Tag Archives: low-income

Expectations for Carson at HUD

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photo by Gage Skidmore

Dr. Ben Carson

The Christian Science Monitor quoted me in What Could US Cities Expect From Ben Carson as HUD Secretary?

Ben Carson, a former neurosurgeon and erstwhile rival of Donald Trump, was nominated Monday by the president-elect to lead the Department of Housing and Urban Development (HUD).

If confirmed by the Senate to be secretary of HUD, Carson would oversee a department dedicated to developing and enacting policies on housing, focusing on building community in lower-income neighborhoods, providing financial assistance for homeowners, and preventing racial discrimination in local housing policies.

Reactions to the nomination have fallen largely along party lines, with many Democrats criticizing Carson’s lack of experience, having never held public office before – inexperience that also makes it hard to predict his potential priorities in a Trump administration. But he has been a frequent critic of social welfare programs, saying that church- and community-based initiatives are a better vehicle than government programs for assisting Americans in poverty.

“I am thrilled to nominate Dr. Ben Carson as our next secretary of the US Department of Housing and Urban Development,” Trump said in a statement released by his transition team. “Ben Carson has a brilliant mind and is passionate about strengthening communities and families within those communities. We have talked at length about my urban renewal agenda and our message of economic revival, very much including our inner cities.”

Trump and Carson had discussed the job before Thanksgiving, but Carson initially expressed reluctance to take a position on the cabinet, despite his campaign for the US presidency, because of his lack of experience in a political office. Since then, Carson has evidently overcome those reservations.

“I feel that I can make a significant contribution particularly by strengthening communities that are most in need,” Carson said in the statement.

Carson is the first African-American pick for Trump’s cabinet, and would likely be confirmed by the Republican-controlled Senate.

Carson’s communication skills give him “the ability to bring the message of poverty alleviation to people nationwide and I hope he would quickly learn the importance of HUD and would try to make it better, stronger, more efficient” Robert C. Moss, the national director of government affairs at CohnReznick, a public accounting firm, tells The Christian Science Monitor in an email.

“Carson is a very skilled speaker, maybe one of the best we’ll see in this role,” writes Mr. Moss, who specializes in affordable housing, “and if he hits on the right direction and takes the message around the country, he could help make the case for affordable housing.”

Trump’s campaign did not focus much on housing or urban development, other than to describe the state of poor “inner city” African-Americans and Hispanics as “disastrous” on multiple occasions. Many critics of Carson say that the former Republican presidential candidate ran on a platform of shrinking the role of government agencies like HUD, putting him at philosophical odds with the very department he will be in charge of.

HUD was created in 1965 in order to build stronger communities and create affordable housing for Americans with low incomes. The department was given the responsibility of enforcing the Fair Housing Act of 1968, which outlawed most forms of housing discrimination, including racial, religious, or based on family status.

African-Americans, in particular, have experienced decades of housing discrimination, says Professor Reiss.

“Redlining, the practice of refusing to provide credit in minority communities, was implemented on a national scale since the beginning of the New Deal, by government agencies like the Federal Housing Administration,” he says. “Such policies continued on for decades. These policies led, in part, to the disinvestment in cities through the 1960s that impacted African-American communities most of all.”

But some of the HUD’s recent rules have come under criticism for “social engineering.” One particular policy Carson has publicly opposed is the Affirmatively Furthering Fair Housing (AFFH) rule adopted by the Obama administration, which requires cities to monitor and report on any housing patterns of racial bias, in an effort to promote less segregated neighborhoods.

“The purpose of the AFFH rule is to reduce segregation which had been caused in part by the federal government’s own actions,” David Reiss, the academic program director for the Center for Urban Business Entrepreneurship
 at Brooklyn Law School, tells the Monitor in an email. The secretary of HUD “can signal that fair housing allegations and violations will be taken seriously or not. If Carson is confirmed, it will send a strong signal that local governments do not need to worry about the Affirmatively Furthering Fair Housing rule for the foreseeable future.”

The Long Wait for Home

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house-keys

The most recent issue of Housing Spotlight from the National Low Income Housing Coalition is titled The Long Wait for a Home. The Executive Summary reads,

The Public Housing and Housing Choice Voucher (HCV) programs provide essential affordable housing to some of the nation’s most financially vulnerable households. Forty percent of new public housing admissions and 75% of new voucher holders each year are required to be extremely low income (ELI) households, who earn no more than 30% of their area’s median income (AMI) or the federal poverty guideline, whichever is higher. Seventy-one percent of the nearly 1.1 million public housing households and 74% of the 2.2 million HCV recipient households are ELI (HUD, 2015).

