Do we need an X Prize to address affording housing in high-cost areas? Yes!
by Tamara Copeland
Washington Regional Association of Grantmakers
My father owned a small real estate business. He used to say that real estate was the best investment because you could live in it, borrow against it, or rent it out. I learned this lesson about asset building as a child. And still today, home ownership continues to be the largest investment that most people make. The asset of a home is one of the enduring symbols of having achieved the American dream. Those who own a home are rewarded through tax credits unavailable to non-home owners. The owned home is the source of funds that allows many people to send their children to college, and while all the votes aren’t in yet regarding the pros and cons of reverse mortgages, the home seems to be how some will support their retirement.
Yet far too many people are financially unable to purchase a home – this core to asset building. So, I am a bit surprised when those of us committed to social justice reform aren’t focused more on home ownership. I wanted to find out why. I talked with bankers, developers, and housing advocates. “The federal government used to subsidize the development of affordable houses,” one banker told me. “When they stopped, building these properties wasn’t practical.” “What about condos?” I asked when a developer told me that land was just too expensive in our region. “We can’t depend on lower-income people being able to pay the condo fee,” was his response. No matter where I asked, roadblocks were the answer.
I refuse to believe that the American ingenuity that led to inventing the automobile, putting the first human on the moon, and building the internet can’t solve this problem. It just takes smart people focused on smart new solutions. What would happen if experts on land use joined with architects and builders, housing policy wonks, financiers, and community organizers to figure out how to produce affordable houses for low-income people in the Greater Washington region? What would it take to get people from various disciplines to actually come together? It has to be more than the basic principle of creating diverse housing stock to meet the housing needs of diverse income brackets. That reason hasn’t worked so far. What would catalyze such a conversation?
I think it would take an X Prize.
I believe that the simple act of enabling affordable home ownership in the Greater Washington region has to be seen as a Big, Hairy, Audacious Goal, and that a large sum of money has to be put on the table for an innovative team to solve it. We like to celebrate the number of people with advanced degrees who live in our region. We talk a lot about our knowledge economy. Nineteen institutions of higher learning are located here. And, I recently attended a meeting at which this region was touted as being more entrepreneurial than Silicon Valley based on the number of new ventures birthed here. We have the knowledge and we have the need. We can be a model for the country. Our problem is not unique.
I would be remiss if I didn’t acknowledge that this need rests within a larger sphere of need for affordable housing, including more affordable rental units. In fact, WRAG is already working to try to address it. But even housing advocates, were stunned to learn from an Urban Institute study last year that “not a single county in the United States has enough affordable housing for all of its extremely low-income renters.” Here in the Greater Washington region, where rental costs are soaring, we knew this reality. But certainly, we thought, someone, somewhere, had figured this out. No one has.
What a tremendous boost for the country it would be for the affordable housing challenge, both home ownership and the production and preservation of affordable rental units, to be solved right here in the nation’s capital.
Who will incentivize this work? Who can fund an X Prize? Philanthropy can.