A recent planning appeal in Watford helps explain this. The case involved an ex-industrial building, which over its life had been home to an upholstery firm, a petrol station and warehouses. It is a typical industrial building — concrete corrugated roof, small windows and it directly abuts the highway on three sides.
Hardly seeming suitable for housing, this is exactly what it is destined to become. And it gets worse. When Watford Council received the notice of Prior Approval from the applicant they were alarmed to find that the drawings proposed 15 flats ranging from You would think that given the unsuitability of the location, the cramped and oppressive living conditions and the risk of being burned to death by a fire that the council could simply refuse the development on planning grounds.
However, under the revised GPDO they only had a very narrow room for manoeuvre. They could not use any traditional planning arguments, so they refused Prior Approval, in part, claiming that the conversion from light industrial to housing was not valid as the units to be provided could not classify as dwellings given the reasons listed above.
The applicant decided to appeal and won. The Inspector, Mr Rennie, found that size, quality, oppressive living environments and lack of ventilation, even if they fell below Government set housing standards, could not be used for refusal as this was not a condition of the GPDO.
In short, no planning argument could prevent this scheme from being developed. Beyond the obvious, why is this important? And healthy housing regulations can protect children and older adults and prevent exposure to toxins that disproportionately affect people of color and residents in lower-income neighborhoods. As a result, a blanket deregulatory approach is likely to undermine public health, widen inequalities, and exacerbate affordability challenges; instead, smart regulatory strategies should be the goal of reforms at all levels of government.
Even though housing affordability is a challenge across the US, solutions should be tailored to local economies, markets conditions, political dynamics, and demographic shifts. In some places , low wages, unemployment, and financial insecurity are the primary drivers of affordability challenges, while in others, gentrification pressures are a major contributing factor.
Across such a broad array of communities and markets, it will be challenging for the federal government to prescribe or assess the sufficiency of local regulatory reforms. To do so, it must provide local governments and other stakeholders with necessary data and resources to effectively assess their own housing challenges and regulatory barriers and to develop plans for overcoming them.
Effective policies will also require a strong emphasis on community engagement from the outset, and ongoing monitoring of implementation and evaluation of outcomes. Mining lessons from each of these efforts will be key to the success of new initiatives. July 1, When the economy crashed, banks were not willing to lend at all. For generations, homeownership has represented the greatest source of wealth for most U. Homeownership also allows households greater financial predictability and stability and has been linked with social benefits, including higher rates of life satisfaction, political participation, and voluntarism.
While these federal investments in homeownership have helped white families build wealth, families of color have often been excluded. The FHA, the VA, and GSEs facilitated policies such as redlining and discriminatory lending that increased segregation and prevented people of color from attaining homeownership in desirable areas. This harmful set of policies began to be reversed in the s and s with the passage of civil rights legislation, including the establishment of the U.
However, the process of correcting these errors has been slow, with significant backsliding, and much of the damage of these shameful policies persists to this day. In the early s, the government and GSE share of the mortgage market began to decline as the purely private securitization market, called the private label securities market, or PLS, expanded.
During this period, there was a dramatic expansion of mortgage lending, a large portion of which was in subprime loans with predatory features. Instead, they often were exposed to complex and risky products that quickly became unaffordable when economic conditions changed. When the housing market stalled and interest rates began to rise in the mids, the wheels came off, leading to the financial crisis.
There is near consensus among experts that the housing crisis was caused primarily by the rise of predatory lending and products with exotic features marketed to consumers without adequate information or preparation and sometimes using fraudulent information, as well as the failure of the PLS market.
These claims directed at federal housing policy are at odds with the evidence. Since its creation in , the FHA has provided insurance on 34 million mortgages, helping to lower down payments and establish better terms for qualified borrowers looking to purchase homes or refinance.
While this role does expand access to mortgage credit, and played a key role in kick-starting the growth of American homeownership following the Great Depression, FHA-insured mortgages have never dominated the American housing market. Critics have attacked the FHA for providing unsustainable and excessively cheap mortgage loans that fed into the housing bubble. In fact, far from contributing to the housing bubble, the FHA saw a significant reduction in its market share of originations in the lead-up to the housing crisis.
The reduction in FHA market share was significant: In , the FHA insured approximately 14 percent of home-purchase loans; by the height of the bubble in , it insured only 3 percent. Analysts have observed that if the FHA had not been available to fill this liquidity gap, the housing crisis would have been far worse, potentially leading to a double-dip recession. The FHA has largely recovered from this period by modifying its loan conditions and requirements, and it is once again on strong financial footing.
The mortgage market changed significantly during the early s with the growth of subprime mortgage credit, a significant amount of which found its way into excessively risky and predatory products.
While predatory loans fed the bubble, the primary driver of this lending was demand from Wall Street investors for mortgages, regardless of their quality, which created a dangerous excess of unregulated mortgage lending.
In many of these cases, brokers offered loans with terms not suitable or appropriate for borrowers. Brokers maximized their transaction fees through the aggressive marketing of predatory loans that they often knew would fail. Many of these mortgages were structured to require borrowers to refinance or take out another loan in the future in order to service their debt, thus trapping them.
The rise of subprime lending was fueled in large part by seemingly inexhaustible Wall Street demand for these higher yielding assets for securitizations. Especially in a long-term, low interest rate environment, these loans, with their higher rates, were in tremendous demand with investors—a demand that Wall Street was eager to meet. The expansion of an unregulated PLS market and the development of the ever more complicated financial instruments tied to it are what transformed a housing bubble into the largest financial crisis since the Great Depression.
The rapid growth of the PLS market relied on brokers systematically lowering, and in many cases ignoring, their underwriting standards while also peddling ever riskier products to consumers. Parties securitizing the mortgages, private credit rating agencies, and the banks failed to closely examine or understand these products—or looked the other way as they profited from the bubble—while investment banks developed ever more complex products that traded based on the value of these mortgage-backed securities.
Various forms of the act were voted down 13 times before it was finally passed during the Depression. Any project needs to pay market wages in order to hire workers.
It is absurd to expect otherwise. The union cost premiums estimated produced by the CBO and others are likely to be much too low. Creating lower-cost housing requires reducing building costs, and prevailing wage requirements push the state far in the wrong direction of this goal. The second negative new regulation is that developers must set aside units that will be rented to low-income families at rates that are far below market rates.
A much better way to build low-income housing is to just build more housing. More housing reduces rents for everyone and is the only proven way to make housing more affordable. After all, the reason that so few can afford California housing is because politicians failed to allow enough housing to be built.
California lawmakers took a great idea—removing environmental and zoning blockades to creating new housing—and loaded it up with enough new, destructive regulations to make it thus far nearly irrelevant. View the discussion thread.
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