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:
12 Big Steps to Make Building Better
Stop With the Glass Façades Already
Put Sprinklers in Every Housing Unit