Expanding Access to Homeownership

New homeowners Lateshia, Sylvia, and Tyrell Walton stand in front of their new home.  U.S. Navy photograph by Mass Communication Specialist Seaman Shamus O’Neill

Christopher Herbert et al. has posted Expanding Access to Homeownership as a Means of Fostering Residential Integration and Inclusion. It opens,

Efforts to enable greater integration of communities by socioeconomic status and race/ethnicity have to confront the issue of housing affordability. Cities, towns and neighborhoods that offer access to better public services, transportation networks, shopping, recreational opportunities, parks and other natural amenities have higher housing costs. Expanding access to these communities for those with lower incomes and wealth necessarily entails some means of bringing housing in these areas within their financial reach. While households’ financial means are central to this issue, affordability intersects with race/ethnicity in part because minorities are more likely to be financially constrained. But to the extent that these areas are also disproportionately home to majority-white populations, discrimination and other barriers to racial/ethnic integration must also be confronted along with affordability barriers.

Enabling greater integration also entails some means of fostering residential stability by maintaining affordability in the face of changing neighborhood conditions. This issue is perhaps most salient in the context of neighborhoods that are experiencing gentrification, where historically low-income communities are experiencing rising rents and house values, increasing the risk of displacement of existing residents and blocking access to newcomers with less means. More generally, increases in housing costs in middle- and upper-income communities may also contribute to increasing segregation by putting these areas further out of reach of households with more modest means.

It is common to think of subsidized rental housing as the principal means of using public resources to expand access to higher-cost neighborhoods and to maintain affordability in areas of increasing demand. But for a host of reasons, policies that help to make homeownership more affordable and accessible should be included as part of a portfolio of approaches designed to achieve these goals.

For example, survey research consistently finds that homeownership remains an important aspiration of most renters, including large majorities of low- and moderate-income households and racial/ethnic minorities. Moreover, because owner-occupied homes account for substantial majorities of the existing housing stock in low-poverty and majority-white neighborhoods, expanding access to homeownership offers the potential to foster integration and to increase access to opportunity for low- income households and households of color. There is also solid evidence that homeownership remains an important means of accruing wealth, which in turn can help expand access to higher-cost communities. Owning a home is associated with greater residential stability, in part because it provides protection from rent inflation, which can help maintain integration in the face of rising housing costs. Finally, in communities where owner-occupied housing predominates, there may be less opposition to expanding affordable housing options for homeowners.

The goal of this paper is to identify means of structuring subsidies and other public interventions intended to expand access to homeownership with an eye towards fostering greater socioeconomic and racial/ethnic integration. (1-2, footnotes omitted)

The paper gives an overview of the barriers to increasing the homeownership rate, including affordability, access to credit and information deficits and then outlines policy options to increase homeownership. The paper provides a good overview for those who want to know more about this topic.

 

Gen Z Eying Real Estate Trends

photo by Thomas Tolkien

The Washington Post along with its content partner National Association of Realtors quoted me in Eye on the Future. It reads, in part,

The suburbs as we know them are in flux. Many of the country’s bedroom communities have traditionally been known for their single-family homes and a lack of walkable public spaces. That’s changing as condos, sprawling townhome complexes and apartment buildings now dot areas where single-family homes would have been built.  Developers are building walkable public spaces to accommodate young families leaving cities but still seeking urban-like amenities.

 Another wave of change is expected in the next five to 10 years. That’s when members of Generation Z-those born on the heels of millennials-will become homeowners. Experts say they’ll transform areas that are sandwiched between major cities and suburbs into districts with an urban feel and amenities, without the hefty price tags major metros demand.

That transformation is already starting to happen. “Many of our ‘suburbs’ are actually neighborhoods in Los Angeles, particularly the San Fernando Valley,” said Kathryn Bishop, a real estate agent with Keller Williams Realty in Studio City, Calif. and member of the National Association of Realtors. “In the Valley, many neighborhoods have become mini ‘cores.’ Sherman Oaks, Encino and Woodland Hills have office towers, good restaurants and night-life business creating their own city areas.”

It’s no surprise that the younger generation needs to find an alternative to the sky-high costs of urban living. The Economic Policy Institute noted in 2016 that folks who live in San Francisco face a cost of living that’s 52.9 percent above the national average. For New Yorkers, living costs were 49.4 percent higher. The country’s least-affordable place to live was Washington D.C., where residents faced costs 63.5 percent higher than the national average.

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“Since the financial crisis there has been an increase in multigenerational households, driven in large part by financial limitations and insecurity as well as by marital status and educational attainment,” said David Reiss, professor of law and research director at he Center for Urban Business Entrepreneurship at Brooklyn Law School.  “Young adults are more likely to live at their parent’s home in recent years than they have been for more than a century.”

