Sunday, December 27, 2015

When the Market Built Housing for the Low Income

In a recent post, Daniel Kay Hertz examines residential filtering, the process by which housing units depreciate and therefore become available to lower-income buyers or renters over time.  In particular, Hertz examines a Stuart Rosenthal article on the phenomenon which I have examined critically here and here. Although he makes the very good point that the filtering process is not operating in unhindered fashion in many large American metros, he also makes the claim, which I have seen in many other contexts and by other authors, that "very little private housing in the United States was originally built for low-income people."

Although this may be somewhat accurate so far as it only applies to formal housing developers, throughout the history of American cities and indeed most other cities in the world, a large portion of the housing stock came from the informal economy, most of it purpose-built for indigent migrants or very poor laborers.  This was the case even in some of the largest and wealthiest cities in the Western world until fairly recently.

In the typical city, such housing would (and is) either be found on the outskirts or on very low-value urban sites, such as floodplains, rocky ground or steep slopes.  Infrastructure was poor and public services were minimal or nonexistent.

American Favela: The "Dutch Hill" area of midtown Manhattan in 1863.  Source here.
Rather than filtering down, these rudimentary settlements had and have a tendency to "filter up" internally, as residents gained a foothold economically and improved their dwellings.  For most Americans, the best-known of these types of areas are the so-called "Hoovervilles" of the Depression era, when the unemployed and rural migrants occupied low-value or underused land near city centers:

Seattle, WA in the 1930s. Source.
These crude shacks offered little more than shelter from the elements, but they were the result of people in dire situations doing the best they could with what they had available.  Governments then and now refused to accept this reality and, rather than trying to improve the conditions within these settlements, generally favored mass eviction and demolition.  In an interesting twist, this style of development has been rediscovered by contemporary American cities (particularly Seattle), and, without apparent irony, has been rebranded as the "tiny house village."

Beyond housing for the very poorest of the poor, American cities through at least the 1920s built in bulk for the lower end of the income scale.  This housing took several forms:
  • As noted above, shanty housing built by those with little or no experience in construction.
  • Small, temporary and/or transient housing, such as flophouses, boarding houses and other manner of SRO rentals.
  • Small multifamily housing wherein a person of some means would build a home with one or two attached apartments which could be let out at low cost.  Often these apartments would be sub-let to boarders who might occupy a single bedroom.
  • Self-built housing of a higher quality, which might be built from a Sears housing kit, or by a person with some background in construction.  One study estimates as many as 1 in 5 American homes were self-built in the 1920s.
  • As noted in the comments, company towns and other housing built by large businesses for their workers to inhabit. 
The first, second and third of these options were virtually outlawed starting in the 1920s and in the decades following.  What changed during and after the 1920s was not the market's willingness or ability to continue constructing such housing, but society's tolerance for housing of perceived low quality or of profitable use.   The Housing Act of 1937, for instance, was not so much concerned with ensuring affordable housing for the poor, but rather with "the provision of decent, safe and sanitary dwellings for families of low income and the eradication of slums."  Single-room rentals did not fit into this well-meaning but upper middle-class vision.

The "eradication of slums" element of this strategy was more faithfully carried out then the provision of dwellings, and in the process much of the evidence of the low-income neighborhoods of the pre-1950 period was obliterated.  Municipal archives may contain photographic documentation of the condemned neighborhoods, as in the case of Nashville, below, showing a street of tin-roofed shotgun houses and very modest bungalows built in the early 20th century for lower-income tenants.  All were "eradicated" in the 1960s along with much of the surrounding neighborhood and their residents dispersed elsewhere.  That many of these neighborhoods were demolished or saw demand for them fall to near zero, with resultant abandonment, should not cause us to forget they ever existed.

Nashville houses circa 1960; all demolished in urban renewal.  Courtesy MDHA.
It might not be going to far to say that the traumatic process of urban renewal instigated an involuntary filtering, as residents of the poorest areas were literally displaced -- cast out of condemned homes -- and forced to seek new housing from among a diminished housing stock.  These people probably did move into somewhat higher-quality housing, but at higher cost and possibly in more crowded conditions as well.

