Memo To US Government: Five Ways To Fix The Housing Industry
by Lloyd Alter, Toronto on 10. 7.08
MEMO: You own the Housing industry now, Here is what you should do with it.
Now that the United States Government owns all the mortgages, the guarantors of the mortgages, and the reinsurer of all the insurers, and possibly pretty soon $700 billion worth of foreclosed houses, what should you do with it?
Usually when a government nationalizes an industry, they have a plan for what they want to do with it. Now that the American government owns it, here are a few ideas that might help build a greener, healthier and more energy efficient nation. We have seen how when people are given the freedom to chose what they want instead of what is good for them, they pick granite counters instead of extra insulation. Now that you own all the lenders and guarantors and insurers, you can tell the people of this nation what is good for them and if they want a mortgage or insurance, that is what they get. Isn't nationalization wonderful?
1. No more McMansions
OK, you own the lenders and the guarantors. So no more low density suburban sprawl. No more McMansions. No mortgages without consideration of the externalities- that we are not paying for highways and sewage treatment plants to service greenfield land when there are thousands of houses sitting empty across America. Need more than 3,000 square feet? Pay cash, and don't expect mortgage deductability on the portion of the house over that, you are out of the McMansion subsidy business.
2. Use your new powers to fix what we've got.
48% of our energy is consumed by buildings. Now that the government owns the business, you can fix that, and demand efficiency. Since you are the lender, you can lend for renovation and rehabilitation, not new construction. Insulation and caulk are cheap.
3. Ration Carbon for New Construction
Change the building codes so that every housing unit that is built gets to emit a given amount of carbon, no matter how big it is. Through the energy crises of the 70's to today, energy efficiency standards kept going up, but the amount of energy used in a house went up faster because they just keep getting larger. The average post-war 1950's house was 983 square feet; by 1970 it was 1500 SF; last year it was 2350. Change our building codes to permit a specific amount of energy consumption, period. If you want to build a house twice as big as, say, the design consumption of a 2500 footer, you have to double the insulation in the walls or cover the roof with photovoltaics. If you want a six burner professional stove in your kitchen, add some more insulation still.
Bolivar Peninsula, Texas, before and after Ike
4. No more hurricane bait.
No more money to fund hurricane and tornado bait that the reinsurers have to pay for again and again. Build where it is safe and stable, don't build where it gets washed away. The pictures from Galveston are shocking, but when the city was washed away a hundred years ago, they rebuilt it on high ground at great expense, knowing this could happen again. Why were people allowed to build on an island that wasn't raised? Why were they able to get insurance? This hurricane was not a possibility, but a certainty. Now that the American government owns the reinsurer, are they going to pay out and let people build there again?
5. Don't fund unless it is green.
You control the industry now; if people have to live in smaller houses on narrower lots or God forbid in multi-storey walkup solar powered housing, you have the power to decide. If nobody can get a loan or insurance unless their house is net-zero energy and on a streetcar line, well, you can do that. Everyone else can pay cash.
Of course, this will never happen in the United States of America, it would be communist to suggest, as Joe Mysak did in Bloomberg, that these ideas "appeal especially to people who like to think they'll be in charge after the revolution. They would apparently love nothing more than for the population to be confined to Soviet-style concrete-block high-rises and be forced to take state-run streetcars to their little jobs at the mill."
But now that the housing industry is owned by the state, the state can set the standards, it can decide who gets a loan and who gets insurance. Let's use this opportunity to ensure that we do it right from this point on, that we rewrite the rulebook to make what we build green, and that we fix what we have instead of mindlessly building more.
More Big Steps that you might take:
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I agree that this will never come to pass in the US. The rich will continue to have their way with things. The one point I would love to see done is the mortgage cap for McMansions. If you can afford a building of that magnitude, then pay for it yourself. Too many people struggle to try and afford housing and need some help with a mortgage.
