Friday, October 26, 2012

NHC joins other housing stakeholders in comments on Basel III rule

by Ethan Handelman, National Housing Conference

NHC joined with many other housing stakeholders to call for changes that would protect the affordability and availability of housing from disruption by the proposed Basel III rule. Simply put, the rule implementing Basel III capital standards for banks affects how expensive it would be for regulated financial institutions to invest in home mortgages, multifamily housing, and other housing assets. In two separate comment letters, NHC and its partners called for specific changes:

  • A joint letter from the National Association of Realtors, Mortgage Bankers Association, and National Association of Home Builders, NHC, and others calls for maintaining existing risk weights (which determine the capital charge banks must pay to hold specific assets) for home mortgages and give credit in risk weighting for mortgage insurance. Read the letter.
  • A letter written by the Mortgage Finance Working Group of the Center for American Progress (on which NHC serves) which advocates several changes to support sustainable home lending at LTVs below 20%, encourage modifications of troubled loans, protect loans for multifamily affordable housing, and to protect small banks, community lenders, and Community Development Financial Institutions from disruptive changes. Read the letter.

The Basel III rule is just one of several regulatory actions that could seriously disrupt the affordability and availability of housing. When combined with the qualified mortgage rule, the qualified residential mortgage rule, and the future uncertainty around the entire housing finance system, this rule-making has far-reaching implications for housing options (or the lack thereof) for years to come.

Wednesday, October 24, 2012

To develop leadership, young housers need mentorship

by Eva Wingren, Mercy Housing

Like many a young D.C. wonk I moved cross-country, not knowing anyone, to take a job that would ultimately rely on who I knew. My employer is a small incarnation of a large nonprofit with offices spread all over the country—it's hard in a small office like mine to get a lot of one-on-one career guidance from others in the housing world. Fortunately, Young Leaders in Affordable Housing's mentorship program introduced me to my D.C. colleagues at other organizations. I was particularly blessed to be matched with Barbara Burnham, Vice President for Federal Policy at LISC. Barbara has incredible longitudinal experience in campaigns and federal policy, and a keen sense of the political realities we are dealing with. She also knows where to push.

At my first meeting with Barbara, I remember despairing of ever accomplishing anything or even understanding the system. “Keep this in mind, Eva,” she said, “you’ve come to Washington at the worst time I can remember. Congress is the most bogged down in partisan infighting, the White House is the most distracted from domestic policy issues, HUD is the most constrained in creating new programs because almost 85% of their funding goes toward renewals of Section 8. It’s bad. If this is the only reality you know, and you jump right in regardless, you’re ahead of the rest of us.”

Of course, Barbara and I spent time discussing my professional development, but where this experience differed from other mentors I’ve had is that, being in the same field, the knowledge she shared actually helped me do my job. My employer is bringing its board to D.C. to advocate on Capitol Hill early next year, and the structure of this big endeavor was created based on contacts she facilitated for me. With the community development field being so interconnected, I have no doubt that other mentors inspired similar collaborations.

I’ve been in D.C. almost a year and a half now and finally feel like I understand the system here, at least a little bit. I’m not holding my breath for the partisan-ness to decrease; rather, I’m just thankful for the wonderful support system I have developed through YLAH and the mentorship program. Now I know who I need to know; the plan for next year is to meet them!

Eva Wingren is a Policy Associate with Mercy Housing, Inc., responsible for public policy, advocacy, and education for one of the nation’s largest nonprofit affordable housing developers, and a member of NHC's Young Leaders in Affordable Housing (YLAH).
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YLAH volunteers are preparing right now for a January 2013 launch of the YLAH Mentorship Program’s second year. In 2013, the program will: (1) provide a bigger launch event to help more mentors and mentees get to know both their peers and their mentor-mentee matches; (2) provide events for mentors and mentees to attend together; and (3) foster a broader sense of community among all program participants.

If you would like to participate as a 2013 YLAH Mentor or Mentee, please contact Ben Funk, YLAH Professional Development Committee Chair, or Elina Bravve, YLAH Mentorship Program Subcommittee Chair. You can reach Ben at (202) 674-3797 or benjaminfunk@gmail.com, and you can reach Elina at (585) 329-4798 or elina.bravve@gmail.com.