But what of the fourth type of housing, the proper self-built house?  As it turns out, there was a crackdown on this type of housing as well for reasons that seem to have had less to do with ensuring decent and sanitary housing and more to do with disreputable and exclusionary motives.  The impetus for these changes may have been the mobility provided by the automobile.  I'll quote from one book at length which describes one town's legislative action against black self-builders in Ohio, including one Eddie Strickland:
"In 1946 ... in a series of irregular meetings, the council [of the town of Woodmere, Ohio] passed a building code aimed at restricting do-it-yourself builders, among whom blacks were a prominent group. The code mandated a maximum one-year time limit for the construction of new homes, forbade secession of work for any period longer than forty-eight hours, and prohibited the use of secondhand building materials. Finally, the code required builders to post a $1,000 bond to ensure compliance..... 
"By lifting construction standards (and allegedly enforcing regulations in a discriminatory manner), Woodmere officials raised the cost of home building in the village and substantially limited settlement by working-class blacks. Moreover, the passage of similar building restrictions throughout the county helped limit the number of African American suburbanites in the Cleveland area. The trend had an apparently chilling effect on the attendance of blacks at the weekly land auction in Cleveland, where a number of families had formerly purchased suburban land for delinquent taxes.... 
"Far from being an isolated event, Strickland's confrontation with authorities in Woodmere reflected a national trend toward regulation of the suburban fringe that hastened the decline of working-class suburbanization in the postwar decades. In Cleveland and other metropolitan areas, the proliferation of suburban municipalities led to the extension of land-use regulations to formerly unregulated areas. Zoning and building codes curtailed informal home building and inflated the cost of a suburban home. Racist application of these regulations closed the door on development for blacks, and the enforcement of sanitary regulations led to the demolition of existing black housing and restrictions on domestic production. 
Excerpt from Places of Their Own: African American Suburbanization in the Twentieth Century by Andrew Wiese
Disputes over self-built homes continue to arise today in remoter regions, as seen in the recent lawsuit brought on behalf of Amish homebuilders in upstate New York who were being required by local codes to submit architectural plans and install other expensive features in their self-built farmhouses.  The elimination of the self-built home as an affordable option in much of the country, in conjunction with zoning regulations limiting small multifamily housing, setting minimum lot sizes and imposing other similar restrictions, completed the elimination of the lower rung of prior housing options.  Left were only the newer mobile/prefab home, which partly stepped in to fill the gap that had been left, and the filtering process, which though demonstrably effective was not always rapid enough to insure a sufficient quantity of housing nor sufficiently cheap housing, especially in cities with high residential demand.

Of these two options, mobile homes were heavily restricted in where they could be located, and urban renewal destroyed huge quantities of filtered housing, i.e., "blighted" homes.  The result is a market which appears, artificially, not to create low-income housing options.

Is this article a call for the return of flophouses, then?  Not in the sense of the negative and unsanitary associations of that term and other like it, but in the sense of a government which recognizes that these older types of housing represent the market's effort to meet vital needs, and that regulation can help meet these needs in a safe and sanitary way without taking an adversarial approach toward them.  These market approaches can be complementary to public housing investments and other public assistance programs, as well, rather than being seen as inferior alternatives.  The tiny house village movement mentioned earlier is one such manifestation of this approach, and shows that the political obstacles need not be insurmountable.

Other and related reading:


  1. "Small multifamily housing wherein a person of some means would build a home with one or two attached apartments which could be let out at low cost. Often these apartments would be sub-let to boarders who might occupy a single bedroom."

    In The Invention of Brownstone Brooklyn, the author talks about how middle-class "discoverers" of Brooklyn's row-house neighborhoods considered themselves to be restoring their houses to their original purpose when converting them from multi-unit to single-family use--but that in fact often there was no basis to this idea. Likely many of these buildings were always multi-unit dwellings in some sense.

    This seems like a particularly pernicious practice in supply-constrained cities, since these conversions replace several affordable units of housing with one much more expensive one, decreasing supply and increasing cost in one fell swoop.

    1. Hi Eli, thanks for the comment. I need to read that book. In some other post, not sure which one, I mentioned the variety of housing arrangements that the Census enumerators of 1950 were trained to look out for. When you look through the original Census records from 1920, 1930 and now 1940 (just released) what is striking is the sheer number of boarders and subletters in apparent single-family homes. Widows would let out rooms in their homes to keep up with payments. As today, tenants would split up single homes, taking a room apiece. Many of those brownstones no doubt had basement apartments or otherwise had boarders in a room or two to help the person living there make their payments. Wealthier people would very often have a servant or two living in a suite within the home.

      These sorts of informal arrangements are not totally illegal today, but the occupancy laws and restrictions on subdivision (limiting kitchens, etc) make it much more difficult than it once was.