Your promotion of the government telling us how we can and can not live is far more frightening than wasted energy and pollution
I just can't agree with a large portion of this post.
Approving loans for renovating and upgrading to improve efficiency, sure. Applying caps to carbon emissions per person regardless of house size, that is fine too, though I hope people could buy and sell such credits. I also wonder how you'd account for electric vs. gas and oil for heat and cooking; does the utility pay for emissions associated with electricity production, or the end user? Requiring people to pay for it themselves if they want to build where a hurricane will rip it down, is fine.
But a cap on home size? No mortgages over 3000 sq ft? Awful. There's nothing special about the number 3000. Does outdoor living space count? Finished basements? Unfinished basements built so they can easily get renovated the next year? Charge higher interest on jumbo mortgages or require more collateral and higher efficiency standards if you must, but an arbitrary cap on size isn't in anyone's best interest.
And a cap on energy usage? What are you going to do, turn off a person's electricity on the 29th of the month if they go out and buy a new plasma TV and use too much power? Refuse to sell people things that don't fit into their state-mandated energy budget? No thank you. Make the price of energy reflect its true cost, please, and if that raises the price, make sure the extra money goes towards changing to a different energy source or paying for the cost of the newly-accounted-for externalities.. Then you don't need to cap anyone's consumption.
New standards for insulation, device efficiency, and phantom power would be a wonderful thing for everyone. But energy usage caps are a terrible idea. Who gets to pick where the cap gets set? On what grounds? It just turns an aristocracy of money into an aristocracy of political influence, which is exactly what generally happens in supposedly communist nations. In a few decades, renewables will be a larger share of our energy supply than fossil fuels; will we repeal the caps then? If so, why not push for the end state of more renewable energy instead of restricting energy use? And if not, why the heck not?
I don't think it is a bad idea to cap home size. Urban sprawl is a national security risk. The more spread out the country the more difficult it is to supply food and utilities.
wow... while I may like some of the things I see on this site, promoting the Federal Government to further extend their unconstitutional authority over how we live just astounds me. Government is force, even if they are forcing things that individually I may like to choose for myself, they are still force and that is wrong.
LA: I thought that the disclaimer at the end about this never happening because it was essentially communist would clarify the issue. It is not going to happen. You can do what you want, the question is, do you do it on your own or with government funding?
Wow! Opinions and positions like those stated by the author are reasons why I often say "I'm no treehugger but..." This type of hard lined attitudes are part of the reason any green movement has had so much trouble gaining acceptance by the general population (at least here in the USA).
The ideas laid out in the article are some of the most socialist notions I've heard since Hillary Clinton tried to take over the US health care industry.
A point that the author doesn't understand or at least acknowledge (possibly because it is counter to his fantasy world) is that there are still viable banking institutions out there making solid mortgage loans to people who can afford them (at least until the Obama tax plan is instituted). The government has not bought the entire industry. Further, what the author proposes WILL increase the chasm between the have's and the have-not's. We would see class envy and hatred the likes of which we have never seen in this country.
To be fair, I do agree with the author a bit when talking about building in low areas in the path of hurricanes. I am still astonished that the government was so eager to rebuild New Orleans. I lived there a short time and I like N.O. but it doesn't make sense to me to publicly fund a rebuild. However, I must take exception to the tornado bait comment. True, there are some areas that get more tornados than others. I grew up in "tornado alley". But, tornados can and do pop up in places people never suspected.
There are many flaws to the authors home size argument as well. First, to arbitrarily pick a maximum size is fundamentally unfair. What if a family has 5 kids (I suppose the author would mandate a family size limit too or at least tax large ones) and/or live in parents/grandparents? What if the owners telework from home or run a business out of the basement? I could go on... Second, the author's fantasy is in direct opposition to existing policies establed by many counties and municipalities to limit population growth and manage the use of infrastructure. For example, the county I live in has mandated that apart from mega-developments with postage stamp lots, all other lots (including minor developments) will be a minimum of 3 acres. None of the mega builders in my area are doing anything more energy efficient than tyvek wrap and high seer heat pump. So, I've had to buy one of those 3 acre lots find a custom builder that will build a green home for me, the wife, and our 5 kids.
