Thursday, February 24, 2011

Latest Report from the Center for Housing Policy: Housing Affordability Challenges of America's Working Households

Today, the Center for Housing Policy released Housing Landscape 2011: An Annual Look at the Housing Affordability Challenges of America’s Working Households. The report finds that despite falling home values and the general perception that housing affordability is improving, the number of working households spending more than half of their income on housing costs rose to 10.5 million, an increase of 600,000 from 2008 to 2009.

Housing Landscape 2011 uses American Community Survey data to compare housing costs and incomes for low- and moderate-income households that averaged at least 20 hours at work per week during the two-year study period. The Center found that the share of working households with a severe housing cost burden rose from 21.1 percent to 22.8 percent. The increase was more pronounced among working renters – rising to 24.5 percent – primarily because rents rose slightly and incomes fell sharply on a nationwide basis. And as the map shows, the 25 states where affordability worsened significantly for working households stretch from coast to coast. In no state did affordability improve significantly.

When you think about it, these findings make sense, right? Falling home prices only benefited those who bought a home in 2009. The mortgage payment didn’t go down for most homeowners, even though the value of their home – and their equity – fell, sometimes dramatically. With more people looking for an affordable place to rent, it follows that vacancy rates tightened and rents rose at the bottom end of the market, as HUD’s recent report suggests. And these trends occurred in the context of rising unemployment and increasing financial hardship.

Far from improving in recent years, this report shows that America’s affordable housing challenges have worsened significantly. But they are not insurmountable. As federal, state, and local governments look for ways to balance their budgets, these findings underscore the importance of preserving programs that provide affordable housing options for low- and moderate-income renters and owners, particularly in these troubled economic times.

Friday, February 18, 2011

NHC to talk Budget on February 25

National Housing Conference will be hosting it's Annual Budget Forum on February 25, 2011. This year's event promises to examine housing-related requests in the President's FY 2012 Budget Proposal and discuss the outlook for housing programs in both the FY2011 and FY2012 budgets and beyond.

The event will also highlight a new report titled Housing Landscape 2011 that looks at the housing affordability challenges of America's working households.

There are only 5 days left to register for the forum, so RSVP today!


Maureen Friar, President and CEO, National Housing Conference

Remarks: Housing Affordability Data  
Keith Wardrip, Senior Research Associate, Center for Housing Policy

Keynote Speaker: Overview of the Federal Budget  
Barbara Sard, Director of Housing Policy, Center on Budget and Policy Priorities

Panelists: Outlook in Congress 
Mark Calabria, Director of Financial Regulation Studies, Cato Institute

Meaghan McCarthy, Professional Staff Member, Senate Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies, Senate Appropriations Committee

Joseph Carlile, Minority Staff Assistant,House Appropriations Committee (invited)

For more information, please contact NHC Policy Associate Clare Duncan at (202) 466-2121 Ext. 228 or at

Thursday, February 17, 2011

One Big Issue…Many Potential Plans

The Obama Administration’s release of the proposed 2012 federal budget on Monday may have overshadowed another important release last Friday – the Administration’s initial recommendations on how to deal with Fannie Mae and Freddie Mac and how to reform the housing finance market in general. Treasury Secretary Timothy Geithner announced the release of the report Reforming America’s Housing Finance Market at an all-day event held by the Brookings Institution focusing on restructuring the U.S. residential mortgage market.

The report – a joint effort by Treasury and HUD – offers the Administration’s preliminary ideas on tackling the looming issue of what to do with Fannie and Freddie, the two government-sponsored enterprises (GSEs) currently under the conservatorship of the federal government. The report proposes a general plan for reforming the U.S. housing finance market and includes three distinct approaches for altering the federal government’s role in supporting the system.

These three options range from almost complete privatization (save for the continuation of FHA) to more limited but still constant government backing. Option 1 would limit the government’s support to targeted low- and moderate-income borrowers. Option 2 would have the government acting as a backstop in times of crisis, either as a temporary guarantor with properly-priced fees or as a provisional insurer to the private market. Option 3 would have the federal government act as permanent reinsurer of mortgage securities, paying out only when private mortgage guarantors have become insolvent.

Presenters and panelists at last Friday’s Brookings event were hearing the Administration’s recommendations for the first time when Secretary Geithner presented them that morning. Nonetheless, many of the proposals put forth by these academics, advocates and practitioners closely resembled one of the three options in the Administration’s report.

