by Maya Brennan, Center for Housing Policy
As the foreclosure crisis emerged, many in housing policy elevated foreclosures as a separate issue in need of attention. Foreclosures, though, are not truly separate from the broader housing policy landscape. Policies that increase affordable housing, improve energy efficiency, and allow families to afford housing near transit or job centers all are secretly doing double duty for foreclosure prevention. Strong housing policy is all about foreclosure prevention.
Since foreclosures started to rise rapidly in 2007, the national foreclosure rate has gone from less than 1 percent to approximately 4 percent (with much higher foreclosure rates in some parts of the country). While we continue trying to find immediate foreclosure prevention solutions, we can prevent additional loans from becoming delinquent by crafting housing policies that work for everyone.
How is a policy like promoting sustainable development also helping to prevent foreclosure? It addresses some of foreclosure’s root causes–unaffordable housing, lack of employment opportunities, and high combined household expenses. Strong housing policies ensure that working families are not forced to choose between high household expenses and living somewhere with job opportunities, decent schools, and adequate transit. This means that families’ budgets aren’t stretched thin, and they can afford to pay the mortgage or rent each month and may even be better able to withstand a temporary job loss.
Foreclosure prevention policies are hiding all over the housing world. Even rental affordability policies and zoning policies that allow a diversity of housing types help with foreclosure prevention. Studies suggest that more than a fifth of foreclosures involve rental properties. If renters can’t afford housing, then their landlords won’t be able to afford the mortgage either.
As far as zoning is concerned, the connections to foreclosures are numerous. Communities need a variety of housing types for local workers to be able to access an appropriate home for their needs. If single-family for-sale homes are all that exist, families may strain to buy a house they can’t afford just to be close to work or school. And if affordability becomes a problem, zoning restrictions can prevent a struggling homeowner from renting the home (or part of it) and using the added income to pay the mortgage.
Foreclosures and the broader world of housing policy are so interconnected that it is easy to miss the links. As we think about crafting strong housing policies, we should be careful not to forget that affordability and sustainability do more than help families live better today. They also provide protection for families and neighborhoods in the future.
Later this month, Solutions for Sustainable Communities: 2011 Learning Conference, hosted by the National Housing Conference and Center for Housing Policy, will be the thought center for strong housing policies that can build a brighter future – without straining government budgets. To share and learn about out how states and localities can achieve their housing, transportation and environmental goals while reducing overall government costs, join us in Washington, D.C. from September 26 to 28. We may even reduce some foreclosure risks while we’re there.