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We Should Look to Vienna for Answers to Our Housing Crisis

The Karl-Marx-Hof municipal housing complex in Vienna, Austria. (Thomas Ledl / Wikimedia Commons)

At the official opening of the legendary Karl-Marx-Hof municipal housing complex on October 12, 1930, Vienna mayor Karl Seitz said, “When we are no longer here, these stones will speak for us.” And they do, along with the 380 other public housing developments built in Vienna during the 1920s and 1930s that ultimately housed a quarter million people.

I recently visited several of these complexes, including Karl-Marx-Hof, which spans more than a kilometer and includes 1200-plus apartments. The residents of those apartments pay a maximum of 25 percent of their income to live in flats that can be as large as four bedrooms. Many of them feature expansive balconies with colorful geraniums cascading down their front, looking out over courtyards graced with towering chestnut trees and modern playgrounds.

The origin story for Vienna becoming the world’s most celebrated example of social housing began after World War I. In the postwar elections, the Social Democratic Workers’ Party gained power, ushering in an era known as “Red Vienna.” The new government leaders inherited a housing crisis so dire that overcrowding forced 170,000 Vienna residents to become what were called “bed-goers,” leasing sleeping space in shifts while still paying extremely high rents. Often, a single sink and toilet were shared by dozens of strangers. Tuberculosis spread so readily in these cramped quarters that it was known across Europe as “the Viennese disease.”

So the new Viennese government devoted its resources to building municipal housing complexes named after figures like Karl Marx and George Washington, demonstrating the ruling party’s commitment to both its “social” and “democratic” missions. Nazi occupation halted that progress, but after World War II, the Social Democratic Party regained power and Vienna renewed its commitment to guaranteeing housing as a fully realized human right.

Vienna’s social housing is an inspiring model for what governments can accomplish when they elevate human needs over the pursuit of private profits. That makes Vienna a very dangerous precedent for US private housing capital and its apologists — and they have responded in predictable fashion.

For example, the pundit Matthew Yglesias recently attempted to marginalize the Vienna housing success story as an historical anomaly, impossible to replicate without a postwar economic crisis. “Pretty idiosyncratic and not necessarily applicable elsewhere,” he tweeted in May. In his full dismissal of Vienna as a model, behind a paywall here, Yglesias writes, “Private capital is absolutely willing to finance the construction of apartment buildings in expensive jurisdictions. . . . Publicly financed construction is a solution to a problem we don’t have.”

The libertarian magazine Reason jumped all over this verdict by Yglesisas in an article titled “Don’t Buy the Social Housing Hype.” “Private providers are willing to build and rent out housing units at affordable rates to the same class of people that are served by social housing,” writes Reason’s Christian Britschgi. “Vienna’s social housing is at best duplicating what the private market is doing.” But these arguments are breathtakingly disconnected from the current realities in both Vienna and the United States.

Progressive Taxation and Strong Regulation

First, contrary to Yglesias’ suggestion, Vienna’s current housing success is not some cobwebbed holdover from a distant era. The early twentieth-century municipal housing boom has not been repeated at that scale, but there is still abundant decommodified housing being built in Vienna. Today, that housing is created mostly by limited-profit associations, organizations that often receive public support in return for tight government restrictions on rent charged and a requirement that any profits be put back into more social housing construction. Many of these limited-profit associations are operated by labor unions.

In these social housing communities, tenants’ long-term tenure in their apartments is guaranteed under the law. Apartments can be passed down among generations under the original terms. The tying of rent charged to a percentage of household income means that renters in Vienna are protected from losing their home when illness or job loss occurs.

“Broad acceptance by people for long-term renting instead of buying only comes with long-term stability,” Maria Maltschnig of the Renner Institute, the political academy of the Austrian Social Democratic Party, explains. Maintaining the excellent condition of social housing is a must, too. “The big thing about social housing here is that it’s not just for poor people. It is for the broad middle class,” she says.

Vienna residents with incomes as high as $77,000 per year can qualify for subsidized housing and are not forced to move if their incomes increase. As a result, half of the city’s residents live in social housing, which creates a price-dampening effect on for-profit housing that is forced to compete with high-quality subsidized housing. That competitive pressure combines with vigorous rent control on private housing to make Vienna one of the cheapest renting cities in all of Europe, even on the for-profit market. Given the fact that good housing is central to both a household’s and a city’s well-being, it is no surprise that Vienna is frequently ranked the most livable city in the world. It is no surprise that Vienna is frequently ranked the most livable city in the world.