Tuesday, October 23, 2012

D.C. region is the nation's most affordable. Counterintuitive? The Center's Robert Hickey explains


by Blake Warenik, National Housing Conference and Center for Housing Policy

Washingtonians are incredulous to learn that, despite the highest housing costs in the nation, the D.C. region is the nation's most affordable metro area when factoring in America's highest median income and the region's moderate transportation costs. Those were some of the findings from Losing Ground: The Struggle of Moderate-Income Households to Afford the Rising Costs of Housing and Transportation, the new report from the Center for Housing Policy and the Center for Neighborhood Technology, released Thursday.

But many moderate- and low-income residents aren't sharing in the windfall, just straining under the metro area's astronomical housing costs. Watch this report from ABC 7 Washington's Jay Korff, where he interviewed the Center's Robert Hickey, a co-author of the report, and got the whole story.


Thursday, October 18, 2012

Housing advocates brief Hill staff on the impact of further cuts to housing programs

by Sarah Jawaid, National Housing Conference

The Campaign for Housing and Community Development Funding and the National Housing Trust held two briefings for Congressional staff today on the effects of sequestration on housing and community development programs. Doug Rice, Senior Policy Analyst of Center on Budget and Policy Priorities provided an overview of the disproportionate cuts that have already hit housing and community development programs over the last two years. He added that further cuts through sequestration would hurt the most vulnerable communities in need of rental assistance.

The administration estimated in Sept. 2012 that sequestration would cause "over a quarter million families—close to a million people, more than half of whom are elderly or disabled—[to] lose their housing vouchers and risk homelessness." The administration also said 100,000 families who receive homeless assistance grants would lose them, including 1,500 veterans and their families. Added cuts to HUD's budget would prevent 80,000 struggling homeowners from seeing a housing counselor and 53,000 jobs would be lost. Rice added that while the possibility of sequestration is a bad idea, replacing it with a deficit reducing mechanism that cuts deeper into non-defense discretionary programs like essential housing assistance would be worse.

Other speakers included:
  • Bill Faith, Executive Director of the Coalition on Homelessness and Housing in Ohio who talked about the impact of cuts to programs in Ohio when local communities are already struggling to keep people housed;
  • Hilary Saunders, Board Member of New York State Tenants and Neighbors who spoke about the importance of housing programs more generally in his role as a tenant advocate;
  • Regina Mitchell, Executive Director of the College Park, MD Housing Authority and Diane Sterner, Executive Director of the Housing and Community Development Network of New Jersey who spoke about the direct impact cuts in housing and community development programs have in their respective communities.
A similar briefing on the House side took place in the afternoon.

Housing and transportation expenses outpace incomes, take a bigger bite from the household budget

by Robert Hickey, Center for Housing Policy

Policymakers increasingly understand that the true cost of a home is not just the mortgage (or rent) plus utilities. When you select a home, you also take on the transportation costs tied to that location. Where you live affects how much—or how little—you will need to spend traveling to work, getting to school, doing errands, and making all the other trips that are part of the weekly routine. It’s not truly “affordable,” then, if your rent or mortgage are low, but your location means you have to own one or more cars and drive so much that the cost of car ownership and gas negates these housing savings.
For this reason, researchers, governmental agencies and others increasingly look at a household’s combined housing and transportation expenses to fully understand and track America’s affordability challenges.

Today, we at the Center for Housing Policy, along with our partners at the Center for Neighborhood Technology, are proud to release Losing Ground: The Struggle of Moderate-Income Households to Afford the Rising Costs of Housing and Transportation. It is the first nationwide assessment of combined housing and transportation costs since 2006, when the Center and CNT released their seminal report, A Heavy Load: The Combined Housing and Transportation Burdens of Working Families.

Losing Ground finds that for households living in the nation’s 25 largest metropolitan areas, combined housing and transportation expenses rose 44 percent during the 2000s—1.75 times faster than income— leading to greater stress on already stretched household budgets.

Rising housing and transportation costs continue to disproportionately impact “moderate-income households,” defined in the report as those earning between 50 and 100 percent of median income in a given metro area. This broad segment of the economy includes families in which the primary earner is a teacher, a police officers or a nurse. Losing Ground calculates that moderate-income households spend an average of 59 percent of income on housing and transportation—11 percentage points higher than the combined cost burden of a median-income household.

Combined cost burdens vary by metro area, with the highest cost burdens not always falling where you might expect. For example, comparing costs to local incomes, Losing Ground finds Miami to be the least affordable metro area for local moderate-income households, with housing-plus-transportation costs consuming a stunning 72 percent of income. Combined costs are similarly out of sync with incomes in the next most burdened metro areas: Riverside-San Bernardino, CA, (69 percent of income on housing and transportation), Tampa (66 percent), and Los Angeles (65 percent).

High local incomes can also make up for high housing and transportation costs. In spite of its pricey housing, the Washington, D.C., metro area emerges as the most affordable for moderate-income households, due to very high local incomes. However, it should be noted that high local incomes do nothing to help low-income residents who often must still contend with inflated rental and homeownership markets skewed by the higher-median income.

While combined cost burdens vary by metro area, moderate-income households are paying more than half their income toward housing and transportation in each of the 25 metro areas studied.

But the report is not all bad news. Losing Ground outlines various steps that policymakers can take to reduce the combined cost of housing and transportation by addressing these expenses together. It identifies promising policy tools for increasing the availability of affordably-priced homes in places that are inexpensive to get around, and increasing low-cost transportation options in areas where home prices are already affordable and land-use patterns can support more alternatives to car use.

In light of the growing burden of housing and transportation costs nationwide, these tools are worth a closer look, as is the full report.

Friday, October 12, 2012

Ireland is ahead of the U.S. in housing policy

by Ethan Handelman, National Housing Conference

The U.S. is used to leading the world: economically, militarily, in space exploration, you name it. Even in the special niche of housing policy, other countries look to the America as a place that has pioneered public-private partnerships, an affordable 30-year fixed rate mortgage, and a vibrant rental sector. But in the post-Great Recession, post-housing crash world, we’re not quite the model we once were. We need only look to Ireland as an example of a country struggling with a deeper real estate correction but able to muster stronger policy responses.

Two telling examples:

Some of the difference between the two sides of North Atlantic is the severity of the crisis: In Ireland, property values fell by 50%, on average, while the average in the U.S. was 30% (the U.S. also has a wider variety of housing markets that fared better or worse). I was able to observe the difference in Dublin first-hand, seeing the massive spike in home values and the concomitant struggle to create affordability, followed by the disastrous crash and the abandoned, half-finished properties called ‘ghost estates’. Ireland’s Housing Agency is in part an expansion of the Affordable Homes Partnership, which led housing affordability efforts before the crash.

Another part, however, is political will. Ireland has nationalized much of its banking sector, which means taxpayers are on the hook either way. That’s made it easier to recognize the economic reality that writing down debt now prevents the painful and destabilizing vacancies that result from widespread foreclosures. Perhaps Ireland’s experience in coming months will help to demonstrate to U.S. policymakers that principal reduction is viable.

Wednesday, October 10, 2012

The growing costs of place


by Blake Warenik, National Housing Conference and Center for Housing Policy

Conventional wisdom holds that metro areas like New York, San Francisco, Boston and D.C. are the most expensive places to live for average families. After all, these traditionally upmarket cities have some of the highest housing costs in the nation. But conventional wisdom is the name given to a popular idea about to be debunked; housing costs are just one part of this story. A new report from the Center for Housing Policy and the Center for Neighborhood Technology draws attention to the other, often hidden, factors that contribute to a growing cost of place for American households.

Cover image from the report
The report, Losing Ground: The Struggle of Moderate-Income Households to Afford the Rising Costs of Housing and Transportation, further explores a phenomenon first covered in the seminal 2006 report A Heavy Load: The Combined Housing and Transportation Burdens of Working Families. Losing Ground draws the latest five-year data from the American Communities Survey and finds that for the average family in the 25 largest U.S. metro areas, any income gains made in the last decade have been erased—and then some—by the skyrocketing cost burden of housing and transportation combined.

Among other findings, the report notes that for every $1.00 increase in nominal income since 2000 for these families, the share of their household budgets going to housing and transportation has shot up by more than $1.75. So how are families getting by? The report includes a case study on the Los Angeles metro area, showing that a typical moderate-income renter household's monthly expenses exceed monthly income by $328. This family must choose among dipping into savings, racking up debt or cutting corners on groceries, health care, clothing and school supplies. None of these choices is sustainable. It's a losing proposition for families in Los Angeles and all around the country.

Read the report now

Wednesday, October 3, 2012

Let's not move to extremes

by Maya Brennan, Center for Housing Policy

Recently, the Economist hosted an online debate on the question “Should home-ownership be discouraged?” If the framing of the question seems convoluted to you, you are not alone. One of the debaters, Richard K. Green (formerly among the directors of the Center for Housing Policy), noted that the more common question is whether it should be encouraged. Many readers could not refrain from commenting on the need for a neutral position. The housing bubble and mortgage crisis have shown that a high homeownership rate is not necessarily good for society or for individuals and families, and research has brought some of homeownership’s benefits into question. But should we really consider the opposite extreme?

No. Moving between extremes gets us nowhere. We need to look for a middle ground.

A consequence of rental undersupply: skyrocketing rents.
Photo: Flickr user greyfodder (CC BY-NC-ND)
We need to identify flaws in the prior policy landscape that contributed to the bubble and mortgage crisis, and we need to fix those flaws. Through policy discussions and working groups, organizations like NHC are doing just that.

At the height of the bubble in 2004, the U.S. homeownership rate was a record 69.2 percent. Today, it's hovering above 65 percent, at the same levels we saw in 1965, with many analysts expecting it to fall further in the coming years. I believe it's possible that the right set of policies and safe, accessible mortgage markets could bring homeownership rates back near the all-time highs without bringing back the risks that led to the crisis. But that shouldn't be the only goal of housing policy.

As a blog post last month highlighted, the nation needs a more balanced housing policy. There are many good reasons to own a home. For one thing, homeownership can be beneficial for families looking for greater residential stability and a vehicle for building assets. However, if we’re only focused on that, we miss that there are also a lot of good reasons to rent: the flexibility to stay mobile in an uncertain job market, (usually) greater housing affordability, and the month-to-month stability of not facing large unexpected repair costs.

A major reason we lack the resolve to ensure an adequate supply of rental housing is because renting is stigmatized. We need to make sure not only that the policy climate and financing system allow for the development and maintenance of the rental housing supply for families at all income levels, but that we focus on losing the stigma through better messaging that articulates why we need robust rental housing.

Let's hope the public doesn't see rental housing vs. homeownership as a zero-sum game. The Economist’s debate ended with 63 percent of readers voting against discouraging homeownership. While that says nothing about the readers’ support of policies that actively promote homeownership, I wonder if we have moved sufficiently beyond the pre-bubble days to stop discouraging rental housing as well.

Tuesday, October 2, 2012

OMB says don’t cut yet—is a deal coming?

by Ethan Handelman, National Housing Conference

Last week, the Office of Management and Budget issued a bulletin to executive branch agencies telling them not to implement the drastic cuts that would be imposed by the sequester yet. The phrasing is careful: “Unless and until the Bulletin is amended, however, agencies should
Illustration: whitehouse.gov
continue normal spending and operations…”

Does that mean that a deal to avert the sequester is coming? Possibly, though there are very few signals to go on. Certainly the sequester would devastate housing programs along with other non-defense discretionary programs serving the most vulnerable Americans. It would also cut deeply into defense spending. And we know that the sequester was designed to be draconian, in part to urge Congress to avert it with a grand bargain. But previous attempts at a grand bargain failed (remember the so-called Super Committee?), so need is hardly a guarantee of success.

When information is scarce, I revert to Occam’s Razor—find the simplest explanation that fits. OMB knows that the sequestration cuts would severely disrupt existing programs and it’s possible agencies won’t need to make those cuts. So, it has told them to wait, in hope, if not necessarily expectation, that Congress will act to avert sequestration. We will likely see more brinksmanship before this is resolved, and in the end OMB may have to amend its Bulletin.