Finding An Affordable Neighborhood

Trulia quoted me in How To Find An Affordable Neighborhood. It opens,

There’s more to consider when buying a house than the house itself. The neighborhood can be equally, if not more, important. You might already have must-haves in mind for the type of property you’ll buy — at least two bathrooms to stay sane, for example. Now you need to focus on finding the best neighborhood that fits your budget. Read on for some tips, techniques, and practices to help you find affordable neighborhoods, whether you’re looking at homes for sale in Seattle, WA, or anywhere else across the country.

1. Use the Affordability layer in Trulia Maps

The most important factor when looking for an affordable home is price. No surprise there. But the listing price doesn’t tell you the full story. The seller could have simply picked a number because that’s what they’d like to get, a price that might have nothing to do with reality.

Use the Affordability layer in Trulia Maps to compare listing prices with recent sales prices. Just scroll over your neighborhood of interest to see the median listing price, change your filter, and then scroll over the same area to see the median sales price. There may be a huge price difference between the two, which besides a too-optimistic seller could also reflect a softening market. A once-unaffordable neighborhood, based on listing prices alone, might now be in reach once you see what homes are actually selling for.

Also look at the sales price per square foot, a real eye-opener. You can see exactly how much location affects a home’s price. “If using a price-per-square-foot comparison, the homebuyer must be sure to compare similar-sized properties or allow for the different results based upon the differences in size,” says Greg Stephens, chief appraiser for Metro-West Appraisal Co. in Detroit, MI.

2. Explore other neighborhoods

If you already have a neighborhood in mind, take some time to look at the bordering neighborhoods as well. You might find more affordable options that have the same benefits. “As home prices increase within desirable areas, generally speaking, locations on the periphery become in demand,” suggests Michael Kelczewski, a Pennsylvania and Delaware real estate agent.

Pick your neighborhood of interest and note the listing and sales prices. Then pick a bordering neighborhood that costs less to buy into. Compare amenities in Trulia Maps, and you can see where the restaurants, grocery stores, nightclubs, cafes, stores, arts and entertainment areas, spas, and active-life spaces are located.

Don’t rule out up-and-coming neighborhoods. Yes, you’re taking a risk here. “Up-and-coming,” as a description, might turn out to be a tad too hopeful if the neighborhood is really going nowhere. How do you minimize the risk? Look for warning signs. “Distressed areas generally are identified by low sales volumes, elevated value decreases, and poor access to amenities,” says Kelczewski.

3. Look for fixer-uppers

If your heart is set on a neighborhood that lets you bike to work and raise urban chickens, you might not be able to get a dreamy, move-in-ready abode with all new upgrades. Instead, target fixer-uppers, or remodels, or teardowns. You might wish to consider a house with “good bones,” as they say, meaning there’s potential in there somewhere. If the house doesn’t even have that, a teardown might be in order.

You can often find fixer-uppers in the foreclosure arena. But beware. “Purchasing an REO/short sale or auction property when the asset is sold ‘as is’ necessitates a network of professionals to understand the condition and to project rehab costs,” offers Kelczewski. “Contractors, electricians, plumbers, even structural engineers may be required in order to adequately analyze a property.”

You’ll also need to devote some time, or sweat equity, to save money when you buy a fixer-upper. “It is important to have a sense of how much work would be needed to get the house in the shape you would want it to be. You would need to get estimates for the work — the final cost will probably be higher than the estimates — and try to determine how long it will take to get permits approved and contractors in the door … [and] it will probably take longer than everyone tells you,” says David Reiss, professor of law at Brooklyn Law School in Brooklyn, NY. “But when you are pulling your hair out because you are cooking dinner in a half-finished kitchen, remember all of the money that you saved when you bought.”

Alternative Living Arrangements

photo by Nabokov

Realtor.com quoted me in Can You Live in a Storage Unit or Van? How Legal These ‘Homes’ Really Are. It opens,

Yes, we know: Finding affordable housing can be tough. Tougher than tough. And that has led people to push the boundaries of what “home” is—living in vans, boxes, and a slew of other stopgap solutions. Call them creative, call them desperate. But can you call them legal?

Well, that all depends on the specifics. Check out this list of alternative living arrangements people have tried to see what leg you can stand on if the cops show up at your door.

Can you live in a storage unit?

At face value, it would seem like this one could work, especially for the types of storage units that are more freestanding as opposed to those housed in multifloor buildings. And, more than a few homeless people have tried it. But, owing to ordinances and a lack of amenities, this one is considered a straight no-go.

“Most of the time, building codes are there for your protection, and storage units aren’t built for human habitation: There won’t be two means of egress, plumbing, or electricity, and ventilation may be an issue,” says attorney Robert Pellegrini, whose law firm, PK Boston, assists its clients with residential zoning and permitting. There’s also no kitchen, bathroom, or windows.

