This was originally posted to the Adams Morgan Listserv on May 6, 2019, as message #51055, groups.yahoo.com/neo/groups/AdamsMorgan/conversations/messages/51055
The video below I believe, will help us to better understand why housing is so expensive in DC. As well, shed light on the confusion caused by government officials’ and smart growth advocates’ deceptive and misleading use of shaky population growth and housing demand statistics. For example, the ludicrous assertion that building 36,000 new housing units by 2025 well help address our affordable housing crisis. The video also sheds some light on the actions those of us advocating for just and equitable housing and development policies must take.
Game Theory and Oligopoly: Crash Course Economics
DC’s housing and real estate development market is basically an oligopoly operating as a public-private cartel setting and controlling the price and nature of housing. The cartel is managed by DMPED’s Real Estate arm and the Committee on Finance & Revenue via CM Evans and Zoning. The cartel’s public-private operators collude through the city’s disposition of public lands, subsidies and market making project tools. This cartel leverages these and other tools to prevent the price of housing from falling to levels more broadly affordable. This is why attacking housing affordability primarily through increasing supply does not work to bend the price curve to true affordability.
This DMPED led cartel using a modern form of Redlining to manipulate housing prices. Historically, redlining worked to prevent and strict if and where working and middle class Black families and others could purchase forsale housing. In DC this would tend to translate into the availability for Black families with incomes in the range from 35% to 85% of AMI to purchase 3 bedroom homes. The cartel works to ensure forsale homes of this size and price range are not produced. Any affordability plan which does not call for the production of a large percent of new housing units, at least 50%, in this range is “committing affordability fraud”.
Instead the DMPED led cartel, subsidizes with public resources a market drived by the production of high priced 1-Bedroom, luxury rentals. The stories of PN Hoffman’s development of the Wharf in conjunction with DMPED and Donatelli Development’s relationship with WMATA/DMPED among others provides some insight into the working of DC’s Housing Cartel along these lines. Carving up public lands, giving multiples awards to the same developers even when it is known that awardees can’t move forward with development under the terms of the award. These projects are good examples of the collusion described in the video.
In fact it is my belief that the evidence shows DMPED and DHCD colluded to cover-up their modern redlining policies by not conducting and releasing a 2015 version of the Analysis of Impediments to Fair Housing Choice 2006-2011 Final Report. A report which would have exposed the cartel’s collusion in redlining which is driving housing pricing and discrimination in so-called gentrifying neighborhoods. The 36,000 unit number and other gaslighted growth predictions are needed to statistically coverup our modern redlining policies and their racial impacts. While focusing on the relining policies of the 1950s which created Ward 3 is important, today’s modern relining as executed by DC’s public-private Housing Cartel is more critical.
Again, CM Evan’s Business Proposal of 2018 goes along way to provide the expose the dynamics of our Housing Cartel.
William