The Augustana Research Institute (picture two Lutherans with a graphing calculator) has issued a weighty report on affordable housing in Sioux Falls. The report brims with concept maps showing the messy web of services meant to help low-income people put roofs over their heads. ARI concludes that complexity and redundancy of services create inefficiencies that favor the big guys in housing:
In development, complexity and competition have resulted in a system where scale wins (e.g., two major developers build tax credit properties because regulatory requirements are too burdensome for others). Faced with limited resources, developers cannot afford to cash flow sufficient units for families at the lowest income levels. Instead, new construction caters to higher income levels and reduces costs by buying property on the outskirts of town, where it is less accessible to low income families. In short, housing development is driven by financing constraints more than client needs [Suzanne Smith and Susan Bunger, Sioux Falls Affordable Housing Needs Assessment 2016, Augustana Research Institute, January 2017, p. 5].
As a primary solution, ARI advocates coordination among all actors in affordable housing: the city, state, non-profits, and developers.
But remember: collectivism is a response to market failure. Even amidst 2.3% unemployment, Sioux Falls employers are failing to provide their scarce workers with the wages they need to support the renovation and construction of decent cheap houses. Since our captains of industry and bumper-car owners are being stingy, we have to run around drawing cooperation lines on concept maps and pouring tax incentives and federal grants into housing efforts.
The market isn’t failing for everyone. ARI finds the middle class is draining upwards as well as downwards:
Overall, median income in Sioux Falls has remained steady since 2010, but this apparent stability masks change in the distribution of income. Since 2010, Sioux Falls has seen an increase in the number of highincome households ($100,000 or more) and low-income households ($25,000 or less). At the same time, the number of moderate-income households has been static. Over the next five years, Sioux Falls is projected to lose 1,900 moderate-income households with incomes between $35,000 and $75,000, dropping the proportion of the population in this income range from 35% to less than 30%. In both the city of Sioux Falls and the MSA, there is a pattern of income polarization; the area is adding households with higher incomes and lower incomes but losing households in the moderate income ranges [Smith and Bunger, p. 11].
I don’t mind folks getting rich, but they aren’t building houses that will ever resell to folks working their way up from starting wages to middle income. A smaller middle class means fewer modest but nicely kept homes in walkable neighborhoods.
Treading sensitive family-values ground, the report does make the point that whatever the bosses may pay, an important step toward affordable housing for families is having two people around to support the kids:
Children living with single parents are more likely to experience poverty and insecure housing. In Sioux Falls, 12,865 (63%) of households with children are headed by a married couple, while 7,606 (37%) are headed by a single adult. Of families below the poverty level, more than 72% were female-headed with no spouse present. Median income for married couple families with children is $83,198 compared to $25,938 for families headed by single mothers and $39,569 for those headed by single fathers [Smith and Bunger, p. 12].
It’s a lot easier to get and keep a job and put in lots of hours if you have a partner in chasing the kids around.
But for an increasing number of households, kids aren’t a concern. From 2010 to 2015, the number of family households without children grew four times faster than the number of family households with children. The number of single-person households grew three times faster than family-child households. There are now more households without kids than with in Sioux Falls.
Growth among the 55-and-older set has outpaced growth among younger folks. ARI predicts that over the next five years, aging-boomer in-migration will stay steady while shifting older, but growth in young folks will catch up:
If the market works, workers will bring skills and sweat, employers will pay living wages for skills and sweat, and everyone will have a decent place to live. If the market doesn’t work, we’re going to have thousands more Sioux Fallsians relying on complicated public-private sector collaboration to subsidize that market failure.