Blog #91: Explaining the Election in 10 sentences – preliminary

Explaining the election (in parentheses: to pursue):

1. A critical shift in the organization of the economy post 1968, from industrial to hi-tech capitalism (occupational structures?).
2. Leaving many dependent on the old economy hurt and at a loss, largely the white working class, hold-over racism and sexism accentuated as scapegoats. (foreclosures, evictions, bankruptcies, struggling suburban homeowners – not the really poor, homeless)
3. They reacted with anxiety and an emotional attachment to the past Deep Story (their traditional identity?)
4. They blamed, quite rightly, “the” establishment, although not clear as to its membership, pushed by media etc. to blame “government” (social media, TV, not press?)
5. Trump as politician picked up on this, despite his own membership in the new establishment (motivation? pathological egotism? Business).
6. The anxious white ex-working class built up a deep story, a vision, abetted by Trump and the media that was heavily emotional (shaping identities?)
7. That story, built on real anxiety-inducing experience, mis-interpreted history, and built a psychological/ideological barrier that facts and reason could not penetrate (high school or less education?). Trump offered the charismatic fairy tale leader, believe me, trust me, not them, they have failed you (over 30 years? 8. Since Reagan? since Johnson?)
9. Hillary offered no vision that addressed the grounded anxiety (health care costs? Real unemployment levels?).
10. But Trump’s allegiance as a businessman is and always was to the new elite establishment, and he will unify the Republican Party around it. The holdouts will be those with a personal repugnance to Trump’s personal behavior, which they will swallow. (social circles, clienteles, customers, tenants?)

The Blog #90 series will deal with some of these isssues in more detail.


Blog 66 Just Housing Draft

Blog #66 –Just Housing? –Public Housing’s Past, Present, and Potential Future

In three parts: First, an argument about public housing and the concept of justice , suggesting that public housing is part of a whole housing system, private and public, shaped both by forces internal to it and external pressures from other parts of the system, justice being thus far a minor criterion for it operations.
Second, a history of public housing’s roles in the past, suggesting it ranged from being a chain of oppression, to being a pacifier of social protest, to be a pawn of special interests, to being a beacon of hope for a more just world;
Third, some policy implications of the analysis, divided between immediate efforts to address internal weaknesses to broader transformative efforts to address its social role in society, to possibilities for system-changing efforts –from an oppressive chain to a beacon of hope.__

The paper derives from a presentation on The Future of Public Housing,” part of a series on “Housing for All,” at the University of British Columbia. My keynote was entitled: “Just Housing? ” with a question mark, and both its title and the tile of the series, gave rie to ambiguities that already open the door to my main points and led directly to my agent.

HOUSING FOR ALL: put public housing isn’t housing for all, and shouldn’t be; it’s for those who need it and don’t have it.. It must necessarily be at the expense of those who have more than they need. Not for all.—except in the longest view. Will be conflict: goal is not consensus, but justice

JUST HOUSING? Is housing just, and is it just housing that decide? Can you have jus t housing if it is embedded in an unjust society??

First, then, the argument:

1. Public housing is part of a much larger system of housing, production, distribution, management, financing, and regulation, and is subject to both internal and external constraints that any discussion of the future of public housing must consider both internal and external, not just the internal, in any discussion of the future;
2. Justice should be a major criterion in any such consideration. Public housing is important not judge as a means of providing shelter for the poor, but as a way of handling a major social institution and shaping fundamental social relationships among all sections of society. Justice requires not just alleviating poverty but reducing inequality, affecting what goes on at the top of the social and economic scale as well as what goes on at the bottom.
3. Therefore, conflict is to be expected, and consensus is not a feasible ultimate goal, in any measures dealing with public housing . Ad they will not only be conflicts about details and methods, will involve a wide array of vested interests outside of housing – both internal issues and external pressures, and will be fundamentally political more than technical.

To be clear, what we’re talking about: what’s unique about public housing? Two things:

1. It’s outside of the market, at least as to the fixing of rents, but
a. Construction still generally private, so developer lobbies, ca be public, WPA First Houses
b. Land purchased privately so costs market dependent. can be eminent domain, high tax
c. Management public, can be outsourced, to a non-profit, e.g. tenant corporation, which could be elected, or CLT model
d. Ownership public, so no profit motive, although efficiency concerns because tax supported, but not just subsidized non-profit, call that social housing. Non-profit involvement is also important, but is not the final solution; it remains with its priorities privately set, not democratically publicly established.
2. It’s based on social need, family size, income, health, existing housing. Has had other: wartime production workers, needed for displaced by urban renewal or public projects.

