Bigger Ideas 1: Where We Go From Here 7
Welcome to Bigger Ideas, a new section of Where We Go From Here, the Substack of Alex Schafran. This is where I will explore bigger ideas, often ones connected to posts in California Housing. As always, suggestions or ideas are welcome - perhaps we can even collaborate.
Homeownership is a spectrum which includes everything from community land trusts to ‘traditional’ fee simple homeownership.
The spectrum of homeownership is a form of resident-controlled housing, where residents have some control over their housing future, regardless of financial equity in the home.
Resident-controlled housing as an idea can help counter the growth of larger and larger investor landlords, and help advance a broader coalition capable of addressing California’s housing crisis.
My wife and I recently bought a house in Oakland. In another housing economy at another time, this wouldn’t be a notable thing. We’re in our forties, want to have a family, and I am into growing things and building stuff. But if you know anything about the Bay Area housing market, or most housing markets in coastal America, you know that we had to have a terrifying mixture of privilege, capital and luck to get to this point.
It was like winning multiple lotteries simultaneously.
One of the reasons we wanted this house is that it sits across the street from four homes currently being rehabbed into affordable homeownership - two by Habitat for Humanity, two by Oakland Community Land Trust (OakCLT). When you add the longtime homeowners on the block, with their very low property taxes and big ramshackle houses, newer owners in smaller and more leveraged units, renters in ADUs and plexes and in the big rent stabilized prewar beauty just down the way, you get a block with incredible diversity of housing types and tenures - and not coincidentally, humans.
The houses across the street, once they are fixed up and filled up, won’t look that different than ours. But through the lens of housing politics, my neighbors and I are imagined as fundamentally different. Not just in how we live, but in how we do housing politics, and whether we can eventually agree on a set of solutions.
Drawing Lines between Me and my (current & future) neighbors
The first set of lines divides us based on our housing tenure - the type of legal and financial relationship we each have with our homes. We own our house through fee simple homeownership, while the new folks across the street will have two different sets of tenures - Habitat’s version of supported, below market rate homeownership, and OakCLTs land trust whereby the occupants own the home, and the CLT owns the land.
In common housing parlance, their homes are subsidized, while mine is supposedly unsubsidized. My home is ‘market-rate’ and theirs is ‘Affordable’1. Their homes are part of ‘community ownership’, while mine is supposedly not. Unfortunately, these dichotomies mask more than they illuminate.
Subsidized v. unsubsidized is simply false. My home is very much subsidized - the Mortgage Income Tax Deduction is one of the largest housing subsidies in the United States. It’s also subsidized by all the infrastructure that makes the home liveable (including the brand new fiber cables being used to write and publish this essay). Virtually all homes in the United States are subsidized in some way, and we need to start admitting this.
Market v. Affordable (or non-market) forgets that all homes exist in some kind of market - just different markets. There is a market for land trusts and BMR homeownership. It’s shaped differently and has different rules and customs and geographies, and it=s set up to be less speculative and exploitative. But it’s not like they exist on another planet with no markets logics at play. OakCLT and Habitat residents still buy in, and can sell out, just with different rules, under different circumstances.
Community v. individual ownerships assumes that folks like me don’t own in a network of relationships, or that somehow the folks in single-family homes across the street are in community and I am not. CLT members in scattered-site housing can live lives with roughly the same degree of ‘community’ engagement as I or the Habitat owners do. We all have institutional relationships connected to our housing - mostly with government and financial institutions - which can support us or exploit us or both. I don’t have a relationship with a non-profit as part of this supportive (or unsupportive) system, but if I lived in a house with a HomeOwners Association (HOA), I would.
The details of our respective tenures obviously matter financially and personally. Even if we will live in similar houses, we won’t necessarily live in the same conditions.
The problem is how these lines between tenures are imagined politically.
Depending on what ‘side’ of the balkanized housing debates you sit on, you may view some of us as part of the solution, and some of us as part of the problem. And no matter what side you sit on, the idea that me and my neighbors could unite to be part of a real solution to the housing crisis probably seems like a pipe dream.
But it’s not. We just have to think more about what we have in common.
Drawing a different set of lines
I understand that finding common ground between me and my various neighbors can seem a fool’s errand. There is clear historical evidence that being a homeowner can give you a pretty serious case of bad housing politics (or bad politics in general). Worse yet, groups promoting homeownership over the past century have often valorized homeowners at the expense of renters and everyone else, promoting us as somehow better and more engaged citizens, which is frankly racist, classist and ageist horseshit.