Bottom line: It’s illegal and possibly dangerous.

Can you live in a van?

A house on wheels? Yes, living in your car or van has become a bit of a thing in pricey-but-young areas like Silicon Valley. But doing so requires some fancy maneuvering.

“There are certainly modifications that you’d want to make to a typical van. But if you don’t run up against vagrancy regulations, there are plenty of Wal-Mart parking lots around for you to call home,” says Pellegrini. “I’d suggest a safe deposit box and better-than-average auto security, but this is definitely doable—just ask all the baby boomers driving around the country in their RVs.”

The trick is to find venues that don’t consider van living illegal.

“Many jurisdictions do not allow people to sleep in public, and this has sometimes been interpreted to include sleeping in a vehicle,” says David Reiss, academic program director for Brooklyn Law School’s Center for Urban Business Entrepreneurship.

For example, in Beaverton, OR, you can’t park a vehicular residence in a commercial lot overnight, but in Boise, ID, you can as long as you have permission from the owner.

To check the status of where you are, do an internet search for “public sleeping + [your current location]” and see what comes up, or look at this report from the National Law Center on Homelessness and Poverty (there is a list of places where it’s OK to sleep in public starting on Page 165).

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Can you live in a box?

Could you build a wooden box in the living room of a friend’s apartment—like in the recent case of an illustrator in San Francisco, CA, who did just that? It became a national story when the city’s chief housing inspector got wind of the box abode and put up a fuss.

“In the San Francisco case, it doesn’t seem that this artist’s box violated local laws,” says Reiss. “Safety investigators are going to be less interested in how people choose to live within their own legal apartments than in how landlords might choose to split up an apartment to jam more and more people in it.”

In other words, if you put one more roommate in your apartment in a wooden box, OK. But if you were to put 10 of those boxes in an apartment and try to rent them out? Well, safety investigators might balk.

Still, it’s not completely unlikely someone might try that.

“Now, more than ever, people are looking for ways to offset the skyrocketing costs of living,” says Pellegrini. “I predict that people’s resourcefulness and practicality will stretch the definition of ‘home’ in order to make ends meet.”

Why Houses Don’t Sell

photo by BriYYZ

I was quoted on Trulia in 8 Reasons Your House Isn’t Selling. It opens,

It’s a seller’s market in many cities across the U.S. If your home is in one of those cities, say Charleston, SC, or Colorado Springs, CO, and isn’t getting offers, something could be wrong. The good news? Knowing there’s a problem is the first step toward resolving it. However, there could be many reasons your house isn’t selling. We’ve asked real estate professionals and agents from all over the country what those top reasons might be — and they’ve provided some sound advice on how to remedy each situation.

1. You’re overconfident

Being in a seller’s market might mean that your home will get snapped up for premium price, no matter its condition. But that isn’t always the best strategy to count on. “Sometimes homeowners and agents get overconfident in a seller’s market and get lazy about ‘Home Selling 101,’” says Sep Niakan, broker and owner of HB Roswell Realty in Miami, FL.

Solution: Be realistic from day one. Although you may love your house, brace yourself for it to potentially sit on the market for quite some time. And no matter the market, it’s still important to “position your home to sell well,” says Niakan. “What does that mean? Staging, staging, and more staging.

2. The house is priced too high

Classic supply and demand conditions come into play in a seller’s market: There’s high demand, yet low supply. Therefore, you can usually expect to get more money for your home. But that doesn’t mean the sky’s the limit when it comes to your listing price. “In a seller’s market, a seller may feel comfortable pushing the asking price a bit higher, and this can be a huge mistake,” says Chase Michels of Brush Hill Realtors in Downers Grove, IL. “Determining the best asking price for a home is one of the most important aspects of selling a home. If your home is listed at a price that is above market value, you will miss out on prospective buyers.”

Solution: Make sure that you and your agent are certain of the value of your home in your market and price it right. “Get an analysis of the local market with a professional agent, solid comparables, and specific market trend data,” says Jill Olivarez, a Miramar Beach, FL, real estate agent.

3. The home needs some TLC

It can be a bitter pill to swallow to pay for home improvements that you may not enjoy for long. But if you want to sell for full asking price, you might need to get your house in a condition that warrants it — and not base this number only on price per square foot. “Retail buyers understandably still want the most house for their money,” says Barbara Grassey, author of How to Sell Your House Fast in a Slow Market and founder of the West Florida Real Estate Investors Association.

Solution: “The seller should have amenities comparable to other properties for sale in that price range and should really upgrade certain amenities,” says Grassey. Some upgrade examples, she says, include a pull-down gooseneck faucet, an upgraded ceiling fan, a double-bar towel rack, or upgraded door handles. They sound simple, but a few small changes can make a big impact.