All proposals, including the Administration’s, had one thing in common – Fannie and Freddie should be wound down and eliminated, although gradually. The proposed mechanisms to do so and the timelines varied, but it was clear that sometime down the line the two GSEs would no longer play a role in the U.S. housing finance market. At the same time, most proposals promoted varying levels of federal government support for the mortgage markets, mainly to keep mortgage costs low, credit widely available and securitization properly regulated.

One area mentioned in the Administration’s report, but not addressed to any great extent in the Brookings event proposals, was how to support lower-income buyers and renters as well as other underserved areas of the market, such as smaller multifamily developments and those in rural areas. The National Housing Conference (NHC) has focused on how to reach these underserved market segments. In September 2010, NHC released a document promoting 10 principles to support the financing of multifamily rental housing, particularly those undeserved segments that currently have limited access to financing.

The Administration’s long-awaited recommendations provide a structure for discussions about how to move toward a stable, sustainable housing finance system. But even the Administration admits the path to reform will be long and involve much debate among Congress, advocates, academics and the private sector. One aim seems to be clear and immediate, though – to scale back the role of government in a responsible way. The more difficult task is to determine a long-term structure for the housing finance system that will safely provide credit to a broad range of American families while limiting taxpayers’ exposure to risk.

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Friday, February 11, 2011

Guest Blogger Miriam Axel-Lute: Greater than the Sum of their Parts

Miriam Axel-Lute is editor of  Shelterforce magazine and associate director of the National Housing Institute.

In 1998 when I edited a special issue of Shelterforce on affordable housing and the environment, it seemed like a bit of a stretch to many. The two movements mostly seemed at odds with each other. We’ve come a long way since then in terms of recognizing the how sprawl, climate change, disinvestment, and segregation all feed into each other in vicious cycles.

The next step is figuring out how to connect their disparate solutions in the same way. The latest issue of Shelterforce showcases several ways this is happening or could happen.

Transit-oriented development, as we know, can reduce sprawl, reduce transportation costs, and give more people better access to regional opportunity. In fact, it’s so attractive that the very mention of a possible new transit station drives up housing costs, so many housing and equity advocates have begun to speak up for including affordable housing in station area plans from the beginning and putting in place a range of policy options to make those goals a reality.

Shared-equity homeownership, meanwhile, can provide a new rung on the housing ladder, and new research shows that it succeeds in balancing permanent affordability with an ability to build significant equity. One form of shared-equity homeownership, community land trusts, may be particularly well poised to implement the recent credit-crunch-inspired surge in interest in lease-purchase programs.

In Atlanta, Georgia, the Atlanta Land Trust Collaborative is combining TOD and shared-equity by employing community land trusts to get affordable housing in place around the planned Atlanta BeltLine transit project—housing that will stay affordable for the life of the transit system, not merely 15 to 30 years. The process that advocates went through to craft ALTC’s “central server” model, which leaves control of CLTs local but provides centralized back office support, is a fascinating one for all of us who have an interest in how change occurs. And not surprisingly, other measures of sustainability are also on the agenda for one of the Atlanta groups taking the lead in forming a CLT near the BeltLine.

All of the tools we work with—TOD, shared-equity, lease-purchase—are valuable in their own right. But when we put them together, that’s when we can start to imagine change that is truly transformative—and sustainable.

Wednesday, February 9, 2011

Guest Blogger My Trinh: Is Your Organization as Strong as it Can Be?

My Trinh

My Trinh was the 2008 – 2011 Bart Harvey Enterprise Fellow. She is currently a Program Officer at Enterprise, helping to coordinate and create resources related to assisting nonprofit development partners. She is also focused on and sharing best practices internally and externally. 

What makes some housing development organizations survive and even prosper in tough times while others encounter crisis? We recently examined ten diverse organizations that faced severe financial instability, and drew some lessons from the exercise.

How can developers avoid the pitfalls that we observed?

Grow strategically. New business lines are not to be started without thoughtful consideration, particularly when there are few resources to make the infrastructure investments that will take the new business past the break-even point. For housing developers who do not manage their own properties, property management may seem like a natural business line to grow. It certainly can be very successful and a stable source of income. But, without adequate initial investment and the capacity to subsidize the business for a few years until it becomes profitable, it can also become its own source of problems.

Conduct Forecasting and Scenario Planning. Take some time to peer into the future. Nobody has a crystal ball, but that’s why examining multiple scenarios is so critical. It can help an organization think through alternative strategies should something go awry.

