Tuesday, May 24, 2011

The Rest of the Story on HOME

by Maureen Friar, President and CEO of the National Housing Conference.

Housing groups around the country, including many NHC members, are responding in force to a series of articles in the Washington Post that disparage the HOME program.  The articles largely ignore the strong track record of the HOME program in creating more than one million affordable homes, instead looking at a few anecdotes and simplistic statistics on project delays, when in fact only 2.5 percent out of 28,000 active developments are delayed.  That’s a strong track record, particularly during the worst economy since the Great Depression and the bursting of the housing bubble when many private sector projects are delayed or derailed entirely. 

HUD’s blog post provides additional context missing in the Post articles, noting that more than any other federal program, HOME has allowed the approximately 650 states and localities who have used the program since 1992 to deploy federal funds and leverage private capital to provide much-needed affordable housing.  HUD’s oversight makes sure that funds committed to projects that cannot proceed are repaid to the government and redeployed to projects that can move forward.  Indeed, in the last two months, HUD has cancelled nearly 2,000 stalled projects totaling $290 million. 

Housing development is a complex process in the best of times, but in the wake of the economic crisis, delays are widespread in the private sector. The economic downturn and severe dislocation in the capital markets over the past few years stalled many projects across the country—both affordable and market rate, subsidized and unsubsidized, and in all markets.  A National Association of Home Builders survey (NAHB) from earlier this year found that more than half of builders reported stalled projects.  In comparison, HOME’s track record stands out for very strong completion.

Share of respondents who reported putting projects on hold until financing climate gets better- percent of respondents by region
(Source: NAHB’s Acquisition, Development,
and Construction Financing Survey, 1st Quarter 2011
)

Total
Region
Northeast
Midwest
South
West
Land Acquisition
53%
53%
55%
57%
42%
Land Development
61
63
56
61
67
Single-family Construction
60
47
58
66
54
Multifamily Construction
45
36
48
43
55
Condo
37
27
38
35
47
Rental
32
20
27
32
45


Overall housing activity slowed down dramatically during Great Recession, as one can see from data on housing starts and housing completions:



During a period of such precipitous decline, we should be lauding the HOME program for helping essential affordable housing projects stay on track.

Furthermore, the Post article’s criticism leveled at nonprofits misses the mark, observes Michael Pitchford, President and CEO of the Community Preservation and Development Corporation.  “The articles focus on small, struggling and even startup not-for-profits in several instances,” Pitchford objects, “once again ignoring the larger context that most not-for-profit developers have sound financial footings and a track record as a good steward of federal funds.” Pitchford adds that affordable housing delivered by nonprofits often comes “service-enriched” to the great benefit of residents and surrounding communities.

As the country takes a renewed look at the HOME program, we should keep in mind a few key points:

  • HOME helps real people.  The National Council of State Housing Agencies (NCSHA) has collected stories to show the human benefit of federally supported state housing programs like HOME. The “Faces of Home” website offers real stories of families and individuals whose lives have been changed by HOME funding and other programs. Low-income people who desperately need affordable housing will be the victims should federal resources for housing programs be reduced or eliminated.                                                                         
  • HOME is a huge producer of affordable housing—more than one million units. Many projects rely on HOME funding during the development process, which can take years even under the best of economic conditions.
  •          Working families need affordable housing, but it is getting harder to find.  According to a report from Harvard University’s Joint Center for Housing Studies released in April, there is a substantial and growing scarcity of affordable rental housing for low- and moderate-income Americans. A Center for Housing Policy report finds that nearly one in four working households spends more than half of their income on housing costs. And despite falling home values, housing affordability worsened significantly for working owners and renters between 2008 and 2009.

    ·         We are losing affordable homes that it took years to create.  Since the mid 1990s, more than 700,000 apartments with federal subsidies tied to them were lost from the subsidized housing stock (either through demolition or owner decision to abandon subsidies and turn the units into market-rate rentals).  Meanwhile, nearly 12 percent of low-cost rentals existing in 1999 were demolished or otherwise permanently lost from the housing stock by 2009.

For 80 years, the National Housing Conference has advocated for decent, safe, and affordable housing for all Americans. The HOME program has been an important element of our national commitment to creating housing opportunities for all Americans—we should measure its accomplishments fairly, recognize failures when they occur, and seek to do better.  In the wake of the housing collapse, now more than ever we should look to expand affordable housing opportunities for Americans that build on proven solutions.  

Click here to read the Post articles. We encourage participation in the discussion on HOME in the comment thread.

2 comments:

LLG said...

People become lost in the numbers and the statistics, so show numbers of different cities for example in Garland 5 new INFILL Houses were constructed and all 5 persons were First Time Home Buyers; in addition, HOME funds assisted 13 persons purchase existing houses in Garland which helped the housing market and increase the City of Garland's revenue base. HOME and CDBG Funding are very valuable cities if used properly!!

Mary Clark, Greater Cincinnati Property Management LLC said...

It is time for the nonsensical attack on affordable housing to end.

While we engage in this pseudo-debate, families are becoming homeless.

The local HOME program in Cincinnati OH provides referrals to decent housing for the large, at-risk population of working single mothers with young children.

I know staff in our local office and can testify to the tireless work they do to ensure that this overlooked population of working parents can find decent housing.

This has a huge effect on children's lives and can set the stage for success later in life.

I am stunned that this is even a debate. Like access to adequate health care, housing is essential to life for our own citizens.

That working people of modest means are subject to the whims of Congress is disgusting.

I am a real estate professional with a decade of experience in rental and can give witness to the success of this program in my area.