    2. I have noticed this in SF as well. It doesn't help that local rent-control and tenants' rights laws mean that being the landlord of a small multi-unit building is much less attractive than owning a single-family home (even if it's rented out).

  2. In New Orleans we have historic preservation areas of low income housing. Native black families have to get a certificate of appropriateness just to fix the porch, while their new rich white neighborhood can add a Bauhaus-style addition because they can afford the architects and lawyers to realize their vision. The city keeps throwing up barriers to entry for black builders in the name of preservation.

  3. It never ceases to amaze me the myriad ways zoning and building laws in the US have been used against black people.

  4. Terrific post, thanks. Something to read when I'm feeling too optimistic yet it leaves a little space for hope.

  5. Some idiot wrote: "very little private housing in the United States was originally built for low-income people."
    What utter nonsense. Even apart from what you wrote in your essay...

    This isn't even true of formal developers.

    Factory housing -- where factory owners built housing for their employees, who were low income -- is a long-standing tradition and a major feature of the 19th century. This was one of the major activities of professional developers: building factory housing. Huge swathes of Chicago's housing was "worker housing" for the workers of specific companies or specific projects; both the "single family" homes on the South Side and the larger apartment buildings.

    Low-income worker housing is also the primary origin of the giant "tenement" apartment buildings built for the low-income in New York City. These weren't even owned by the factory owners. But their workers had to live somewhere, preferably close by, and so they cooperated with the builders of large apartment buildings for the low-income workers -- generally right next door to the factory buildings.

    Both of these traditions -- company-owned housing and tenements -- seem to have been largely eliminated. Now employers expect workers to find their own housing. Why? What changed?

    1. The equivalent today would be if Microsoft set up giant apartment buildings next door to their office parks to house all the temps, contract workers, janitors, and so on -- and on the other side of the office park, platted out rows and rows of tiny tract houses with no side setbacks for the permanent employees.

      But they didn't. And neither did Amazon. Or Google. Or any of the other big companies.

    2. Right, excellent points as to factory housing and the tenements. I suspect what changed was the same thing that changed as to all housing at first in the 1920s and then, in a second round, in the 1970s: the rise and intensification of exclusionary zoning. Secondly, it probably has to do with the rise of the automobile, such that workers have access to a much larger housing market and would themselves feel less compelled to take up a company on an offer of housing. The exception might be in the very expensive coastal markets, but then, in those places, zoning is so strict and the development process so slow that it may not be politically feasible to build large quantities of worker housing/dormitories.

    3. Well, Facebook is doing something like that:

      The biggest roadblock seems to be the municipalities, which are skeptical of any increase in housing, even if it houses highly-paid workers.

  6. In urban areas also the number of poor people holds one third of the total population. Hence the numbers of slums are increasing every day. Also some low income families prefer to stay in slums rather renting a house. So finally government has put attention towards this problem and decided to build housing for them. Bravo!! Property Management Winston Salem, NC.

  7. In New Orleans we have historic preservation areas of low income housing. Native black families have to get a certificate of appropriateness just to fix the porch, while their new rich white neighborhood can add a Bauhaus-style addition because they can afford the architects and lawyers to realize their vision.

  8. You can't have cheap housing and also have high "quality" requirements for the site.

    In the 1950s, there was huge amounts of housing built for the middle-middle and lower-middle classes. First, there was a HUGE pent-up demand from the 1930s. Second, all the GIs were coming back and getting married at once. Third, the FHA programs began. Fourth, the anti-rooming house measures were taking hold. Rooming houses WERE often upper-level slums. But fifth, and just as critically, food was so much more convenient to buy and cook setting up house was no longer a hideously expensive endeavor unless you had both a wife and a good wage.

    These were homes that were smaller than the professionally-built homes of 30 years before. They had no sidewalks. Sometimes no real curbs! No buried powerlines. No "walkable" anything. They were build on cheap land on the outskirts of cities. No special controls for runoff--no flood control other than building them on high land. Storm water was separated from sewer and released directly into the nearest stream. No special fees for building new schools or for infrastructure increases.

    These are the communities that today, as they filter farther down, are incredibly expensive to provide services to. People want to live in NICE suburbs with good-sized houses. The standard for "nice" changes over time, and it now requires 2 bathrooms and a garage when before 1 bathroom and a garage is fine.

    You can tell exactly what properties will filter down because if it's built for a family and has less than 2 bathrooms, no garage, no easy place for a dishwasher, and no dedicated laundry facilities, it will filter down unless there are huge pressures pushing it up--or unless people are adding on heavily.