And what can government agencies do to help?

Set Realistic Fees. When fees to owners do not reflect the true costs of operating the properties, the organization must subsidize the project. For greater sustainability, the projects should be able to operate without subsidy, and even generate cash flow for its owners. This is the best way to ensure that projects do not lead to the demise of their owners, and the communities that they serve.

Incentivize Long-Term Ownership. In structuring housing credit transactions, public lenders should ensure that there are financial incentives for effective ownership and operation of the properties. If all surplus cash flow goes to pay cash-flow contingent loans, what financial incentive is there to operate a property beyond the break-even point?

Want to learn more about our study of organizations in financial distress? Looking for more in-depth recommendations? Register for Enterprise’s February 23rd Live Online Event, “Building Sustainable Organizations: Lessons and Recommendations from the Field.” A copy of the full report on this topic will be distributed prior to the presentation.

Enterprise is launching our new blog, @ the Horizon, on February 15, 2011. Please check the link for new posts and share your comments!

Tuesday, February 8, 2011

Chrysler Ad Only First Step in Motor City's Future

Detroit was once the envy of the country, the creators of the auto age and builders of Motor City. After the fall of the US auto industry, Detroit became the poster child for the recession as the city faced challenges of severe unemployment, rising crime and foreclosures.

But, this Sunday one commercial may have finally shown a spotlight on a city which has seen more than its fair share of hardships. Chrysler’s Super Bowl ad instantly lit a fire under the city’s deem reputation. The ad highlighted local talent and embraced the city’s controversial cover boy, Eminem.

Embracing and building on the momentum of local pride portrayed on a national level through this Chrysler commercial, Mayor Dave Bing announced Monday he will begin luring 200 police officers back to the city by offering them renovated homes for as little as $1,000.

According to the Detroit Free Press, “53% of the city's 2,845 officers live outside Detroit. The exodus began in 1999 when the state revoked mandatory residency for Detroit's municipal employees, allowing police to live where they wished.” By providing the city’s most critical workers, like police officers and fire fighters, the chance to purchase a home closer to where they work Bing’s hope is to reduce crime and help solve the city’s hemorrhaging tax base.

"We hope this serves as a call to action for other corporations, organizations and individuals to live where they work," Bing said. "Detroiters want to live in safe, clean neighborhoods. They deserve nothing less."

The city plans to pay for this incentive using $30 million of its $41 million from the Neighborhood Stabilization Fund. The remaining $11 million is being used to help lower-income residents buy houses.

Wednesday, February 2, 2011

The Census Bureau Speaks: What's going on with homeownership and vacancy

 The Census Bureau released its quarterly report on residential vacancies and homeownership on January 31, 2011. The homeownership rate dropped .4% to 66.5%, its lowest level since 1998. This decrease is a change from recent years. The nation's homeownership rate gain of 0.8 percentage points from 2000 to 2007.

However since 2007, in large part because of the housing market collapse, the homeownership rate has lost 1.3 percentage points, erasing the boom's gains, said Stephen East, a Ticonderoga Securities housing analyst. Paul Dales, senior U.S. economist with Capital Economics stated that this change "shows how big the bubble was and how catastrophic the bursting has been."

However, the vacancy report displayed a different outcome for rental housing. The vacancy rate for rental housing fell to 9.4% from 10.7% a year earlier. 38 million homes are rented, up one million from the previous year. This numerically recorded shift from homeownership to rental is a sign of the times, and shows that despite homes being as affordable as ever the American people may be unable, unwilling or uninterested in playing the dwindling homeownership sandbox.

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New Magazine covers Affordable Housing & Sustainability

Sustainable Communities Magazine is a bimonthly journal edited for city officials and housing development professionals that covers changing land use rules, environmental requirements, and new urban planning initiatives. It covers local efforts nationwide to improve land use policies to encourage affordable housing as a key component of what makes cities and towns sustainable, including how to fight NIMBY and improve community relations.

The premier issue features articles on how to keep housing affordable along transit routes as dozens of US cities expand their train lines, plus a story on new green building requirements in California, a piece on the economic benefits to cities of compact, transit-oriented development, as well as many other articles.

Sustainable Communities Magazine is published by the Partnership for Sustainable Communities,® a nonprofit organization based in San Rafael, CA. Subscriptions are offered as a benefit of membership in the organization.

Interested parties can view a FREE sample issue at the PSC web site,