4. There’s a problem with the title

“Title” in this case doesn’t mean the cute name you might have given your place (“The Laurels,” “The Conners’ Corner Cottage,” etc.). Rather, it’s the document that shows ownership. “One reason a house won’t sell is because there is a problem with the title to the house that spooks buyers,” says David Reiss, law professor at Brooklyn Law School in Brooklyn, NY. Here are some examples he gives of title problems:

  • Conveyance without a recorded deed (can sometimes happen in transfers between family members).
  • A paid-off mortgage that is still showing up as a valid lien on the house.
  • A mechanic’s lien that was filed for work done on the house by a subcontractor.

Solution: “Some [title] problems just require a little time to resolve,” says Reiss. Contact the title company to find out what you need to do to prepare for selling — then do it.

Promoting Opportunity with Development

"ArlingtonTODimage3" by This image was altered by Thesmothete with additional graphical elements to indicate the location of transit stations and the extent of development around them. - Derivative of :Image:ArlingtonRb aerial.jpg. Licensed under Public Domain via Commons - https://commons.wikimedia.org/wiki/File:ArlingtonTODimage3.jpg#/media/File:ArlingtonTODimage3.jpg

Enterprise Community Partners have posted Promoting Opportunity Through Equitable Transit-Oriented Development (eTOD): Barriers to Success and Best Practices for Implementation. It opens,

Development patterns directly relate to a community’s strength. Individual families, the local economy, municipal governments and the environment all benefit when well-located housing, jobs and other necessary resources are connected by efficient transportation and infrastructure networks. Equitable transit-oriented development (eTOD) is an important approach to facilitating these connections. This paper defines eTOD as compact, often mixed-use development with multi-modal access to jobs, neighborhood-serving stores and other amenities that also serves the needs of low- and moderate-income people. The preservation and creation of dedicated affordable housing is a primary approach to eTOD, which can ensure that high-opportunity neighborhoods are open to people from all walks of life. eTOD supports the achievement of multiple cross-sector goals, including regional economic growth, enhanced mobility and access, efficient municipal and transportation network operations, improved public health, and decreased cost of living.

Yet it is sometimes difficult for planning agencies, local governments, transit agencies, housing organizations, private developers, and other institutions that influence development to act in concert to overcome barriers to eTOD. Each stakeholder has a unique mission with disparate goals and compliance burdens and must comply with complex and sometimes contradictory rules and regulations. However, improving coordination between these sectors can shift a potentially adversarial relationship into a symbiotic partnership. As the public resources that support transportation and infrastructure networks and housing affordability remain threatened, such efficient coordination is an especially important goal. (5, references omitted)

eTOD has a lot going for it: it’s environmentally responsible, it’s socially responsible, it can promote nice development. It is a shame that it is so hard to pull off. It would be great if HUD could take the lead in promoting eTOD, perhaps in tandem with its recent fair housing initiatives.

Housing and Transportation Affordability Index

The Center for Neighborhood Technology has a Housing and Transportation Affordability Index which

provides a more comprehensive way of thinking about the true affordability of place. It presents housing and transportation data as maps, charts and statistics for 917 metropolitan and micropolitan areas—covering 94% of the US population. Costs can be seen from the regional down to the neighborhood level.

The recent focus on combined housing and transportation costs is very useful when planning affordable housing policies as total housing and transportation costs provide a better guide to housing cost burden than housing costs alone.

The Housing and Transportation Affordability Index

shows that transportation costs vary between and within regions depending on neighborhood characteristics:

  • People who live in location-efficient neighborhoods—compact, mixed-use, and with convenient access to jobs, services, transit and amenities—tend to have lower transportation costs.
  • People who live in location-inefficient places—less dense areas that require automobiles for most trips—are more likely to have higher transportation costs.

The traditional measure of affordability recommends that housing cost no more than 30% of household income. Under this view, a little over half (55%) of US neighborhoods are considered “affordable” for the typical household. However, that benchmark fails to take into account transportation costs, which are typically a household’s second-largest expenditure. The H+T Index offers an expanded view of affordability, one that combines housing and transportation costs and sets the benchmark at no more than 45% of household income.

When transportation costs are factored into the equation, the number of affordable neighborhoods drops to 26%, resulting in a net loss of 59,768 neighborhoods that Americans can truly afford. The key finding from the H+T Index is that household transportation costs are highly correlated with urban environment characteristics, when controlling for household characteristics.

A lot of housing policy rests on the definition of affordability, whether it is that housing cost should be no more than 30% of household income or that housing and transportation costs should be no more than 45% of household income. It would be useful for researchers to take a fresh look at those benchmarks to ensure that they make sense in today’s economy.