So certain conclusions flow from these essential characteristics of public housing —-

1. Its purpose is cannot be just housing as shelter, but just housing, housing that serves goals of social justice.
2. That means it can’t just deal with housing; it has to look at impact on jobs, discrimination, status, security culture, education
3. And Justice in housing involves looking at full range of housing system, rich as well as poor, gated communities as well as ghettos.
4. It further means it will always be conflictual: justice involves distributional issues, which means there will be winners and losers.
5. It will always involve relations of power; issues of planning, construction, design, programming, will be important , but not decisive.

Second, the history: If we look at its history, internationally, the results on the ground of these characteristics of public housing have varied:

1. Sometimes public housing has been among the losers: as a set of chains binding its resident to their prescribed place within the status quo, akin to a ghetto or a prison, functioning as an instrument of oppression; (Baltimore, sometimes New York City.)
Increasingly today, concentrations of crime, police surveillance, stigmatization indicator, a controlled slum
2. Sometimes as a pacifier, to prevent the very worst problems of homelessness and shelter, it could be worse remember, be quiet and seek small improvements
Bismarck, the New Deal
3. Almost always as a pawn, serving multiple interests , developers, land owners, , in fill, economic development , aesthetics, slum clearance, votes, ideology (government good, governments bad)
First Houses
4. But can be a threat to power also, because conjures up the image of what good housing can be, in a good society; it can be a beacon of hope and a spur to organized resistance, a radical utopia. In two ways:
a. As itself the basis for organization, a platform and site of action, a model community, a bubble utopia in practice. In day to day work. Or
(Vienna, The Bronx coops, Howard’s Garden Cities.)
b. As a model, an image of what a whole society might be organized to look like and provide, what the role of government should be. ideologically, theoretically: A beacon.
Utopian Communities, 60’s communes

With that history, what’s the future of public housing? How might its potential best be realized?
The answer, of course, is clear! What any economist will tell you:“ It Depends!” But on what? Well, on politics.

Not greater knowledge, better design, more sophisticated financing, more caring officials , better behaved applicants , fairer admissions or continued occupancy criteria – but, to put it plainly, on the distribution of power at the local and indeed higher levels of government and policy determination, on what politics in a democracy ought to be.

But, in today’s world, on who already has the power, already are the key actors: tax sensitive politicians, ideological politicians , developers, financiers up to hedge funds, private landlords, real estate agents/boards, employers, –and how others might be brought in as significant players, neighborhood merchants, ethnic groups , LGBT, residents, those in need of housing. On the ability to organize the politically unorganized and underrepresented..

Third, the Policy implications For the Future of Public Housing

A, Immediate policy implications.
1. Improvements possible. Knowledge, research, technical competence useful
• fair eviction proceedings,
• More efficient personal security, housing authority special police.
• better and more responsive management,
• Adequate funding for maintenance and repairs,
• Empowerment of residents and residents’ councils, for their knowledge, and support and pressure capabilities, to make actual policies bottom up.
• Hiring practices, including training of residents
• Provision of ancillary facilities and spaces for activities: health clinics, pre-school, recreation, meetings.

2. Some tough policy issues, needing research and thought, as in conferences like this
• Based on need, or good tenancy record, or family record?
• Mixed, set aside units for higher, (part from raising funding): for interaction? But less for very poor?
• Hire tenants, but social problems, less competence.
• Is inclusionary zoning for private housing a good idea as an alternate? With public housing management?
• Coalition building: with whom? middle class? Developers?
• B. Radical transformative possibilities. Defined as:
• Recognize conflict, willing to fight, not convince for consensus
• Talk about justice, inequality at the top, not just poverty at the bottom.
• Open a vista of even more, face up to the realities of capitalism and its weaknesses.

C. Systemic changes:
Fund public housing adequately. Fund distributionally, tax the rich, profits.
Decommodify land, and housing (up to mid-level?)
Empower residents of public housing, perhaps C.L.T. model, with legal authority.
A right to housing, globally recognized. 