Contrary to Yglesias’s argument, this success is less attributable to economic conditions of the 1920s than to the current policies of the Social Democratic–led Viennese government. Social Democrats’ commitment to protecting tenant rights of tenure and affordability is coupled with progressive taxation and investment in social housing. That stands in stark contrast to the United States’ practice of typically allowing landlords to terminate leases without cause, all while subsidizing wealthy landlords and homeowners and underfunding subsidized housing so dramatically that three of every four eligible households cannot obtain the federal subsidies they qualify for.

Tight regulation of privately held land in Vienna ensures that social housing construction is ongoing. At least two-thirds of any private land sold must be diverted to rent-limited housing. “Since the ground that can be built on is a limited resource, we don’t see housing as a fit for the private market,” Maltschnig says. The result: anyone with an urgent housing need gets immediate shelter and prompt placement in a municipal apartment. Vienna has virtually no visible homeless population and no slum areas of low-quality housing and concentrated poverty. And Vienna is not alone: several other nations, like Singapore and Finland and Sweden, have followed a similar blueprint in achieving remarkable social housing success, too.

Private Market Housing Fails Low-Income Renters

As for the United States, it is disingenuous for Yglesias and Britschgi to claim that the private housing market can match Vienna’s success given the abundant evidence to the contrary. There are 600,000-plus people sleeping on the streets in our nation every night, and research shows that most endure homelessness primarily because they are unable to afford housing. Census data show that twelve and a half million US households are behind on their rent or mortgages, and thus at perpetual risk of joining those who are already on the streets. In our eviction court clinic, my students and I regularly see clients who have landed there after months and sometimes years of paying 70 percent or more of their income to market-rate rent — and we live in one of the least expensive urban housing markets in the country.

Yglesias and Britschgi claim that a housing market unfettered by regulations would change all that — presumably, the magical thinking goes, by “filtering” extra housing supply down to lower-income households. But there is no version of for-profit housing that can meet the needs of our clients whose income is limited to a $914 monthly disability check or are working home healthcare jobs for $13.50 per hour while juggling childcare obligations. Housing experts have repeated this refrain for years, and the details are released annually by the National Low-Income Housing Coalition’s Out of Reach reports. The stark truth is that millions of Americans simply do not have enough income to afford market-rate housing.

To his limited credit, Yglesias does offer a throwaway line to address what he apparently considers the minor point of massive housing insecurity: “If you’re making market-rate housing more abundant but are still concerned about the fate of poor people, why not give them money?” That would certainly be welcome, but we can’t afford to leave progressive housing policy out of the equation.

This is not hypothetical: real people suffer immensely from private capital’s failure to provide affordable housing, not to mention private builders shutting off the supply when profit margins are low. This is especially true when the alternative is what Britschgi calls the “botched, authoritarian boondoggles” of US public housing. Broad swipes like these (Yglesias has written previously that “public housing is not the answer”) ignore the many successes of US public housing, as chronicled in a recent Human Rights Watch report. Worse, critiques of public housing’s maintenance and safety struggles neglect to mention that those struggles are directly attributable to campaigns by the real estate industry — and Yglesias’s and Britschgi’s market-cheering ideological predecessors — that ensured that public housing in the United States was never constructed with as much care as in Vienna, and ever since has been starved of the resources needed for proper maintenance.

Contrast our US situation to a recent scene in Vienna’s Sonnwendviertel neighborhood, a city-center area, developed over the past ten years on the site of a former massive railyard. It is now the home to more than fourteen thousand people, almost half of them living in subsidized apartments. A true “fifteen-minute city,” it features the car-free Bloch-Bauer Promenade, where children ride scooters to and from school while adults sit at cafes or walk through ground-level grocery stores, topped by upper floors dedicated to apartments.

From the rooftop garden of one of those buildings, looking west over a fifteen-acre park, I was struck by a gleaming black and silver building, eight stories stacked on top of a ground-floor commercial area featuring a restaurant with floor-to-ceiling mirrored windows. This was one of the area’s many limited-profit housing buildings.

The rent paid by the building’s residents is comparatively cheaper than the rent paid by our clients, many of whom are living in for-profit housing that is often infested with mold and roaches. My guess is that there is no libertarian blog post that could convince them, and millions of other tenants in the United States facing the same housing challenges, that Vienna is not succeeding at a level we can and should emulate here.

Fran Quigley
Fran Quigley
  Fran Quigley directs the Health and Human Rights Clinic at Indiana University McKinney School of Law.
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