Local Reliance: The Shortage of Low-Cost Housing

The institute for Local Self-Reliance works to help urban residents gain greater control over their lives. This issue discusses the shortage of low-cost housing and maintaining the city tax base.

| January/February 1978

  • The institute for Local Self-Reliance covers the shortage of low-cost housing.
    The institute for Local Self-Reliance covers the shortage of low-cost housing.
    Photo By Fotolia/marilyn barbone

  • The institute for Local Self-Reliance covers the shortage of low-cost housing.

The institute for Local Self-Reliance showcases urban problems, this issue they focus on the shortage of low-cost housing.

The Shortage of Low-Cost Housing

It's no secret that most large U.S. cities are increasingly finding themselves in a fiscal quandary. They can't afford any further shrinkage of their tax base, so they encourage renovation of and the immigration of middle and high-income people to the inner city. But by doing so, they displace the lower-income and moderate-income families already living there, thus making the current shortage of decent low-cost housing that much more critical. Nowhere is this more evident than in Washington, D.C., where some houses that cost $10,000 four years ago are now selling for $60,000 . . . before renovation. Obviously, a solution to this problem is needed.

Fortunately, there is a way to maintain the city tax base without displacing the poor. It's called community ownership of housing . . . housing owned not by profit-motivated landlords, but by a non-profit land trust, community development corporation, or "coop". (Over 500,000 Americans now live in cooperatives. If the cost of home ownership keeps going up, this number is likely to grow much larger.)

Community ownership of housing has many advantages. At the head of the list are the economic benefits: Resident/owners of a community-owned building do not pay for the speculative profits of landlords or the ownership turnovers that drive rents sky-high. Once an initial monthly "payment" is decided upon, only increases in local and state taxes, utilities, etc., can cause a hike in the monthly charge.

What kind of "rents" do co-op residents actually pay? In three buildings completed in 1973 by Coop Services, Inc. of Detroit, co-op members pay from $87.50 to $111.50 per month (including utilities) for their housing. By contrast, the tenants of some nearby limited-dividend, investor -owned buildings constructed in the same gear (with financing similar to that of the Co-op Services development) pay monthly rents ranging from $135 to $225. (What's more, the three co-op buildings are air-conditioned, while their privately owned counterparts are not.)

Aside from the obvious economic benefits, cooperative or community ownership of housing can also have a positive impact on the surrounding neighborhood. Co-op residents realize that the more maintenance work they do themselves and the less vandalism there is to their property, the lower their monthly payments will be.

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