Four take-aways:
1. Public housing is part of a system, both a system of providing hosusing an a system of social and economic relations in the society as a whole: both an internal and an eternal system
2. Justice should be a major criterion for a public housing system and not just at the bottom, not just the alleviation of poverty, but also at the top, the reduction of inequality. They are inter-related, and both are needed.
3. There for conflict is to be expected, and power will be involved, and not only more knowledge and technical competence is needed, but also political organizing and democratic involvement.
4. Public housing can be an instrument , a chain, of oppression, a pacifier of social resistance, a pawn for special interests, or a beacon pointing to just housing in a just society.

Everything need not be done at once; not a revolution, but transformatively towards social justice beyond housing,
Public housing is today a pawn in the hands of often conflicting but powerful groups in our society
But there are also movements to turn it instead into a beacon exposing injustice and pointing the way to better
a future for public housing worth fighting for, well within public housing’s dna:
Public housing as a beacon illuminating the possibilities of a just society, not a pacifier, not a pawn in power plays.
And at all costs not a stick to beat the poor.

The motto might be: break the stick, discard the pacifier, capture the pawn, relight the beacon!

If you believe all that, , better gird your loins for the battles that are surely ahead, and I suspect better started in many places already . Indeed, under way from the beginning of public housing’s history.

But it’s a battle worth waging.

Blog #54 – Community Land Trusts as Transformative Housing Reforms

Community Land Trusts as Transformative Housing Reforms

That New York City has a housing problem is rather well known. The devil here is indeed in the big picture as well as in the details. 47% of the city’s low-income renters[1] pay more than half of their incomes to obtain housing. Imagine what paying half your income just for housing means for the ordinary person, let alone one with limited income. 24% live in overcrowded quarters, more than 1.5 persons per room in the standard definition. Neighborhoods are clustered by race, ethnicity, income, household composition –what impolite critics call segregated, one of the most segregated (84.3 on the widely used dissimilarity index, where 100is completely segregated. Only Gary, Detroit, and Milwaukee, of the 314 other metropolitan area in the United States, are more segregated.[2] 224,000 units were in physically poor conditions. 164,000 units were vacant but not available for sale or rent, according even to the official figures.[3]There were 15,993 mortgage foreclosures in the city in 2013;

Bloomberg News[1] headlined the fact:


Community Land Trusts may have a significant effect on New York City’s housing crisis, may affect struggling and even prospering neighborhoods, may achieve significant savings in the city’s budget for housing while increasing the afford housing supply for families in trouble. But their long term impact may go further, and be a transformative new way of looking at the housing market and its limits, and model the way it can best function to serve the needs of all the city’s resident.


The federal government has, in its fashion, responded to such problems; New York City has the highest number of public housing unit, owned and managed, and maintained (in niggardly fashion) by the New York City Housing Authority itself. New York State has, if reluctantly, permitted the city to establish limits on the rents that can be charged for a declining portion of the city’s large renal stock. Mayor Bloomberg responded by pushing for extensive new construction of units, with a minor allocation to those most in need. Mayor de Blasio has put forward an extensive and expensive new housing plan that envisages 200,000 new units, and more, in the next 10 years.


But of course, when we say “New York City has a housing problem,” hat does not mean everyone in the city has a problem. The New York Real Estate Board holds that the real estate market has rebounded from the bursting of bubble that the industry, with the active encouragement of the financial sector, itself produced so recently. Rents going up are good news for landlords, if bad for tenants.[5] Mortgage foreclosures by banks and other financial institutions provide opportunities for big operators to buy up homes at a bargain, throwing home owners willy-nilly onto the rental market, shattering hopes of accumulating wealth by investing in “asset building” in a housing market sure only to go up, not down. At the same time, a Rent Stabilization Board makes sure rent regulation won’t prevent landlords from covering the costs when they go, protecting the profits from their investments, regardless of whether that means their tenants chances of meeting their basic needs are widely jeopardized. Talk of inequality!


A tiny new non-profit, called NYCCLI, somewhat incongruously pronounceable as “nicely,” the New York City Community Land Initiative,has just been incorporated in New York. What does it hope to offer to deal with this situation? Quite a bit, it turns out. NYCCLI’s formal incorporation papers describe it purpose as “advocating for community land trusts.”


