The Banished Bottom of the Housing Market

I mean... this article discusses how this used to be done? It winds up looking a lot like dormitories at schools.

I think many Americans have the impression that this violates the terms of their lease, and without other-country kinship connections and networks, they’re not aware of how to find people who would lease under high occupancy conditions. It may even be illegal. So we may need to explicitly make these legal again so Americans will rent in this way.

Family homes and family apartments are not the same thing. You are referring to zoning restrictions only allowing detached single family homes to be built, which are more expensive per occupant, and hence keep poorer people away.

There are multiple reasons for why dense areas only have 1 and 2 bedroom apartments, while less dense areas only have detached single family homes. One is, as you say, to keep the poorer people away. But another big one is also the change in household size due to people's preferences. And yet another is people's preference for detached single family homes once they do have kids (by and large).

but it wasn't cheap.

> they would need to be able to vote to kick people out.

Not possible. Tenant laws are highly protective of the tenants. There is zero chance you could allow people to vote to kick another person out and not get immediately crushed by discrimination lawsuits.

Evictions also take a lot of time and legal fees. If you rent a room to someone and they break the contract you can't just kick them out. You have to follow the eviction process. Even if someone stops paying rent and tells you they're done paying, it could take months before you can actually evict them.

> maybe a less dystopian form of mental institute. More like a dorm with mental services and security.

That already exists. It's underfunded.

This is part of the advantage of SROs: every person has their own space, with a locking door.

> If the options are "people have conflict over who cleans the kitchen" and "rampant street misery" the decision is obvious, at least to me.

Arguing over who cleans the kitchens is the version of the problem for friends who know each other. If you try the same arrangement and add people with severe mental health problems or drug problems randomly into the communal kitchens you would get something far, far worse.

I only brought that up as an example of what happens in the best case of friends choosing to live together, not as a suggestion of what it would be like with public strangers mixing together.

The SROs discussed in the article were prominent long after that.

Modern synthetic fentanyl is a different situation than opium for many reasons, including the relative strength and difficult controlling dosages. The current opioid epidemic is really bad for drug users, even with historical perspective.

As always, I'm firmly of the mind that none of this has to do with balance sheets or what things cost. There's a type of person who just has this image in mind that everyone struggling is a drugged up loser who refuses to get a job and lives on benefits, thanks to decades of propaganda saying as such. The fact that UBI would save us astronomical amounts of money versus the current piecemeal, ineffective and constantly under seige social system we have doesn't matter, because the point isn't to keep people fed, it's to keep poor people in line. The fact that housing assistance and other such things would clean up the streets of the same people while giving them the help they need, and at a lower cost than rolling the cops on them to beat them with batons and shove them into coach busses to other cities doesn't matter, because the violence is what they want.

There's a substantial slice of this country that legitimately hates poor people, whether they want to admit it or not, and they will die on the hill of spending a thousand taxpayer dollars making their life a living hell, before they will willingly accede to giving them a hundred bucks to buy food.

This is not a reasonable position and as such, you cannot reason with it.

As they say, "The cruelty is the point."

> The drug and mental illness you describe are widespread right now, but because they happen in periodically-swept homeless encampments, you can ignore them and pretend they're not real.

What are you talking about? I brought them up because it’s a front and center problem that anyone who walks through a big city will have to encounter on a daily basis. It’s not out of sight out of mind at all.

> And where's this assumption that SROs would have no facilities maintenance or law enforcement?

At $231 inflation adjusted dollars per month, just how much do you expect to be left over for daily cleaning staff? If you expect nearly hotel level frequency of cleaning common spaces, you’re going to have to expect nearly hotel level monthly rents.

Law enforcement isn’t going to arrest someone for refusing to clean their plates. It’s the responsibility of the SRO operator to evict people. Do you know how hard it is to evict anyone these days? Even literal squatters or people who stop paying rent can take months to evict.

> a willingness to kick out problematic tenants. The Y has a zero-alcohol policy, and will kick you out with no notice for violation. Tenant's rights laws and social norms make this much harder today.

You probably brought up the biggest problem with making this model work today.

In the 1920s the threat of being evicted rapidly for violations was real and present. Either you follow the rules or you’re getting kicked to the street.

Modern tenant laws are unbelievably protective of tenants and require extremely long periods to evict people. I know someone who spent months and tens of thousands of dollars trying to evict squatters who broke into their house while they were doing some construction work on it. If it takes months to kick non-paying tenants who were never invited out of a place you own, it would be a nightmare to try to evict people from an SRO fast enough to keep any peace.

> And while drug use is a problem today, alcohol abuse was a problem 100 years ago.

The different stereotypes of abusers of different drugs are not inaccurate.

If you had your choice of renting to someone who regularly abused mushrooms, alcohol, or methamphetamine, your preference is likely to be in that order and for good reason.

I would not want to share a room with someone constantly on mushrooms, would not want to share a house with someone constantly blackout drunk, and would not want to share a street with someone frequently on meth.

> Hiring a janitor or cleaning or supervisors etc was so much cheaper than it is now due to Baumol's.

IIUC, this is an inappropriate of use of Baumol's cost disease. That is intended to apply in cases where the fundamental issue is that technology and/or process changes cannot improve the productivity of those performing a task, such as a symphony orchestra. Janitorial work has been subject to productivity increases, and ultimately, it's a bit of a stretch to use Baumol's to talk about a case where you can't for some reason reduce the number of people doing the work from one to zero.

Supervisory roles might, possibly, be an appropriate Baumol's example.

Yes -- the closing of mental hospitals was very much in response to a moral panic (possibly justified) against the unreasonable use of involuntary indefinite confinement. That combined with the inhumane conditions in the facilities themselves, which was itself worsened by the difficulty in obtaining funding and overcrowding.

