Housing USA: Affordable Housing Beyond America
By Scott Beyer
6 min read
This will be my last Housing USA column for Tax Credit Advisor. I want to thank you, the readers, and the magazine staff for running it these six years.
Over these years, I’ve highlighted affordable housing problems in U.S. cities, and how developers can help solve them using Low Income Housing Tax Credits, low-cost building methods and more. During the first few years of the column, I was even traveling America to tour projects, and upon completing my journey, summarized the trip for the March 2019 TCA cover story, Urban Odyssey.
Housing USA is ending because now I’m taking my act overseas. For the next year and a half, I’ll travel through the Global South – spending a half year each in Latin America, Africa and Asia. The purpose is to learn about the future of urbanism; the Global South is the world’s fastest-growing area, and its planning decisions will impact how billions of people experience cities.
I’ll still look for housing themes as I travel. And learn how other countries deal with the same challenges the U.S. faces – lack of affordable housing, excessive government regulation and technological adoption in the otherwise conservative building trades.
Public Housing
One area I’ll look at is social or public housing policy. Public housing has a checkered history in the U.S. with origins in federally sanctioned segregation and chronic underfunding from the federal government inevitably leading to poor conditions. Recent efforts through the Rental Assistance Demonstration have put the public housing portfolio on a path to financial solvency via the voucher platform and leveraging outside capital.
While only a small percentage of Americans live in it, 80 percent of people live in public housing in Singapore (one of my stops).
Faced with a housing crisis in the 1960s, Singapore began building cheap, high-density apartments for low-income residents. Unlike the U.S., their government actually maintained the units, and perhaps more crucially, residents own them.
Another public housing model that advocates celebrate is at another of my stops: Seoul, South Korea. However, Seoul is only able to produce 5,000 public housing units annually in a city of 9.7 million, showing the scalability problems of some U.S. affordable housing programs.
While I have not found any foreign programs that mirror LIHTC one-for-one, there are similarities in different countries. For example, in Colombia, the government switched from social housing to private-sector-driven programs. Private developers build affordable units and low-income Colombians enjoy various subsidies to purchase them.
Startup Cities
That said, most people, even in the developing world, don’t need to depend on the government for affordable housing. There are many private-sector innovations.
For instance, startup cities. I hope to visit 50 to 100 of these during my trip. They are privately-run cities that host governments have given some level of autonomy. This grants them leeway to operate the land as they wish and experiment with alternative governance.
One famous example that many startup cities model themselves after is Shenzhen, China. Shenzhen, which I will visit during my Hong Kong stop, is a special economic zone with lower taxes and a better business environment than China. It has over 90,000 foreign enterprises and has grown, in a few decades, from a small fishing city to a 23-million-person metro.
However, most startup cities are smaller and more experimental. I’ve already visited a few in these early months of my trip, most notably Prospera, a proprietary community on the Honduran island of Roatan. Prospera has been described as a “crypto-libertarian paradise” and a special economic zone (SEZ) that, enjoying near-full autonomy from the Honduran government, will have low taxes, dense zoning and crypto-friendly regulation. Upon visiting, I toured an on-site factory that will mass-produce deeply affordable micro-units renting for several hundred dollars per month.
Other startup cities that I’ve visited, such as Michatoya Pacifico (Guatemala) and Morazan (mainland Honduras), specifically cater to low-income natives working in local factories. So, while generic private planned communities are often exclusive, startup cities—which apply business incubation concepts to urbanism—often have a special focus on affordable housing. Startup cities seem to be more welcome in the Global South than “developed” Western societies because they’re seen as alternatives in places where traditional government institutions fail.
Construction Technology
Another path to housing affordability that interests me is construction technology, such as modular housing, 3D printing, eco villages and more. These allow housing to be built faster and cheaper.
Again, there are lots of communities in the Global South experimenting with this, like a nonprofit called New Story that built a 3D-printed home village in Mexico and plans to build more in an effort to end homelessness.
A high-tech version of an ecovillage is Tengah, in Singapore, which will have 42,000 new homes, and will be designed for pedestrians and bike riders.
Slums and Self-Made Cities
An extremely cheap form of housing that I’m already seeing during my trip is informal slums. About a quarter of the world’s urban population lives in these. They develop because of rapid population growth and poor governance. In the parts of Latin America I’ve traveled through, for example, people move from destitute rural areas into cities to find jobs. Because there’s no immediate housing for them, they often build illegal slums on government-owned hillside land, in what is colloquially called “invasions.”
Brazil’s favelas are one example.
While slums are depressing—poor, unsanitary, gang-controlled—they represent a truly bottom-up form of urbanism. People go onto land and build structures without any regard for property rights or zoning laws. As a result, units are predictably cheap, helping to house those on the margins who would otherwise be homeless.
The Dharavi slum in Mumbai (another one of my stops) was made famous by the movie Slumdog Millionaire. It has an informal economy worth $1 billion.
“If one looks past the open drains and plastic sheets, one will see that slums are ecosystems buzzing with activity…Creating neat low-income housing estates will not work unless they allow for many of the messy economic and social activities that thrive in slums,” says economist Sanjeev Sanyal.
Sometimes slums can develop into something resembling a modern city. Neza is a “self-made city” near Mexico City. It began as an illegal settlement but grew, despite a lack of official access to electricity, water and sewage. It’s now home to 1.1 million residents.
I’m sure I will see many more interesting affordable housing solutions on my trip and learn how people outside the U.S. tackle urban issues. Thanks again to TCA for giving me the opportunity to learn so much about how affordable housing works in the U.S. Hopefully this knowledge was passed on to readers, who can continue to follow me at MarketUrbanismReport.com.