And what is a community land trust? A community land trust is a trust that typically owns land, on which the housing unit or units are leased, for 99 years, to a limited equity co-op which provides homes for households, typically lower to moderate income, who occupy the buildings as members of such a co-op and have all the rights a home owners would have except for the right to sell the unit at a profit. Their sales price is set by a formula approved by the trust, typically permitting recovering the purchase price plus improvements plus some cost-of-living adjustment, but excluding the value of the land, which of course remains with the trust. The trust that owns the land also sets some basic rules for its use, basically to ensure that the housing on it will be permanently available to household who need it at the most affordable rents possible. The board that runs the trust is typically composed 1/3 each of residents of it housing, residents of its neighborhood, and supporters, who may come from government, advocacy groups, or technical experts who may be helpful to the trust. [6]


What good are community land trusts? They have four major advantages:


First, they make possible the creation of affordable housing on a permanent basis, especially for lower income households. CLTs make a key trade-off: they give up the possibility of speculating on an abnormal increase in the dollar value of the home in return for the security of knowing there is no threat of loss if housing prices go down and no danger of eviction if the cost of occupancy become unaffordable because of job loss or ill health or other circumstances beyond a household’s ability to control. And unlike almost all currently existing affordable housing programs, if a community land trust receives public subsidy, its benefits remain permanently available to their targeted low/moderate income recipients, and do not expire after a fixed time period of 20 or 30 or 40 years, and costs for such future residents have been permanently fixed to exclude any increases in the speculative value of the unit.



Second, community land trusts build communities and stabilize neighborhoods. They provide for deeply democratic management of their housing. By having not only residents but also neighbors and supporters from the wider community on their boards, they can provide diversity, establish priorities for expenditures, achieve efficiencies of scale, and put the strength of the trust behind individual members falling on hard times


Third, community land trusts represent a whole new approach to the principles governing the way housing is distributed, occupied, and used in a democratic society, limiting the intensity of the inequality induced by a private market which sees housing as a commodity to be bought and sold for its exchange value, for the profit it may produce, instead of for the needs it may satisfy, its social use value. NYCCLI’s approach can help change housing from a symbol and magnifier of inequality to address at least in part one of inequality’s main causes.


But fourth, and in the long run perhaps most important, they can be transformative.


Community land trusts challenge the arrangements of a housing market used to the pleasures and pains of speculating on housing value, which is, economically, fundamentally speculating on the value of a given location, and instead see housing as a necessity of a decent life and a supportive environment for all. And they provide the same opportunity for “wealth creation” or “asset building” as does buying a house with a mortgage and paying off the mortgage: put the equivalent of what is put into paying off the mortgage principal and interest on the land into a savings account or other good investment, and you have the accumulation with perhaps even less risk. Putting this together, they can move from seeing housing as a commodity, valued for its exchange value, the profit it can produce, and see it rather as a necessity of life, even perhaps up to a certain configuration as a public good.


The different tenures of housing and the legal and financial relationships householders have to the housing they occupy have major implications for the way people live. Community land trusts can provide a form of home ownership for a resident that combines the privacy and security and insulation of the American Dreams’ single family suburban house with the solidarity and support and social richness of the ideal urban life-style. Immediately, to reach the lowest income groups, they will need some public support for acquisition or basic running costs, and they richly deserve such support.[7] In the long run, transformatively, they can benefit not only their residents but the neighborhoods and the housing system



[2] Censusscope, available at

[3] The Census Bureau’s Housing and Vacancy Survey for 2011,. The count by Picture the Homeless suggests a significantly higher figure.


[5] The Real Estate Board summarizes:

“,,,notable gains this quarter, as compared to the second quarter of 2013, included: the 19-percent-increase in the average sales price for all homes in Brooklyn to $715,000; the 15-percent-boost in coop sales in Queens; and the 13-percent-increase in the average sales price for a coop in New York City to $768,000. The residential market in Manhattan also remained strong with the average sales price for all homes increasing by six percent to $1,491,000 year-over-year”

[6] Detailed information is available from the national Community Trust Network, whose website, at, contans extensive references to further materials, as do NYCCLI’s own educational materials.

[7] And remember the enormous subsidy that inures disproportionately to higher income households from the mortgage interest deduction in our income tax system.

Blog #38 – Community Land Trusts: Empty, Moderate, and Full-bodied.