In the US this is very much an unsolved problem -- chronic homelessness is probably a problem better served by indefinite involuntary confinement, but the moral cost of this is very high and there's a lot of reluctance to go back to that. In Europe this is less the case -- if you look closely into any country that has made big strides fighting chronic homelessness (I'm looking at you, Finland [1]) underneath it you'll see a huge rise in the involuntary confinement numbers that are the quiet solution.

[1] https://news.ycombinator.com/item?id=43280456

“Americas doesn’t correct problems - we over-correct.”

Bill Maher

Interestingly, churches are one of the ways you still could, given that when zoning conflicts with practice of a religion zoning often has to give way. Get some folks with development experience and start a Hospitaller order.

In the modern regulatory environment what that will likely wind up doing is effectively being a housing subsidy for Walmart workers or comparable.

>People live in the city because they want to eat out, right?

No? Having a usable kitchen does not mean you cannot eat at restaurants, and surely a good portion of people who like to eat at restaurants also want to be able to cook at home sometimes, if only to save money. This is not even going into the fact that eating at restaurants is almost always unhealthy.

Maybe in Asia, but in the us eating out is crazy expensive. People living in cheap housing are not eating out all the time post covid.

> People live in the city because they want to eat out, right?

Dining out is expensive. It's essentially incompatible with the target demographic who need extremely low cost housing.

See? Exactly the decay I was talking about.

There are no other options. Like smaller cities with a lower cost of living. The big cities just suck away life from everything.

Tenant rights didn't end SROs, but they made them much more expensive to operate in cities that make evictions difficult. Most cities were already discouraging them with zoning and building codes, and tenant rights expansions in some of the most expensive cities just doubled down.

Where they still exist in significant quantity, it's usually because of subsidies, carve-outs that exempt them from some code or regulatory requirements, or both. NYC still has the most in the country, and might stop losing the ones they have so quickly thanks to some 2023 carve-outs and subsidies. But as a percentage of the housing stock (which is already too low!) they've declined from ~10% in the 1950s to >1% now. But it's very, very rare anywhere for new SROs to be built, and especially in the cities that could benefit most from them.

Chicago passed an ordinance in 2014 to preserve the SROs they had, with subsidized loans and tax credits to operators, but between 2015 and 2020 they still lost 37% of their remaining SRO buildings (no more recent data seems easily available).

There are still a decent number of sros in uptown. We’ll see how long that lasts with the new towers and zoning probably making them prime redevelopment targets.

SROs still exist even in NYC; I used to live not far from one in Brooklyn that got bought and redeveloped. At one point in NYC there was a push for what they called "student living" or something, which was basically an SRO -- shared kitchens and bathrooms, etc., but all the ones I was aware of were made into city-run homeless shelters in the 2010s.

I sat on the board of an HOA for a small condo building where I had purchased a unit. The board was comprised of owners.

The HOA was our only way of ensuring bad owners didn't abuse their ownership rights. It was an old building, so all the water was shared on the water bill and the HOA let us split this up based on square footage. Units which had excessive numbers of people living there also liked not to pay HOA dues of any sort (doubling the water bill problem for other units).

At one point a unit was running a brothel! This was wild to find out about, because it wasn't in a bad neighborhood or anything - it was the historic district.

HOA's have their uses, but also like any positions with power, they attract people who want to give meaning to their own insignificant existence by lording it over the less powerful (insignificant in the sense that most of our lives are insignificant).

Yes, typically the local government require a HOA-like structure for all new housing developments.

In addition to supporting adherence to environmental regs, they also form the collective financial entity that pays for maintenance of development roads and other common items. The local government shifts that burden onto the HOA instead of adding to its obligations.

That doesn't seem like an adequate explanation. An HOA that only existed to maintain the stormwater plan and just collected small dues to maintain it would be almost completely unrecognizable compared to how actual HOAs function. Come to think of it, even my standard explanation of HOAs being prevalent because local government use them as a backdoor way to increase property taxes is inadequate, since an HOA that just maintains the roads and parks would also be pretty unrecognizable.

Maybe these explain why HOAs exist, but not why HOAs almost always have a big tangle of rules on top. Is there some regulation that explains that aspect?

A lot of those laws are meant to prohibit brothels, without the hassle of needing to actually prove that the house is being used as a brothel.

It may be that there's no one answer because every city is different.

In Chicago, for example, the ongoing decline of SROs is still a live issue. The most recent time the city passed a new ordnance intended to try and halt the decline was 11 years ago [1].

As far as I'm aware it hasn't slowed the decline, and there maybe a plausible argument to be made that it's worsening the problem by creating significant barriers to opening any new SROs. The ordnance requires a 180-day notification period prior to the sale of any existing SRO building, and during that period you can only sell to an owner who intends to preserve the building's current use as an SRO. If that fails, you get about a year to find another buyer, and any residents being displaced by the sale get relocation assistance, including a $2,000 check to offset relocation costs.

I believe the people who drafted and passed the ordnance had the best of intentions. But (and I'm no real estate financier so maybe I have no idea what I'm talking about) it seems like it might have also made it functionally impossible for anyone to open a new SRO. I can't imagine any bank or investor would be willing to finance an enterprise with those kinds of strings attached. That really amps up the risk to investors, and for an enterprise that's probably already relatively unattractive due to low potential ROI compared to yet another luxury development.

1: https://www.chicago.gov/content/dam/city/depts/mayor/Press%2...

Yes I think Japan does this as well. For example in Shibuya Miyashita Park, a recent traveller would find a nice mall here, but not too long ago it was a genuine park, one full of homeless.

The government pushed away people with nowhere to live to who knows where and built a luxury mall. All the tourists visiting assume Japan has no homeless.

Out of sight, out of mind.