If the authors fantasy were to ever become a reality then you might as well plug me into one of those pods from The Matrix. At least there I would have the illusion of free will and a little elbow room.
I think this article has some fair points. And especially for those who are thinking of how to add value to their homes, there are many green solutions to consider.
There are still a lot of people out there who think that going "green" means sacrificing a comfortable lifestyle. It's actually so much easier than you'd think- especially when you spend a little time doing research!
For example, my parents really want to install a hot tub (I know, I know- not what you would consider an eco-purchase). BUT- after doing research, we discovered a company called Dimension One Spas whose spas & hot tubs are made from 100% recycled milk jugs and are so well insulated that they minimize the use of a heater. Plus, they're filtered using a patented ozone UV light system so the water is cleaned without any chemicals.
Plus, by improving the backyard, it will increase their home's value too. Not to mention make it more enticing to buy.
For all those luxury home owners who want to find a simple way to minimize their impact on the Earth without compromising their comfort, I would highly recommend checking this company out. Their website is: www.dimensiononespas.com.
Every time you're going to make any kind of purchase, just consider if maybe there's a better, more eco-solution. All it takes is a 5 minute google search. Making this world a greener place starts with YOU.
Will you move to North Korea already? Or are they too resolute in their belief of personal freedoms?
Seeing all the comments that suggest I move to North Korea, I would like to clarify that I am not saying that nobody can live in a big house, I am just saying that the government shouldn't be the lender or the guarantor or the insurer. If you have the money you have the freedom.
What you have suggested is dangerous, there are many countries in this world that have collapsed because of this very thing.
The housing and banking problems stem not from what you call Mcmansions but from society itself.
You know it all goes back to the seven deadly sins,
greed,sloth,avarice. There is nothing wrong with wanting the nicer things in life, but there is a cost associated with it and a question that needs to be asked :
Is it worth the cost?
I have designed several solar panels and use one on my home to reduce my energy costs for heating and use the clothes line most of the time, except when the tempature drops below 0 degrees and I also do not drive so much.
Until you change the culture in society we will be in a world of hurt, let us fix it now while we can and not leave for the next guy( you know our kids and grand kids)
And what about older homes?
Do you deny them insurance?
What about people who buy existing homes that don't meet the new standards? A 1950s ranch isn't going to meet the new higher standards. But buying an existing home is better than a new built. So....who decides which is better? Do you allow refinancing of older homes for the purpose of upgrading with insulation and solar?
Government regulation is socialism or totalitarian communism. Looks like the anti-environmentalists have discovered Treehugger.
The post goes over the top is suggesting the power that we can exercise as voters and taxpayers (we are the gov't). Our gov't, through subsidies, earmarks, fees, and policies, supports lifestyles and attitudes that are not in line with environmental goals.
A policy that would not allow tax deductions of interest for homes over 3,000 sf is simple and logical based on the standard that we don't tax necessities.
A policy that considers the true costs of locating communities (new roads/road repair, utilities, and other infrastructure) would be wise. We ought not to limit options, but we should remove some subsidies and make costs transparent and somewhat progressive.
We could also institute a policy, easily enough, that would do to 'high risk' areas such as hurricane- or flood-prone areas what we did to homeowners in the national park system when that was created - give them a slow way out of poorly-located communities. The gov't should not force these things as suggested in the article, except in dire circumstances; instead we should steer policy to do what makes sense for the country and it's citizens.
As a taxpayer I cringe each hurricane season as we insure poorly-located communities. As an architect, I see that we can do much more in terms of responsibly locating communities and that we ought not to limit house size, but simply limit how much we as taxpayers contribute to oversize housing.