Community Land Trusts – Empty, Moderate, or Full-bodied?

Community land trusts,[1] as a legal form of ownership of land, can come in three different forms: empty – available to any group for any purpose; moderate – to deal with serious but limited problems for a limited group, or full-bodied – handling both immediate problems but with a broad social justice perspective pushing transformative content and actions.

The differences are significant. Community land trusts can simply be an expanded form of co-operative ownership used by those protecting an already strong position in the housing market, insulating its members from outside influences by exclusion. The legal form of land trust is available to all, and ”community” can be interpreted restrictively by the well-to-do as easily as broadly by less well-off users. Thus, community land trusts as an empty form.

At the other extreme on a scale of social justice, community land trusts have the potential to play a transformative role in our housing systems, favoring lower-income households and all those ill served by existing markets, including poor households, the homeless, African-Americans and ethnic minorities, many women, households diverse by gender relations, age, and background.  -justice focused community land trusts can whittle away at the dominance of the private market as a method of allocating housing. Community land trusts can be models of democratic governance, both internally and at a larger scale of governance. And they can help in the political processes by which public resources are allocated to establish and implement a meaningful right to housing for all. Thus, necessarily, full=bodied community land trusts .

Community land trusts may also be transformative in a quite different context: achieving effective grass-roots democracy. If extended, community land trusts may be seen as a form of neighborhood self-government, in fact controlling land uses and what goes with them in an unquestionably powerful manner, viz. having legal title to the land. But such a potential for community land trusts is not at this point seriously in the picture. The tie-in with other social movements pressing for democratization of land use controls and the planning function of government should not be ignored, however.

In between these two extremes lie a wide variety of variations in form and content. The exclusionary use of community land trusts would presumably be rejected by most. There is a danger of co-optation by interests posing community land trusts  as an alternative to public housing or rent regulation or subsidies or favorable tax treatment for those in need. Presumably, also, a formal commitment to principles of social justice and serving those in need would be part of any mainstream moderate position. But how sharply to focus their immediate goals, how widely or narrowly to devote their energies, how to use limited resources, with whom to ally and who to confront in adversarial fashion, how far and in what manner to be politically engaged, are all matters in which strategy as well as principle. Compromises will be inevitable. Thus, moderate community land trusts.

Where in this spectrum of possible community land trusts  a given effort stands seems to me to depend on three factors.

  1. How seriously is “community” taken? Community land trusts can be simply a legal form of holding title, used for tax and financing purposes, but in daily use essentially a management company, negotiating with utilities, contractors, maintenance staff, etc. Or it can be seen as a part of an effort for form and maintain a communal level of social interaction, involving not only collective democratic decision-making but a sharing of activities, of information, of social responsibilities, of political involvement. It can affirmatively work on positive relationships with its outside neighboring community, having not only neighborhood representatives on it boards but helping integrate its residents in its community, more widely defined, sharing facilities, activities, information, as circumstances suggest. Likewise, it can affirmatively look to achieve and make use of a diversity of residents, including both levels of recognition and of assimilation comfortable to each.
  2. How, and how clearly, is the constituency of the community land trust understood? A community land trust has control over who its members are, can have processes similar to those of cooperatives in interviewing potential new members. But there are general principles that must be established, and they will influence not only who is in the community land trust but what its relations with its outside community and government will be. Specifically, income levels and household composition can be defined as criteria.
  3.  If the principles of social justice are followed, it also becomes more likely that the community land trust will operate as a full-bodied trust.
  4. How does the community land trust see its political role? Every community land trust except an exclusionary one of the well-to-do faces the reality that many to whom it would like to be open cannot afford even the non-profit real costs of decent housing. The need may go from an immediate need for help even with basic costs or special needs to an on-going concern about rising costs or changed incomes limiting what a household can afford.  That inevitably means a concern with governmental subsidies, levels of taxation, utility costs, building codes, public services, public facilities. But the problems community land trusts  face are shared by a large part of the population as a whole. If the community land trust sees itself as part of a broader movement to achieve social justice in the provision of housing, perhaps as part of a broad right to housing movement, it will be more and more a full-bodied community land trust both in its inception and its ongoing daily activities.

