The other problem is that even a housing policy that does benefit a community will do so slowly. It takes years to plan and build new homes. It takes time for new supply to lower costs. That time breaks the feedback loop between good policy and good politics. “ If you’re a politician and you have a four-year term, you really need to do all of your housing stuff in Year 1 if you want to have people feel the benefit within that single term,” Aaron Shroyer, who served as special assistant to Biden for housing policy and coauthored the Searchlight plan, told me.

     Some polling Searchlight did is telling here. Seventy-nine percent of Americans say housing costs are “too high” or “way too high.” Sixty-two percent say it’s become harder to find housing they can afford. But only 24 percent think building more housing in their community would lower costs. People do not believe building housing near them will benefit them. So policymakers need to create that benefit; they need to turn the indirect and slow gains of growth into something more visible and immediate for the community that is creating that growth.

     The other big idea in the Center for American Progress plan is to change the way we build housing in America. “If you go back to 1910, somebody showed up with a toolbox and a hammer to build a house,” Bernstein told me. “And if you go to 2025, it’s the same damn thing. This is the one sector where productivity has been literally falling for five decades while everything else has been going up.”

     The comparison that often gets made here is to manufacturing. Between 1950 and 2020, productivity in the manufacturing sector — how much you could produce with the same number of workers — rose by more than 900 percent. That’s a big part of why everything from tables to televisions is cheaper today than decades ago. But over the same period, productivity in the construction sector has fallen. That’s not the only reason housing is so expensive today, but it’s part of it.

     But you can manufacture housing — construct homes in an off-site factory much the way we construct cars, and then ship them for final assembly. This technology was pioneered in the United States when George Romney, Mitt Romney’s father, served as secretary of housing and urban development during the Nixon administration. But the United States never figured out the rules or the financing to make an industry out of it. Instead, it’s taken hold elsewhere.
In Sweden, for example, more than 40 percent of new homes — and more than 80 percent of single-family homes — are fabricated off-site.

The Center for American Progress’s plan proposes a slew of projects to take this industry America invented and make it one where America is a leader. It wants the federal government to seed a major research program to fund innovation in housing construction. It wants the government to leverage its purchasing power to become an initial buyer for modular housing — one idea here would be to have the Department of Defense upgrade its military base housing using modular construction. It wants to modernize building codes to make modular easier — removing, for instance, an outdated federal requirement to attach a permanent steel chassis to all modular construction — and update federal insurance and financing rules to make sure modular production qualifies.

You could imagine states and cities acting even before the federal government does. “New York was once a beacon of creative, public sector-led, affordable housing production,” says Mayor-elect Zohran Mamdani’s housing plan. “But decades of disinvestment and shrinking government capacity have left us waiting on the real estate industry to solve a housing crisis from which they profit.”

Left unsaid in his plan is that publicly subsidized, affordable housing has become monstrously expensive to construct because the public money triggers rules and process and reviews and negotiations that market-rate housing doesn’t contend with. A RAND study found that, per square foot, affordable housing cost more than 1.5 times as much to build in California as market-rate housing; a Washington Post investigation revealed an affordable housing development in D.C. where the units cost $800,000 each to build, even as the same developer was building market-rate units for $350,000 next door. One reason we don’t build enough affordable housing is we’ve made affordable housing unaffordable to build.

Mamdani proposed investing $100 billion to build 200,000 “publicly subsidized, permanently affordable, union-built, rent-stabilized homes” over the next decade. That works out to $500,000 per unit — if all goes well. What if New York City became a test case for how modular construction could allow public housing, ordered and built at huge scale, in unionized factories, to become cheaper and faster to build than market-rate housing? If it was only $350,000 per unit, that would mean building almost 300,000 units for the same cost.

One problem the modular housing industry has faced is the absence of steady demand to keep the factories running and work out the kinks of construction. A place like New York City that wanted to build public housing at scale, over a long period of time, could create that steady demand and use it to seed an industry — New York could become America’s leader in modular construction.

Perhaps that’s fanciful. But our thinking on housing — both public and private — has been far too small for far too long. We’ve accepted shocking cost increases paired with stagnating productivity. We’ve made it impossible for tens of millions of families to build the lives they want in the cities they’d ideally choose. At this point, making it possible to build more housing just isn’t enough. We need to change how we build housing. I don’t know if modular housing is really the answer. But it’s worth trying.

Original source: New York Times – requires subscription