Partly in response to this old-fashioned homeownership ideology, and it’s impacts, to be in the vanguard of housing policy these days is often to be skeptical of homeownership. Many of the people I work with and write for are skeptical of homeownership or homeowners - even when they are one. Tenant organizers, CLT advocates, housing justice warriors, social housing nerds, YIMBYs, even housing economists - groups that overlap in all kinds of ways - have all fought battles with homeowners or their industry advocates.
They may own homes, but hate how their neighbors vote, or how homeownership has been used politically. They may be well aware of how the drive for homeownership has been exploited to give people of color a worse deal on the “American Dream”, what Keeanga-yamahtta Taylor brilliantly calls ‘predatory inclusion’ - homeownership designed not for housing, dreams or wealth building but for corporate profits at the expense of housing, dreams and wealth building.
In my connected post in California Housing, one of the principles I discuss is how we must own our history if we are going to talk about homeownership. With this in mind, what does it look like to examine the challenges that me and my neighbors all face, regardless of tenure? Two challenges stick out to me.
First, while me and my (current and future) neighbors we may have different tenures in different markets, may have radically different household sizes and housing needs and backgrounds and incomes and interests in gardening and DIY, we all are survivors of a housing market that frankly sucks. Unless you are extra rich - and I don’t think anyone on this block qualifies as such - your housing market sucks. It sucks to find a home to buy, it sucks to find a home to rent, it sucks to find an Affordable unit of any kind. It sucks to try and maintain your house or fix your house, no matter whether you rent or own. Most of us pay way too much money just to stay in our house. We all face markets with way, way, way more demand than supply. All of us face trying to access markets that are opaque, confusing, full of lots of fine print and shady actors and black mold. We all may currently be housed, maybe we even love our homes, how many would go out into the market if they didn’t have to? If we need an extra reminder about how bad it sucks, we just need to go to the next block, or the park, or under the overpass, and ask our unhoused neighbors.
Second, we all face a real estate market where larger and larger and more powerful investors are actively making all of our housing tenures - with the possible exception of rented single family homes - harder and harder to come by.2 It’s harder to buy a home because not only are you competing with individual buyers fueled by high salaries and intergenerational wealth, you have an investor class buying up massive swaths of these very limited options. If you are a renter, you are facing a growing algorithmic machine that is more attuned to keeping you out than welcoming you in, and prices that have now rebounded to eyewatering prepandemic levels. And in the the Affordable submarket, we face a continuing wave of ‘expiring use’ challenges, where owners can let affordability restrictions expire so they can sell out to wealthier investors, investors whose business plan depends on one thing - evicting the poorer tenants in favor of wealthier ones who can pay higher rents.
If we are drawing political lines, this is where we need to do it - between those of us facing the suck, and those of us building business plans to make the suck worse.
Resident-controlled Housing and the Spectrum of Homeownership
In a study I developed a few years ago - coincidentally with OakCLT - we identified 56 different housing tenures in Oakland. These range from rental tenures to ownership tenures, tenures with different degrees of legal protection against displacement, different types of subsidy, and a range of informal and unhoused tenures. This work is part of a larger project, with my colleagues Jake Wegmann and Deirdre Pfeiffer, to try and convince people to think more deeply about tenure - that set of legal and financial relationships we have with our housing.
Rather than be trapped by this imagination of renting and owning - another false dichotomy - we examine tenure along a spectrum. One axis is equity - how much of a financial stake, both in terms of equity and liability, one has in a property. Another is control - what kind of voice you have in the management of your property, including whether you get to stay there. Mutual Housing Associations are technically rentals, as you have no equity, but you have some control. A rental where you have real tenants rights, or are connected to the owner by bonds that go beyond the legal contract, can also be on this spectrum. Limited equity co-ops give you less equity than other ownership forms, but you have some control. Fee simple ownership with an HOA has less control than my form of fee simple homeownership - you can lose your home if you don’t pay HOA dues, or even in some places if you violate their rules.
When we see tenure as a 2-dimensional graph, and not a 1-dimensional line, we can start to appreciate how many of us have something in common. A key feature of the market for permanent housing should be that it gives you some sort of control over that housing future. In some cases, we want equity, and are willing to take the risk. In other cases, people just want control, and don’t want the risk or potential reward of equity. What we want is determined by so many factors - cultural beliefs, our age, our physical condition, our household size, what we can afford or access - and can and does change over time.
Another thing that unites me and my (current and future) neighbors, at least the ones across the street in the CLT and Habitat buildings. We all have some legal voice in our housing, with different equity/risk arrangements that fit our financial capacities and needs. While we all have debt, and large financial institutions are connected to our housing through mortgages, we do so at a very different level of power and exploitation than if the big investors own your property.