A note on the ideological and economic aspects of community land trusts:

The idea of community land trusts resonates with an old theme in economics: that of land as a common natural resource, one not the product of human efforts, and therefore not to be appropriated by individuals for their private use, but to be shared among all. Community land trusts can be seen as an implementation of that view, at least on a small scale: no individual has the legal right to dispose of his or her interest in a community land trust for personal gain. Yet, theoretically, the ability to sell an interest in a building built on land in a community land trust at a price for that building fixed in a private market will take into account that that interest is made more attractive by its ground lease. Thus a likely profit can in fact ensue to the seller of a community land trust unit, amounting to an ability to make a private profit from a natural resource,. The market value of a building or unit in a community land trust building is technically the price of a commodity.. The land itself may be decommodified, but the right to use it is valuable, and could be realized by a sale of what is on the land and benefits a private owner from its common ownership. The land is decommodified, but not necessarily the building on it, to which the value of participation in the community land trust accrues.

What makes the typical community land trust radical is not the separation of land from building and its character as natural resource, but rather the restrictions that the classic community land trust, moderate to full-bodied, imposes on those leasing the right to occupy from the trust. Those restrictions typically regulate the price at which a housing unit in a community land trust can be sold. In these community land trusts , the leases to occupant members either prohibits the occupant from selling the unit except at a price established by the board of the trust, or gives the trust itself the right to buy at a fixed and limited price if the unit is put up for sale. . In this way community land trusts operate as would a limited equity co-op; the separation out of land ownership is simply another way of controlling collectively the price of units in it, as well usually as the characteristics of new buyer occupants. It is the restrictions in the permitted sales of units in a community land trust which make it an ideologically radical idea, and the terms of that restriction set the extent of the radicalism. If limited to an original price, originally set not aiming at a profit, and usually increasing only to the extent of the occupants own investment of money or labor in the unit, that makes it radical, for it effectively takes the unit out of the housing market and eliminates its use as a provider of private profit. A resident of a classic community land trust has virtually all the rights of a home owner, except the right to sell at a profit.  It turns housing into a set of use values, rather than of exchange values.[2]

Community land trusts may also be transformative in a quite different context: achieving effective grass-roots democracy. If extended, community land trusts may be seen as a form of neighborhood self-government, in fact controlling land uses and what goes with them in an unquestionably powerful manner, viz.having legal title to the land. But such a potential for community land trusts is not at this point seriously in the picture. The tie-in with other social movements pressing for democratization of land use controls and the planning function of government should not be ignored, however.

All this has two implications. One is that such a community land trust cannot be seen as a “creator of wealth.” The opportunity to benefit from a speculative increase in the value of land is denied the owner. That may make a community land trust less attractive to some, but may be welcomed by others, and should in any event be clear in the use of the community land trust form of ownership. The other implication is the need for thoughtful consideration of how permitted sale prices are established. While the principle of non-speculation is clear, its definition is not quite. Specifically: typically, the seller is allowed to recover his or her purchase price plus investments. But usually that purchase price is adjusted by some formulae, such as changes in the cost of living, benchmarked to some measure of the rate of inflation, at least on the up side. That means it has some characteristics of an investment that does have market advantages: it is protected from erosion by inflation. It has the additional market advantage, the more full-bodied the community land trust is, of having collective backing against personal misfortune; foreclosure is technically impossible and eviction for non-payment of rent is handled more humanely than it is in the market, again to varying degrees. That benefit is of course realized to some extent in directly market terms when it comes to financing; a bank is likely to recognize the stability provided by the collective responsibilities and spread out risk inherent in the community land trust form as opposed to conventional single-family home ownership.

So “decommodification”  is not complete, but is certainly ideologically challenged by the use of the community land trust form, and its extent will vary with the details of the trust instrument and the leases given pursuant to it.

And if the above economic analysis is right, it provides some solace for potential participants in a community land trust that, while they may not accumulate speculatively-driven wealth by participation, they do achieve definite economic advantages in terms of security, both of occupancy and of return of original investment.

My own take, again if the above analysis is correct, on implications for community land trust practitioners:

Be clear who your constituency is. (Point 1 above.)