The housing resources available to ELI renters however are insufficient. The private and subsidized rental markets make available only 3.2 million affordable homes for the nation’s 10.4 million ELI renter households, resulting in a national shortage of 7.2 million rental homes (NLIHC, 2016). ELI households face a long wait for housing assistance. Unable to find affordable housing, 75% of ELI renter households are severely cost burdened, spending more than 50% of their income on housing costs and leaving little money for other necessities (NLIHC, 2016).

The last nationwide survey of Public Housing Agencies (PHAs) regarding their public housing and voucher waiting lists was conducted in 2012. Since then, rental affordability has worsened, squeezing ELI renters even further out of the private market. To document the current state of waiting lists, NLIHC surveyed PHAs in the Fall of 2015 and Winter of 2016. Three hundred twenty PHAs responded with complete surveys, representing a diversity of size, location, and metropolitan status.

Survey data paint a bleak picture of waiting lists closed to new applicants and long waits for housing assistance. Key findings include: „

  • Fifty-three percent of HCV waiting lists were closed to new applicants for housing assistance. Sixty-five percent of HCV waiting lists closed to the general public had been closed for at least one year. „
  • Eleven percent of public housing waiting lists were closed to new applicants. Thirty-seven percent of public housing waiting lists closed to the general public had been closed for at least one year. „
  • The median HCV waiting list had a wait time of 1.5 years. Twenty-five percent of HCV waiting lists had a wait time of 3 years or longer. „
  • The median public housing waiting list had a wait time of 9 months. Twenty-five percent of public housing waiting lists had a wait time of 1.5 years or longer. „
  • ELI households accounted for nearly 74% of households on the average HCV waiting list and more than 67% of households on the typical public housing waiting list.
  • Families with children accounted for 60% of households on the average HCV waiting list and 46% of households on the typical public housing waiting list. „
  • Seniors comprised the most common type of household on 15% of the public housing waiting lists for which these data were provided.

Closed waiting lists and long waits for housing assistance make clear that we must expand housing resources for our nation’s lowest income renters. Legislation introduced in the 114th Congress would increase investments in vouchers, public housing, and other housing programs.

*     *      *

These policy changes, and others like them, could end housing poverty and homelessness once and for all by providing the resources necessary for every low income family to afford a home.

This report rightly brings attention to the big problems facing extremely low income households and federal affordable housing programs. Whether anything is done for them depends completely on the outcome of the election.

Historic Preservation and Affordable Housing

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photo by Ebyabe

Lior Strahilevitz has posted Historic Preservation and Its Even Less Authentic Alternative to SSRN. The abstract reads,

Historic preservation regulations are costly, contentious, and – as best we can tell – tend to promote residential segregation. Preservation as practiced in the United States also tells historical tales in a way that is inevitably selective, often more attuned to contemporary needs than historical objectivity, and likely to signal current residents and visitors about whose stories aren’t worth commemorating. Yet historical preservation, even to its critics, can further desirable goals. This essay examines traditional historic preservation strategies while also considering two potential alternatives, neither of which has received much attention.

The first alternative to traditional historic preservation – fake history – is employed on a large scale in the fastest growing residential community in the United States. The essay provides a case study of the use of fake history and theming in The Villages, Florida, revealing both the strategy’s potential for generating low-cost cultural resonance and its pitfalls. The possible connections between The Villages’ omnipresent theming and its disturbingly homogenous demographics are explored. The essay suggests that The Villages’ alternative to historic preservation might be replicated elsewhere and speculates about the demographic results of efforts to create more inclusive fake historical narratives.

A second, and novel, alternative to traditional historic preservation would select sites for historic preservation restrictions at random within a given community. Many of the problems associated with the way historic preservation regulations are implemented in the United States stem from the arbitrary and occasionally ugly battles over what to preserve and what to erase. Historic preservation becomes a battlefield for cultural warfare. Compared with this alternative, the case for randomly preserving in each city a few blocks that date from each particular era, while letting market forces dictate what gets preserved or destroyed elsewhere, may be surprisingly strong.

While I do not like either of these novel alternatives, we would certainly benefit from fresh thinking about what we are trying to achieve with historic preservation. Historic preservation remains too much of a niche area of regulation dominated by the few who feel most strongly about it. It has slowly but surely increased its reach in cities like New York. But it has not been accompanied by much serious thinking by broader constituencies about the costs and benefits of each incremental step.

