In October 2016, Diego Bravo moved as marketing vice president of the startup Innit to the Californian population of San Mateo, a kind of Majadahonda of San Francisco. "As soon as I arrived in the area I started looking at rentals," he recalls. "I put in the search engines" $ 2,000 / month "and I only got loose rooms in shared flats. There I knew that the thing was complicated."
The first place he got into were the Metropolitan apartments, one kilometer from the center. "They had great facilities: movie theater, gym, heated pool, yacusi and barbecue." But they were 70 square meters and cost "$ 3,425 per month, garbage collection, water and garage included." Although he earned a good salary, the rent was eaten 41%. In addition, as in San Mateo there is no income limitation, the following year they raised it to $ 3,775. "Obviously, we didn't stay and we moved to Elm Street." The facilities were only "decent", but the price difference was substantial. "When we told people that we paid 2,500 euros a month, they asked us how and where we had found such a bargain."
San Francisco is "the zero zone of the digital age," says Michelle Queen in National Geographic. In its bay are 33 Fortune 500 companies, including Apple, Netflix or PayPal. Since 2009, students and graduates of Stanford and Berkeley universities have founded nearly 3,000 companies and generated more than $ 63 billion.
But this explosion of wealth has put tremendous pressure on the surrounding terrain. For the typical detached house you are asked for 1.3 million dollars , a figure that may be available to Silicon Valley star programmers, but not to service employees. And we don't talk about the top of the range. "The most expensive zip code in the United States," says Bravo, "is Atherton, just south of San Mateo." There the average per mansion is around seven million.
"More than one employee with a six-figure salary is seen and wanted to find accommodation," says Queen. "Surely there is no place more suffocated than Palo Alto Este, a city of about 30,000 inhabitants with formidable neighbors: Facebook to the north and Google to the south. In the last 50 years it had been a melting pot of African-American and Latino families. Today they are installing there white and Asian. The average appraisal exceeds one million dollars, when in 2011 it was around 260,000 ".
Unable to accompany their income to such an escalation, many are forced to share a roof with family and friends or exile to the periphery. "They are raising one-million-dollar residences next to shelters for the homeless," says pastor Paul Bains, who runs an NGO in Palo Alto Este, in the magazine.
SCARS
Jaime Pérez Luque had the opportunity to know first hand this wild gentrification when the business school of Madison, Wisconsin, hired him to teach an urban economics course. "I entrusted my students with an essay on the homeless phenomenon. They mentioned one Piccolo Pete, a very popular street musician in the town. Although they did not make fun of him, he wrote to me very angry when he read it on the web. I invited him to eat and I found a charming, intelligent, prepared character. He is a computer engineer, master several instruments and plays the flute in the municipal orchestra. But something happened ... "
Piccolo Pete's home is a dirty, rusty truck full of buns, not even a motorhome. "What I like most is that it is my space," he boasts in a reddit documentary. "It gives me a lot of independence. I have no landlord or mortgage payment."
"When I met him," Pérez Luque continues, "I understood that many people live like this in the United States." Although some carry psychiatric or addiction disorders, others simply cannot afford an apartment. "They work, but the money gives them to eat or to pay the rent, and they choose to eat." And the problem is that ending up in the street leaves scars. "You are afraid, you are exposed to violence, drugs ... If I had two weeks in the open, I would not be the same."
"In the year after the eviction," agrees the sociologist Matthew Desmond in Evicted, Pulitzer Prize for Non-Fiction 2017, "a family experiences 20% more deprivations than a similar family that has not been evicted. [...] One every two mothers have symptoms of clinical depression. [...] Even after many years they will remain less happy, vital and optimistic. "
Eviction is not a manifestation of poverty, but often a cause. Like a whirlwind, it drags you to simas of unknown suffering. At the international conference on affordable housing he set up this summer at the ESCP business school, where he now teaches, Pérez Luque projected the images of a woman who had ruined himself. "He explained how, when you lose your house, you meet wonderful people, but also someone who is not so much, and now feels vulnerable. In the video he cries."
It does not seem an appropriate material for an academic meeting, but "I put it", Pérez Luque justifies, "because that is a bit the sense of those who investigate in this area: find remedies to alleviate the tragedy of people like her."
Vouchers
The increase in homelessness in the West is partly due to the well-intentioned principle that everyone must enjoy decent material conditions. Until the 70s, the law was relatively tolerant of infra-dwellings, but from that decade on, the requirements to grant habitability certificates were hardened and many buildings considered unhealthy had to be demolished. "Housing improved," writes Jason DeParle in The New York Review of Books, "but it became very expensive," and was out of reach of the most disadvantaged.
The Great Recession aggravated this shortage in a double way. On the one hand, many owners lost their flat and joined the tenant market. On the other, salaries waned. "Between 2001 and 2014, rents rose 7% and renters' income fell 9%," DeParle details. "To afford a two-bedroom studio in a place not particularly expensive like Florida, an employee must earn $ 19.47 per hour [...] twice the minimum wage."
For the humblest, finding an affordable lodging was never easy, but they are no longer alone. Half of the professionals who earn between $ 30,000 and $ 45,000 spend more than 30% of their income on housing. "The probability that a normal citizen ends up on a sidewalk has multiplied," says Pérez Luque. "Governments are aware of this and have launched different initiatives."