  1. Stress the “community” in community land trusts when presenting them. (Point 2
  2. Be clear and up front where you stand on the importance of social justice in the spectrum between moderate and full-bodied community land trust.  (point 3)
  3. Be politically active in coalition formation with other social justice oriented organizations and actors, and join with them both in obtaining the necessary support and subsidies for community land trusts  and in supporting other housing rights organizations program proposals for governmental action in the housing field, particularly on financing and rent regulation and affirmative non-discrimination. (Point 4.)
  4. Be up front about community land trusts’ impacts on wealth accumulation (minimal) and its other economic advantages: security of tenure and investment.  (Note on ideological and economic aspects.)  Blog#38.

[1] A community land trust is a legal form in which the ownership of land is held in the form of a trust and separated from the ownership of any structures that may be on it, which are privately (often in the form of a co-op or mutual housing association) built, occupied, and managed, subject to the term of a land lease from the trust. The trust is typically controlled by a board in which the actual users of the buildings on it are the primary members, together usually with representatives of the neighboring community and/or relevant government representatives. The leaseold interest with the users of the building have can be sold  subject to the provisions of the lease from the trust, which typically limits its resale price and must approve the buyer. An excellent fact sheet,  which also contains further useful links,.is at,,

[2] The myth that home ownership per se is a reliable way to accumulate needs to be dispelled. Home owners accumulate wealth only through two aspects of home ownership: one is savings, the other is speculation. The savings are essentially the forced setting aside of money to pay off a loan, the mortgage. Alternate investments of savings might do even better, and be subject to less risk. The other source of additional wealth creation from home ownership lies in the possibility of capturing the increase in the value of the house, which is fundamentally of the location on it is built, for the physical building itself depreciates. Again, that’s a speculative investment, and not always a safe one, as today’s economy shows. And see the historical experience recounted in Sclar, Elliott, Matthew Edel. and Daniel Luria. 1984. Shaky Palaces: Home ownership and Social Mobility in Boston’s Suburbanization.  New York Columbia University Press 1984.

Blog #1b – The Myth of Wealth Accumulation through Homeownership

Homeownership for most is only wealth accumulation the same way regular savings in a savings account is, and perhpas riskier.

The Myth of Wealth Accumulation through Home Ownership

Home “ownership” consists of a bundle of rights :in most people’s minds, they include the right to occupy, the right to exclude others, or privacy, the right make physical changes to the unit, the right to remain in occupancy, or security of tenure, the right to pass on to one’s heirs – and the right to sell at a profit.  Of course all these rights are limited: by zoning rules which regulate what kind of business can be done there,, set-back requirements and building codes that regulate what can be done physically with the property, perhaps parking requirements, environmental rules, laws against creating a nuisance (noise, other forms of conduct, fire codes – and in most cases obligations to opay a mortgage, which, as people are increasingly finding, limit security of occupancy quite painfully.

And yet many people believe that home ownership is particularly valuable because it is a form of wealth accumulation, wealth that will be become a stepping stone to perhaps starting a business[1] or paying for retirement or even just a new car, by virtue of the fact that its likely to go up in value and thus be a good investment, and  even if it doesn’t, as one pays off the mortgage one can take out an home equity loan and have funds for other desired purposes.  But those are two quite different hopes: benefiting from increases in property values, and being able to take out a home equity loan whether there’s an increase or not.

On home ownership as an investment that will increase in value, accumulating wealth reliably over time: the facts make that hope a shaky one, particularly today, with over four million foreclosures and an estimated 14 million homes “under water,” with mortgages exceeding their declining values. Studies over the long term suggest that’s not just now, but homes have always been “Shaky Palaces,” as one careful study noted,[2] which pointed out that even where losses could be avoided, gains did not compare favorably with investments in other areas, even with conventional savings account.  And that should be the real test: will wealth accumulate more rapidly from investment in a home, or in alternatives? The evidence does not support ever-increasing prices of homes, and certainly raises questions as to the desirability of such an investment  as an investment over other forms of investment.

But taking out a home equity loan, or holding on to a home over the years as a form of security for one’s old age, do not rely only on speculative value appreciation. As a mortgage is paid off, equity accumulates., and indeed for many that provides a safety net for old age and possible illness. But what is really happening here? Payment on mortgage principal are simply a form of regular savings; as Michael Stone has pointed out,[3] one could easily envisage an arrangement where interest payments on a mortgage remained steadily payable and instead of paying off interest the equivalent amounts were consistently saved, and invested with returns that might well be greater than the slowly declining interest on the mortgage.

