Wednesday, August 8

The Extreme Backwardness of Housing Policy

A recent run-in with our insurance company, coupled with my work on housing grants, has made me seriously question the craziness of America's current policies on housing.

For example, the current methods for establishing the value of a house:
  • Don't reflect what the house can actually be sold for or what it would cost to restore the property in the event of a disaster
  • Don't reflect the investments that went into a property to make it what it is
  • Take no account of the intangibles that are an inextricable part of the value of a home
  • Place undue weight on variables that often don't apply to homeowners at all
When you consider the deplorable state of America's infrastructure, and remember the truism that an ounce of prevention is worth a pound of cure, it seems that the government could get a lot more bang for it's buck with a few simple revisions to policy.

Currently we dump millions of dollars into government programs that rebuild (or replace) derelict housing for low income families. Though well intentioned, they cause problems to be left until they are at their most unsafe and most expensive before fixing. They give houses to people who will be no more capable of maintaining the new structure than they were the last one, and see hundreds of thousands of dollars get eaten up by administrative costs - fees, filings, etc. 

Meanwhile, in addition to no assistance in making unglamourous but absolutely vital repairs and upgrades, hard-working homeowners living within their means are often penalized with higher property taxes for their efforts!

It's mind-boggling to think what a few simple revisions to policy could accomplish.
  • Reducing the administrative and filing fees involved in purchasing, maintaining or upgrading property would free up hundreds of thousands of dollars annually that could be applied directly to projects that increase the value and safety of existing housing stock. (And could be easily accomplished. Eliminate unnecessary restrictions, and track crucial information through a simple online processing tool.)
  • Instead of trading iPods for guns, trade unsafe, outdated housing systems for new ones. An old water heater for an energy-efficient tank-less one. An electricity guzzling washer/dryer for a new energy star model. Bought in bulk or surplus, safer and more efficient appliances could be cheaply obtained. Increased efficiency will free up homeowner funds for other improvements, and the government will benefit from reductions in pressure on energy grids, pollution and public safety risks.
  • Encourage homeowners' insurance providers to run their own incentive and reduced-cost upgrade programs. They will immediately benefit (safer homes are less likely to have catastrophic incidents forcing giant pay-outs), and see returns over the long term as improvements to general housing stock will raise real property values. 
That's the end of my rant for now. I have no action steps for how to replace the current boondoggle on policy nonsense with practical, forward-thinking legislation, so I'll just say this: keep your eyes open. As the Wizard's Second Rule warns us, the worst of consequences can come from the best of intentions. Cheer on every smart, practical program you can find to improve America's housing stock and don't get suckered into supporting bad programs just because they good intentions.

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