The most popular are subsidies. In the United States, more than two million families receive vouchers every year, but Desmond believes that a more generous, universal scheme would be needed, reaching everyone who needs it. "Evictions," he explains in Evicted, "would collapse and become exceptional events. The homeless would virtually disappear. Homes could take advantage of the injection of money to invest in food. Children would go to school and adults would recycle and even save." .
Unfortunately, there are reasons to suspect that it would not be so. "These grants stimulate demand and raise prices," says Pérez Luque, "which complicates access to the majority of housing more. The only beneficiaries are those who receive them."
Some researchers even question this last advantage. Brian A. Jacob, Jens Ludwig and Max Kapustin analyzed a natural experiment that took place in Chicago in 1997. That year, the Housing Authority held a lottery and distributed coupons among 18,000 lucky people. As other neighbors of identical socioeconomic extraction did not perceive anything, a comparison could be established between the two groups and the conclusion is that the program had "a minor impact on education, crime and health". Worse yet: it reduced the propensity of parents to work.
TOPES
Another much appreciated measure among the left is the limitation of rentals. Pérez Luque advises against it. "The net profitability of a lease is already modest, at 2.5% according to the Bank of Spain, and if the owner is reduced, he could choose not to take his flat to the market, which would further aggravate the shortage."
This is an old debate. Apart from the one mentioned by Pérez Luque, the other big argument against rent control is that landlords stop doing maintenance, because it doesn't compensate them. That is why it has always been said that there are two ways to destroy a city: bomb it or limit rents.
For their part, the defenders of the regulation argue that the security given to the tenants allows them to establish a network of friends and family that makes the neighborhood life safer and more enjoyable.
Until recently, the controversy was theoretical, but the regulatory changes introduced in several cities have provided the opportunity to empirically test the different theses. The most sobering case is that of San Francisco, which imposed rent control in 1979. The law contemplated, however, a series of exceptions that authorized the landlord to cancel the contract: to prove that he needed the house to live or that the sold, after compensation to the tenant. What happened? That many owners opted for the latter possibility and, consequently, withdrew thousands of multi-family homes from the rental park, which contracted 15%. And at whose hands did they stop? Of customers with high purchasing power. "The application of limits," Stanford professor Rebecca Diamond concludes, "did not stop the gentrification of San Francisco. On the contrary, it accelerated it."
"It is not necessary to act neither on the demand nor on the prices", concludes Pérez Luque. "Housing is expensive because it is scarce. The solution is to increase the offer."
And how do you get that?
"In the Community of Madrid," he replies, "the builder is obliged to reserve a part of each promotion to social housing. That reduces its margins and what does it do to compensate? Transfer the extra cost to the free apartments, with what the price general increases and, yes, those who access the cheap house do them a favor, but those who do not, who are the majority, make it even more difficult. "
For him, the most promising formula is the tax credit. "In the United States there are two types: one municipal, the TIF (tax increment financing), and the other federal, the LIHTC (low income housing tax credit)." The philosophy is the same. Developments that meet certain requirements (25% are intended to accommodate people at risk of exclusion, for example) receive a loan on account of the taxes accrued by those real estate in the future. "It is a public intervention system that does not interfere with the market," says Pérez Luque. Instead of distributing aid, the Administration waives part of its tax collection to reduce the cost of capital to the builder. "The building is cheaper and may, therefore, charge less for leases."
WHITE BOOK
The protagonists of Evicted are African-American women. They represent 9% of the US population, but concentrate 30% of evictions. There are two reasons: they charge lower salaries on average and need larger houses because they tend to keep child custody. These are the other big victims. Desmond gathers a handful of moving portraits. There is Jori, a boy who at 14 years is considered more the defender of his mother Arleen than his offspring. "If Arleen needed to smile, Jori stole for her. If she lacked respect, she fought for her." It is an existence in which it matures quickly. At four years old, another of the children refuses to sing in class or shake hands with his mother. And when she faces a prison sentence for an attempt at armed robbery, she accompanies her to the court with the commitment not to mount a scene if they condemn her. In the end, he falls 15 months and, while she howls desperately, the boy "looks at her impassively, just as his mother had taught him."
"We must end this drama," says Pérez Luque. Unfortunately, it will not be easy. Access to housing "constitutes a huge challenge," writes Jane Dokko, in the magazine of the Federal Reserve Bank of New York. Despite the poise with which the politicians of both signs defend their proposals, "none of the remedies tried to date have no drawbacks." Not even tax credits. A work by Nathaniel Baum-Snow and Justin Marion reveals that, by lowering prices, it discourages the entry of free entrepreneurs and, in the vicinity of promotions financed with LIHTC, 60% less apartments are built for rent.
In spite of everything, we have learned something. "You can not block the processing of licenses," complains Perez Luque. "In Madrid it takes about a year to get one."
It is also necessary to review the restrictions to build in height that remain in force in much of the West. "The United States is no longer a nation of pioneers," Jenny Schuetz and Cecile Murray observe on the Brookings think tank website. "We cannot rely on single-family and low-density housing developments to accommodate the population."
But above all there is much to investigate. Perez Luque's idea is to prepare a white paper with the help of experts from around the world and put black on white "what works and what doesn't". Without prejudices or ideological apriorisms, because as he confesses to me: "I used to be extremely liberal".
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