Affordable Housing and The Wealth Gap
Accruing generational wealth through the increased value of your house doesn't work if you can't afford to buy a house in the first place
This is the second in our series of shows in which we take a local look at a nationwide problem – the relationship between home ownership and the widening wealth gap.
What exactly is the relationship between the wealth gap and home ownership? Well, it’s pretty simple. The way most of us in the United States accrue wealth is the appreciation of the value of our home.
Why this leads to a wealth gap is easily demonstrated here in New Orleans: over 50% of New Orleanians rent. Not because they’ve made some maverick financial decision about home ownership, but simply because they can’t afford to buy a house.
Because more people with more wealth spend more money - and therefore fuel the economy - most economists agree that widespread wealth is economically better for everybody - even the already-wealthy.
So, given that the best way to widespread wealth is widespread home ownership, how do we make homes affordable for the 50% of New Orleanians who are priced out of the market? Getting someone who can’t afford to buy a house to become a homeowner might sound like an impossibility - but that’s exactly what both of Peter's guests are doing on this edition of Out to Lunch.
Will Bradshaw is Chairman and co-founder of the property development company, Green Coast Enterprises. As a property developer, Will is familiar with the various tax incentives and financial products people in big-business-real-estate use to finance and build houses. Today, Will is using his expertise to put those same tax incentives and financial products to work for low-income would-be home owners.
He’s doing this through a project he’s created, called the Reimagine Fund. Basically, it works by forming groups of people who pool their money. The Reimagine Fund uses that money to leverage tax advantages normally only available to wealthier property developers, and through these complex maneuvers is able to finance people into properties they would otherwise never be able to afford. It’s a fascinating, unique hybrid of property development and social activism.
There’s another way of making home ownership affordable: Make the price of new-construction homes cheaper. That sounds impossible, right? The price of a new house is determined by the unavoidably high cost of building it. But, what if you could find a revolutionary way to build new houses that is substantially cheaper than anything that’s ever been done before?
That’s what a local New Orleans company is doing. The company is called Shibusa Systems, and its CEO and co-founder is Katy Reynolds.
The word “systems” in the company name refers to the method of building houses they're pioneering. Shibusa Systems homes don’t require contractors to build them.
Shibusa Systems homes don’t require contractors to build them. Let that sink in - your brand new Shibusa Systems house is not built by a long line of sub-contractors who are each expensive and require the kind of hand-holding and choreography that would make Alvin Ailey throw up his hands in despair, as many home-building contractors and home-owners frequently do. The components of a Shibusa Systems house are pre-cut, packaged, and delivered to the site of a new home where they are easily assembled by Shibusa's single team of in-house construction crew who, get this, show up every day. It’s kind of like getting a house from Ikea, delivered. And that’s not all. There’s a long list of innovative cost-cutting elements to the Shibusa home building system.
The uneven distribution of wealth in our country, and in our city, is a gap all of us would like to see narrowed. Nobody wants wealthy people to become less wealthy. But we all agree that it would be a good thing if less-wealthy people had more access to resources.
The most fundamental way more of us can have greater wealth, and hand it on to the next generation, is through widespread home ownership. It’s fairly well accepted that we can be a nation of homeowners without upending the economy or unleashing an economic revolution. We just need to stop talking about the widening wealth gap and instead find ways to start closing it.
It can be done. It’s not easy. It requires vision for a community, dedication to an economic and financial plan, and hard work. There are people actively working on this. Katy Reynolds and Will Bradshaw are pioneers in this field who are both in a position to have a massive future impact on this issue, nationwide.