The types of tenures which give residents legally defensible control - under certain conditions, for nobody is a sovereign citizen - are what I would call resident-controlled housing. All forms of resident-controlled housing, whereby residents have legitimate voice in their housing regardless of equity, should be considered part of the spectrum of homeownership. Homeownership is about control, about voice, about certain responsibilities. Yes, financial equity matters, and someone has to own the asset, but to think about homeownership only in cases where one person owns the entire asset misses the boat empirically and politically.
If we are willing to look at what me and my neighbors have in common, we can start to see the contours of a housing movement based around resident-control. This is a movement that must be based on the full diversity of different resident-controlled tenures, ones where folks like me own the entire asset, ones where folks do not, and everyone in between.
Centering Ownership in the fight for Land Use Reregulation and Affordable Housing
Building this movement will require many steps, for it is hard to overcome a half century of ideology, distrust and institutional inertia.
One challenge is that people will misinterpret this essay as arguing that homeownership is good for people, because that is the way public policy and industry analysis have sold housing tenures over the years. My argument for centering homeownership isn’t based on homeownership being good, or homeowners being good. My argument is that homeownership and resident control are part of the same spectrum of housing, and that people value control. People want homes they have a voice in, and will fight for this type of housing. It’s a vision that allows people to unite around producing a very diverse set of outcomes that have the minimum in common. It unites people around common challenges - powerful and numerous investors, and not enough homes to go around.
Take the fight for land use reregulation. Yes, our zoning and land use system is not conducive to an equitable or livable California. But one of the reasons why the land use reform movement struggles to build a big enough base to win is that middle and lower income Californians don’t see themselves being able to access new housing. People see cranes, and they don’t think that this housing can be for me or my family or my community (or be built by me and my community).
Land use reformers are insisting that communities open up the code, but have been largely silent on who will own the new housing that will be built - or worse, part of the chorus of writers claiming that investors are not the problem, or that ownership doesn’t matter. This further alienates ‘pro-housing’ forces from the communities we need to say yes to housing. Team pro-housing needs to start paying more attention to who will own the housing, and who is buying existing housing. It matters, and is the missing piece of the land use reform movement.
If we can provide people with a vision of who will own that housing - much like Social Housing reformers are trying to do - we can build a larger movement to reshape housing. If it is just going to be mega investors owning the homes, then both me and my neighbors - including the renters next door, and the folks living in the encampments on the block to the north and park to the south - are unlikely to get fully on board, no matter how desperate the need.
The same logic holds for Affordable Housing. Despite the need, we’ve never seen the full throated demand from people for deed-restricted rental housing - especially not one big enough to overcome the insane cost. More and more Affordable Housers are falling in love with Community Land Trusts, and recognizing that resident voice in housing matters even when the landlord is a non-profit or the government. Expiring use is such a problem that we are starting to see more of an embrace of social housing models which would eliminate this nefarious poison pill.
Resident-controlled housing is a way to build a more aspirational vision of a better housed California, one that doesn’t fixate on specific magical housing tenures. It instead seeks to give all residents a degree of control, and the type of equity stake that helps them but doesn’t hurt them.
One part of this, as I argue in my connected California Housing strategy, is the largest tenure conversion program in history. We have the ability to safely convert under-regulated rental tenures with little control and no equity into resident controlled tenures. We can support often-exploited low-income homeowners, who are more likely to be from marginalized communities and who are the constant target of scammers and bad deals, legal and illegal. We can build a tenant- and community-purchase program that has real dollars, real incentives and real scale. We can even convert some of the more protected rental tenures - like those in non-profit owned buildings, or for-profit owned and formally subsidized buildings with LIHTC and Project-based section 8 - into resident-controlled tenures.
This is where we can build a political alliance strong enough to change California housing. By focusing on resident control, and supporting the full diversity of resident-controlled tenures, we can build the political will to change our housing markets so that they suck less for me, my diverse neighbors, and most of California.
And what about those investors? This is the subject of an upcoming essay in this space, but here are the basics. Investors matter, but a better housing market can only tolerate investors who adhere to a basic set of ethics. We only own our home through collaboration with a global financial institution - one that gave me and my wife an excellent deal. They get their payments, we get a house and real control. If and when the investor community offers a good deal to everyone else in the housing market, well, then we have a deal. We’re a long way away from this point, but there is a path if we make it.
I capitalize Affordable to indicate that in industry parlance this means it has some sort of deed-restriction or income limit, i.e. if officially Affordable, as opposed to simply cheap enough that one can pay the cost based on your income, i.e. affordable. This is an important issue and distinction in housing policy.
The growth in single-family rental availability comes with increased vulnerability of those tenants, as they are the least likely to be covered by rent regulation, and the most likely to have larger families with children. See my recent research with Pfeiffer and Wegmann for a primer on the issue. Email me for a copy if you can’t access it.