    Some of these old affordable communities are otherwise fine. Others employed criminal cost-cutting procedures. Levitt's early homes were among the criminal. He cranked up the water heater to near boiling and used the water to heat the homes' slabs. He was too cheap to buy a mixing valve, and so the water came out of the tap at around 200 degrees. He did this deliberately and caused a number of people to get skin grafts and caused a small child (who innocently got into the tub by himself and twisted on the water) to nearly die.

    There is no such thing as cheap housing built to the "high level" that so-called urbanists dream of. It simply does not exist. It is, at best, a terrible, tiny, crowded tenement that is new for approximately 5 years and stays sorta nice if you get "nice" people to rent from you (broke student baristas whole parents you can hold financially responsible for a drunken party's damage and not the semi-employable for life).

  9. The rooming house phenomenon deserves more explanation. In the 1910s, kitchenless living was widely appealing to a huge swath of the population. Single men and women would overwhelmingly choose a kitchenless (or near-kitchenless) life because the very few things that could be cooked by a full time worker in the time that he had as his disposal were monotonous and/or expensive, and he'd have to choose to have expensive delivery of all kinds of things.

    Food workers got incredibly low wages--much lower than "minimum wage"--for a LONG time. They were excluded from minimum wage laws until the latter half of the 20th century. Raw food was also incredibly more expensive. As a result, cheap cuts of food cooked well (a good stew, for instance--time-consuming and cheap) were generally a lot cheaper than the kind of food you could whip up in an evening. As cheap dining options spread, the old boarding houses went out of favor. You didn't have to show up at a certain time to get fed or limit yourself to one woman's food repertoire. You could eat cheaply 6 nights and splurge another, if you wanted to. So boarding houses were out. Rooming houses were in. This was true for lower and middle class singles all over the country.

    Lower class couples were fairly rarely seen in the kitchenless housing. They gravitated to single-wall kitchen and shared bathroom "apartments," even if the wife worked--she just worked even more to make food how she could around her working hours, which would mostly be "doing for" different families different days so she could control her working hours well enough to actually have the time to cook.


  10. Lower middle class couples were in actual apartments without shared bathrooms. They would also run their own rooming houses, maybe informally, to help afford a house.

    Middle-middle class couples often chose "housekeeping" apartments of 3 to 5 rooms that came with a maid to do the heavy cleaning weekly. That was cheaper and less trouble than hiring a part-time maid yourself and trying to afford a house. Some of them would also have a house and boarders/rooms for rent. They were not often "kitchenless."

    Upper-middle-middle class couples, though, were well represented in the "kitchenless" world. They would choose to live in residential hotels for financial reasons because it was cheaper to live there than to hire a full time maid-of-all-work, which would be expected for their position. Upper middle and upper class couples and even families found it cheaper to keep a residential suite at a hotel and make use of the hotel's ballroom and various entertainment rooms to host their own parties than have their own homes, and upper middle class couples also got the thrill of having the upper class couples just a floor or two away (though the upper middle class couple would have one room and a bathroom or at most a suite of two rooms, while the upper class couple or even family would have 3 rooms or more, of course).

    When people stopped expecting to have heavy levels of household help--because wages went up and also because household chores became easier--and as the cost of the labor to prepare food soared when compared to the cost of the food, the kitchenless lifestyle lost its luster. The tradeoffs of the lack of privacy and the lack of control of your food weren't worth the perks. So they left.

    The only people who were staying in kitchenless residences were now some singles and the lower class, and the downtowns took on more and more the characteristic of slums. The costs of remodeling to add bathrooms and kitchens were high, and the rents expected were low--never mind fire regulations, which took a long time to catch up in some towns to decent standards.

    At this point, a savvy businessman could have made apartments for singles and couples without kids, but most people in search of a better life had gone to the suburbs, and the grocery stores and "daily" retail followed them. There was also no parking for these old apartments, which is fine if you are easily able to move every time you change jobs--which lower class people did pretty often, unless they were in an ethnic ghetto, when their employment was pretty much tied to the neighborhood and there was never going to be much improvement in their condition--but even lower class people were richer and had more stuff to move and wanted to be able to look farther afield for work.

    Interestingly, it's the small towns where upper-story apartments were actually still very viable. Usually some provision could be made for parking nearby, and the supermarkets were often just a 5-minute drive from downtown. But the new tract housing was so incredibly cheap there that it seemed like a bad return on investment to pick remodeling downtown for rent versus a cheap tract house with an FHA-backed loan.