We Need To Measure What Matters

This is the fourth post in a series about how I ended up working on the housing issue. It is more reflective and qualitative than quantitative. I’ve over the years about the many mistakes being made in housing policy along with ideas on how to make better policy. This series is a look back at my experience and how we got where we are today. It ends with some ideas about how to change how we think about housing

It might seem strange, and it still does to me, that the first time I really absorbed the idea of “affordability” was in late 2007 while the City Council was debating something called incentive zoning. I was wrapping up a stint on the staff of a retiring member of the Council and an advocate and I were looking at the legislation that would have imposed a fee on new development to fund the development of affordable housing. “How are we defining affordable?” The answer struck me as arbitrary: “Affordable means a person that earns 60% of Area Median Income pays 30% of their income for housing.” It was the beginning of a long and uncomfortable relationship with the idea and the term.

I first wrote about affordability way back in 2009, about two years after my conversation with the housing advocate and after the housing market crashed. What I had already concluded by then was that the term, “affordable,” wasn’t really about anything quantitative, but instead, the qualitative relationship people have with price. Affordability is truly about how people feel about price and is entirely subjective. The attempt by government to measure this feeling quantitatively has resulted in the arbitrary 30% standard that ignores the fact that even if housing is 25% of gross monthly income, a family may still be struggling, and another household that pays 40% might be saving because of other tradeoffs like living close to work and family.

Later that year I suggested we find another measure, something proposed the idea of the Residual Income Model, an idea championed by Michael Stone of the University of Massachusetts – Boston. The idea is that housing affordability, to be effectively measured, has to consider other costs besides housing. If a family can pay 30% of its gross income for housing but can’t afford other important needs, then it is cost burdened. I shared this in a simple presentation to colleagues not long after this. I’m still an advocate for this model, as well as using more and better data to figure out the quantitative aspect of the feeling that housing is too expensive. To make policy, a community and government has to get beyond the emotion of housing is “too damn expensive” and figure out how families with less money can be sustainable

When combined with the dreaded “cost burden” figure, a calculation using old United States Census Data that tries to estimate how many people in a city are paying too much for housing, “affordability” is less helpful and more inciteful. Let’s face it, nobody enjoys writing a rent check. But the question is at what point does housing cost cross the line from inconvenience to economically damaging and then into a risk to a household’s viability as a household. Our current system of measurement doesn’t adequately assess any of this, and public policy is made with bad information and the public remains ill informed – and angry – about housing costs. We need to develop, test, and implement a more nuanced suite of multivariate data to help us understand how to affect the housing economy to help people with less money and to fight housing inflation.

Unfortunately, things have changed for the worse since that conversation with my colleague almost 16 years ago. We’re not any closer to resolving problems with “affordability” or even understanding what that means. Worse, the problem of housing price is still not seen as simple economics, a lack of supply in the face of rising demand, but instead as largely a social issue that needs more money rather than more efficiency and innovation, and fewer rules and regulations. And honestly, anyone who began a career as I did, looking to giving cities meaning through public engagement will find that instead, the problem of housing cost as social justice issue has forced urban planning and reading and writing cities into an inflationary feedback loop, which is where housing is today.