The frequently heard statement that “the wealth of most Americans is in the homes they own” is a very deceptive formulation. A home is not usable wealth, not a disposable resource thatcan be usedfor whatever its occupant wants, the way a bank account or a stock certificate or, indeed, a marketable title to someone else’s property is. A home, at least for most people, is what they rely on for shelter, safety, comfort, a place to rest, to eat, to entertain, to enjoy.  They have it for its use value, not for its exchange value – or at least need it first and foremost for its use, not for what they could get if they exchanged it for something else, cash or a car or a boat. When you take $400 out of your savings account to buy a refrigerator to use, your usable “wealth”  isn’t increased by $400, it’s down by $400; if a rich diabetic pays $5,000 for a dialysis machine on which he has to depend, he isn’t $5,000 richer; if anything, he’s $5,000 poorer, less possible resale value after his death. If someone buys a house for $100,000 with a $90,000 mortgage and a $10,000 down payment from savings, he’s plus $10,000 in equity and down $10,000 in savings, and as he pays off the mortgage principal his equity goes up as his alternative savings go  And he can’t use that equity the way he could use the equivalent savings, as an investment in some profit-making enterprise. You don’t” accumulate wealth” by buying a house to live in, except to the extent you’re paying off the principal on the mortgage instead of saving and investing the equivalent amount elsewhere.  If there’s any advantage to buying/owning a house rather than a savings account, it’s in the favorable tax treatment payments and profits on sale (if any) get, an unwarranted distortion of a progressive income tax system.[4]

So treat housing as something that is to be used to meet critical human needs, not something to be bought and sold speculatively for the profit its limited supply might produce  on a sale, or for the forced savings it requires at the cost of alternative investments. Limited equity ownership, mutual housing associations, etc., are a way of providing such non-speculative housing.

Peter Marcuse

July 9, 2010

[1] The unfortunately widely purveyed view of Hernando de Soto in a developing world context. Se, among other discussions,  Marcuse, Peter. 2004. “Comment on Donald A. Krueckeberg’s ‘The lessons of John Locke or Hernando de Soto: What if Your Dreams come True?” Housing Policy Debate, vol. 15, No. 1, pp. 39-49. Available at:

[2] See Elliott Sclar and Matthew Edel, Shaky Palaces, a multi-year study of home prices in the Boston area.

[3] In Stone, Michael. “Alternatives to the Mortgage Trap: Household Savings and the Mutual Housing Association.” In Progressive Planning No.182, Winter 2010, pp. 22-25.

[4] See Peter Dreier and John Atlas’ several writings on the millionare’s tax deduction.”

The Rich Default on their Mortgages

The difference between speculative ownership and residential ownership

The New York Times headlined its article:  “Biggest Defaulters on Mortgages Are the Rich” (David Streitfeld, front page, July 9, 2010).  It seemed surprised. It shouldn’t have been.

There’s an important point that needs to be stressed in the account: these are largely investors engaging in strategic defaults. not  “homeowners” defaulting on mortgages. They are, to put it simply, landlords; these aren’t their homes that they are so heedlessly giving up. They are speculators in real estate, assuming, as the article says, that “real estate would never drop.” When the plain-talking owner of a $2 million house in Houston, quoted as a “plain-talking exception,”  says, “I just decided to let it go, give it back to the bank. I just didn’t feel like it was a good investment,” this isn’t a homeowner speaking, but a businessman talking about making or losing money.

The ownership of housing has two characteristics: it provides a home, shelter, privacy, hoped-for safety, a reflection of personality, for a resident homeowner, and it is an economic asset for the person having title to it. While the two are usually the same person, these two attributes of “ownership” are quite separate, although often confused. If you consider a house only as an asset, of course you would let it go if that’s the most profitable way of dealing with it. If you live in it as your only residence, your considerations are quite different.

If we could only keep these two aspects of ownership separate:  protect homeowners who have mortgages on homes that they need to live in, and take a quite different position as to landlords who own housing only on the speculative hope its value will rise, we’d be way ahead of the game. Of course resident homeowners also would like to make a profit when they sell; but that’s a different order of priorities from being secure in having a place to live. Limited equity ownership, community land trusts, and similar forms of ownership might be one answer.

Peter Marcuse

See the hyperlink: