October 8, 2015
Thursday’s Advocacy & Think Tank Round-Up
- Citylab finds that urban farmers and real estate developers are teaming up in an unlikely alliance to create housing which incorporates on site food production, the latest in trendy, locavore hip.
- Enterprise Community Partners has launched a national sign on letter to oppose Cuts, lift spending caps and restore funding to the Home Investment Partnership Program (HOME). HOME, according to Enterprise, is “the only Federal Housing Program exclusively focused on providing states and localities flexible gap financing for affordable housing development” for the low and very low income populations (seniors, the disabled, etc.)
- A New York Times editorial argues that the relief promised to homeowners facing foreclosure only materialized for banks, who unloaded toxic loans on the government, and private equity firms, who are now purchasing loans back from the government, at a discount and continuing to foreclose.
- National Association of Realtors finds that most Zombie homes (think unoccupied – long term vacancy) are not foreclosures but owned free and clear of mortgages.
October 8, 2015 | Permalink | No Comments
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October 8, 2015 | Permalink | No Comments
Severe Crowding in NYC
NYC Comptroller Scott Stringer
New York City Comptroller Scott Stringer has issued a report, Hidden Households, that shows that more than one in twelve NYC homes are crowded. The report opens,
New York City is in the midst of a protracted housing emergency. The City’s net estimated rental vacancy rate is the official statistic used to gauge a housing emergency, but there are other important variables that shed light on the state of our housing environment. Chief among these is crowding. Crowding is an established predictor of homelessness and a critical indicator of negative health, safety and economic household risk factors. The City’s “hidden households”, which contain nearly 1.5 million New Yorkers, are the topic of this report.
* * *
Among the most notable crowding trends detailed in the report, we find that New York City’s overall crowding rate, which includes rental and ownership housing units, rose to 8.8 percent in 2013, compared to 7.6 percent in 2005 – a proportional increase of 15.8 percent. The City’s crowding rate is more than two and a half times the national crowding rate of 3.3 percent. The proportion of crowded dwelling units increased in all of the City’s boroughs except Staten Island during this time period with increases of 28.1 percent in Brooklyn, 12.5 percent in Queens and 12.3 percent in the Bronx.
Severe crowding, defined as housing units with more than 1.5 persons per room, also increased substantially, surging by 44.8 percent from 2005 to 2013, with increases seen in every borough. Most notably, the proportion of studio apartments with three or more occupants rose by over 365 percent from 2005 to 2013. All told, 3.33 percent of all dwelling units in NYC were classified as severely crowded in 2013, compared to a national severe crowding rate of 0.99 percent. (2)
The report only focuses on the problem of crowding, but it would be helpful to mention one of the main solutions to crowding — building more housing. To the extent that the NYC Comptroller can push down construction costs in NYC and support increased density in appropriate neighborhoods, he would help reduce crowding in the long run. Lots of people want to be in NYC. We need lots of apartments to house them.
October 8, 2015 | Permalink | No Comments
October 7, 2015
State of Lending for Latinos
The Center for Responsible Lending has posted a fact sheet, The State of Lending for Latinos in the U.S. It reads, in part,
At 55 million, Latinos represent the nation’s largest ethnic group and the fastest growing population. However, Latinos continue to face predatory and discriminatory lending practices that strip hard-earned savings. These abusive practices limit the ability of Latino families to build wealth and contribute to the growing racial wealth gap between communities of color and whites. The Center for Responsible Lending (CRL), along with its numerous partners, has sought to eliminate predatory lending products from the marketplace. High-cost, debt trap lending products frequently target Latinos and other communities of color. (1)
No disagreement there. The fact sheet continues,
Barriers to Latino Homeownership
According to a 2015 national survey of Latino real estate agents, nearly 60 percent said that tighter mortgage credit was the No. 1 barrier to Latino homeownership; affordability ranked second.
In 2014, Latino homeownership dropped from 46.1 percent in 2013 to 45.4 percent. In 2013, Latinos were turned down for home loans at twice the rate of non-Latino White borrowers and were more than twice as likely to pay a higher price for their loans. (1)
I have a few problems with this. First, I am not sure that I would unthinkingly accept the views of real estate agents as to what ails the housing market. Real estate agents make their money by selling houses. They are less concerned with whether the sale makes sense for the buyer long-term. Second, it is unclear what the right homeownership rate is. Many people argue that higher is always better, but that kind of thinking got us into trouble in the early 2000s. Finally, stating that Latinos are rejected more frequently and pay more for their mortgages without explaining the extent to which non-discriminatory factors might be at play is just sloppy.
The fact sheet quotes CRL Executive Vice President Nikitra Bailey, “As the slow housing recovery demonstrates, there is a market imperative to ensure that Latino families have access to mortgages in both the public and private sectors of the market. The market cannot fully recover without them.” (1) But what Latino households and the housing market need is not just more credit. They need sustainable credit, mortgages that are affordable as homeowners face the expected challenges of life — unemployment, sickness, divorce. It is a shame that the CRL –usually such a thoughtful organization — did not address the bigger issues at stake.
October 7, 2015 | Permalink | No Comments
October 6, 2015
The Next Urban Renaissance
The Manhattan Institute has released an electronic book, The Next Urban Renaissance: How Public-Policy Innovation and Evaluation Can Improve Life in America’s Cities. Ingrid Gould Ellen, the Faculty Director of NYU’s Furman Center for Real Estate and Urban Policy, has a chapter on Housing America’s Cities: Promising Policy Ideas for Affordable Housing. She suggests three reforms:
First, cities could incentivize construction and development—and thereby increase the supply of housing—by more heavily taxing land than property. Such a “split-rate” tax would encourage development of underutilized land by reducing the added tax burden that standard property taxes impose on improving buildings.
Second, cities could reduce (or even eliminate) minimum parking requirements that significantly increase the cost of housing.
Finally, cities could shift some of the public funds currently spent on homeless shelters to time-limited rental subsidies for those at risk of homelessness. None of these ideas is new, but each deserves serious reconsideration as housing affordability problems mount around the country, especially in high-demand, coastal cities. (1-2)
I think the split-rate tax is worth exploring, although it may not be political feasible at this time. The property tax system in NYC is incredibly screwed up, so any proposal that involves scrapping it and replacing it with one that is more equitable is a step in the right direction.
The elimination of minimum parking requirements is a no-brainer. This is not only because they increase the cost of new housing (by increasing construction costs and by reducing square footage that would be available to other building uses). It is also because we should be trying to disincentivize people from owning cars in NYC, not incentivizing them with subsidizing parking.
The last proposal — time-limited rental subsidies — is also worth exploring although it sounds a little too good to be true. Early research indicates that program beneficiaries are unlikely to end up in shelters. If these findings are confirmed by more rigorous studies, then time-limited rental subsidies would be a brilliant policy innovation.
While none of these proposals are going to solve NYC’s affordable housing crisis, they will all have a positive impact at the margins. They are worth further study.
October 6, 2015 | Permalink | No Comments
