislation that will do just that.
The Affordable Housing Forever Act (AHFA) will bring dignified housing as defined by the UN, and which includes housing security and a means of building equity, to all people. It will create a system in which rents become equity payments, enabling people of all income levels to own modest housing at a young age…or any age. This will be accomplished by effectively addressing supply and demand issues, as well as excessive housing inflation.
There are three major dysfunctional factors driving the affordable housing crisis that must be effectively and thoroughly addressed if we are to manifest a housing system that works for everyone. They are:
1) Investor-induced excessive demand;
2) Lack of supply;
3) Non-productive-credit driven housing hyper-inflation.
Excessive, Unnecessary Demand
The organic purpose of housing is to house people. Ideally the demand for land/housing would be dictated only by the number of people present. The commodification of land/housing has greatly and unnecessarily increased land/housing demand by allowing investors, large and small, to purchase land/housing in excess of the land/housing they personally need. This in turn greatly and unnecessarily increases demand. The AHFA will effectively address this by re-prioritizing the housing of people as the chief purpose of housing, abolishing investments in existing housing, and dismantling our feudalistic property laws.
Supply
As wealth inequality has increased, money supply and labor have been diverted away from necessity & sustenance-based housing to luxury-based housing. Restrictive zoning laws and community resistance have thwarted affordable housing supplies across the country. The AHFA will effectively address these issues by redirecting money supply and labor to necessity-based housing and by holding cities effectively accountable when they fail to meet affordable housing requirements.
Excessive Non-productive Money Supply
The AHFA makes the distinction between credit used to construct new housing units and credit used to purchase existing housing units. This is an important distinction as construction loans are a use of credit in which the benefits of the produced goods outweigh the negative impacts of any resulting inflation, while existing-home purchase loans produce nothing but have: 1) hyper-inflated not only existing home sales but housing prices across the board; 2) made massive loans a necessity for average home buyers; 3) created a perpetually massive income stream for banks; and 4) have turned housing into a speculative market that our faux economy has become dependent upon.
Existing home sales’ massive commodity-specific money supply, above and beyond the general money supply, enables existing housing units to be sold for much more than they are really worth and is responsible for housing’s hyper-inflation. The AHFA will effectively address the hyper-inflation of housing by regulating lending & pricing for existing-home purchases.
Excessive, unnecessary demand, lack of supply, and excessive inflation are powerful forces when acting alone. When acting together they are extremely formidable, and enable those controlling land/housing and controlling the money supply to easily take economic advantage of those in need of housing.
The AHFA is a comprehensive plan that effectively walks away from the ongoing dysfunction of our current housing system and moves on to an equitable and comprehensively healthier housing system.
In addition to the above economic factors, the plan is informed by the following principles:
1) Dignified housing is a human right;
2) The secure, dignified housing of people takes priority over profiteering;
3) In the words of Thomas Jefferson, our laws of property have been so far extended as to violate natural right;
4) Taking what one needs and leaving the rest is a cornerstone of sustainability and humane coexistence;
5) Allowing one set of people to build wealth not by working but by hoarding land/housing in order to exploit and profiteer from those who really are working and contributing to society is not just and is a recipe for civil discord;
6) Investment income should never be allowed when it isn’t benefiting the collective or when it creates an impediment for others to the necessities of life;
7) We need to transition to a mixed-market economy in which life’s necessities are protected from the free market.
The Plan
Decomodification
Phase 1: Initial Prohibition
Upon passage of the AHFA, purchasing housing for investment is prohibited. A housing unit may only be purchased by buyers committed to being occupants. A buyer’s former residence must be on the market within six months of the new purchase date and sold within one year.
Phase 2: Disposition Period
Beginning on the second anniversary of the AHFA’s passage, any housing held as investment must be sold within 10 years, at the rate of 10% per year of the aggregate value of one’s housing holdings, less one’s primary residence, at the time of the second anniversary of the achs passage. Failure to meet these guidelines will result in the following fines assessed every year:
(the second anniversary value or current value, whichever is less, of all non-primary residence holdings remaining above required sales)*(10%*disposition year). For those owning 9 housing units or less, the assessment of fines will begin according to the following schedule, but the fines will be accelerated in order to reach 100% by the tenth year:
8-9 units: end of 2nd disposition year;
6-8 units: end of 3rd disposition year;
4-5 units: end of 4th disposition year;
2-3 units: end of 5th disposition year;
1 unit: end of 6th disposition year.
Multi-unit dwellings will be sold as individual units.
Until cities have fulfilled their affordable housing requirements, secondary homes will be treated as investment units.
Supply
The federal government will undertake construction of new, necessity-based, energy-efficient, non-toxic, weather and disaster-resistant homes that meet UN guidelines for dignified housing. The smallest sustenance units will house those who can’t support themselves and would otherwise be homeless. Successively larger units will be available to those who qualify, with the smallest units prioritized to the lowest income earners. Prices will be based on cost. Mortgages will be held by the federal government and will be offered at 0% interest. Mortgage terms will be 10 years. These homes will be forever prohibited from being used to secure a loan for anything other than the purchase of the home itself.
For those who fall behind on mortgage payments, suitable work programs will be offered. As a last resort, an occupant may be moved to a smaller, economically feasible unit. An occupant can never be evicted unless a smaller or sustenance model is available to them.
Inflation
Sales prices of all existing homes will be limited to purchase price adjusted for general inflation plus fair market value of improvements less depreciation of improvements. Required down-payments for existing home purchases will start off at 20% of purchase price and increase 2% per year for 15 years and will remain at 50% from thereon.
Upon passage of the AHFA, a moratorium on non-necessity housing construction loans will go into effect. This moratorium will be lifted for housing loans in cities that have met their affordable housing requirements.
From thereon, lending guidelines will be put into place that mandate funding of construction of necessary affordable housing, to be determined yearly by a housing board. This board will be made up of proven housing advocates, elected by the people to represent 15 regions of the country, serving four-year terms, and who are prohibited from taking money from donors. Campaign guidelines will go into effect ensuring all candidates have equal media exposure.
This board will determine housing-construction interest rates for different housing types, with necessity-based housing receiving the lowest rates, and luxury-based housing receiving the highest rates. The Federal Open Market Committee will relinquish the duties of setting interest rates and determining availability of money/credit for any and all housing purposes.
Again, this is the basic foundational blueprint for the AHFA. Effectively addressing the major points listed above is requisite to once and for all effectively addressing the perpetual dysfunction of our current housing system. In addition, many other factors also need to be effectively addressed, and many details need to be worked out. These aspects should not be left to politicians. It is crucial that the public contemplates, brainstorms, and engages in civilized intellectual debate in order to identity and effectively address these other factors and details.
The AHFA, while requisite to creating a new, equitable, healthy, and functioning housing system, needs to be one component of a larger, comprehensive plan, such as the New Green Deal, that effectively addresses the many other dysfunctional aspects of our current systems, such as climate change, wealth maldistribution, and inequality.