There are obvious trade-offs with landmarking that don’t just affect landowners and developers. By restricting new construction, landmarking tends to restrict the supply of new housing units. This might be okay, but we should certainly think through those costs before just letting preservation districts cover more and more of a city. I am not particularly interested in communities based on fake history, but others are welcome to them. For me though, I am concerned that our most important cities might end up like Paris — stunning historic playgrounds for the wealthy, encircled by high-rise ghettos for the poor.

Women Are Better Than Men,

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photo by Matt Neale

Greeks vs Amazons, Mausoleum of Halicarnassus, British Museum

at least at paying their mortgages. This is according to an Urban Institute research report that found that

It’s a fact: women on average pay more for mortgages. We are not the first people to have noticed this; a small number of other studies have also pointed it out (e.g., Cheng, Lin, and Liu 2011). One possible explanation is that women, particularly minority women, experience higher rates of subprime lending than their male peers (Fishbein and Woodall 2006; Phillips 2012; Wyly and Ponder 2011). Another explanation is that women tend to have weaker credit profiles (Van Rensselaer et al. 2013). We find that both these explanations are true and largely account for the higher rates.

Looking at loan performance for the first time by gender, however, we find that these weaker credit profiles do not translate neatly into weaker performance. In fact, when credit characteristics are held constant, women actually perform better than men. Nonetheless, since pricing is tied to credit characteristics not performance, women actually pay more relative to their actual risk than do men. Ironically, despite their better performance, women are more likely to be denied a mortgage than men. Given that more than one-third of female only borrowers are minorities and almost half of them live in low-income communities, we need to develop more robust and accurate measures of risk to ensure that we aren’t denying mortgages to women who are fully able to make good on their payments. (1)

This second paragraph undercuts the catchy title of the report, Women Are Better than Men at Paying Their Mortgage, because it is only true when comparing single women to single men and when credit characteristics are held constant.

The report confines its analysis to sole female and sole male borrowers, excluding two-borrower households. This limitation is compounded by the fact that the credit characteristics of men and women are not the same (as men have better credit characteristics as a group).  As a result of these limitations, I think the title of the report goes too far. The authors also acknowledge that the stakes are not that high because the “inequality does not translate into a significant amount that single women overpay for their mortgages: less than $150 per female-only borrower per loan.” (15)

That point aside, the report does raise an important issue about whether credit characteristics metrics are biased against women: “the dimensions we rely on to assess credit risk today do not adequately capture all the differences. This omission has real consequences.” (15) This is certainly true, but lenders will have to carefully navigate fair lending laws as they seek to capture all of those differences.

Homeownership in NYC

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photo by Nathan Hart

Brooklyn’s Charles Millard Pratt House

NYU’s Furman Center and Citi have released their joint Report on Homeownership & Opportunity in New York City. It opens,

In New York City, the notoriously high costs of rental housing are well documented. But becoming a homeowner in the New York City real estate market is also a considerable challenge for low- to middle-income households. Households earning less than $114,000 face a severely constrained supply of homeownership opportunities in New York City.

This report seeks to shed light on the extreme variation in homeownership rates among New Yorkers and quantify the homeownership options that exist at different income levels. We do this by analyzing 2014 home sales prices and examining the potential purchasing power of households at various income levels in New York City, as well as in the nearby counties of Nassau, Suffolk, and Westchester.

We use five income categories for this analysis—Low-Income, Moderate-Income, Middle-Income, NYC-Middle-Income, and High-Income. These income bands are based on percentages of Area Median Family Income (AMFI) for the New York City metropolitan statistical area established by the Federal Financial Institutions Examination Council (FFIEC) and are based on data from the 2006-2010 American Community Survey. This report includes an additional middle-income band (NYC-Middle-Income), given that affordable housing programs in New York City serve households up to 165 percent of the U.S. Department of Housing and Urban Development (HUD) area median income (AMI). (3)

You’re all wondering, of course, what NYC-Middle Income is, so the report provides the following explanation of the income categories:

“Low-Income” households have an annual income of $34,000 or less, or 50 percent of AMFI;

“Moderate-Income” households have an annual income between $34,001-$55,000, or 50 percent to less than 80 percent of AMFI;

“Middle-Income” households have an annual income of $55,001-$83,000, or 80 percent to less than 120 percent of AMFI;

“NYC-Middle-Income” households have an annual income of $83,001-$114,000, or 120 percent to less than 165 of AMFI; and

“High-Income” households have an annual income above $114,001, or 165 percent of AMFI or greater. (3, emphasis added)

The report finds that

the purchasing power of most New York City households is limited, largely due to growing housing prices and stagnating incomes since 1990. In addition, while New York City had a relatively low share of homeowners compared to the U.S. in 2014, it was disproportionately low for Low-Income and Moderate-Income households relative to their U.S. counterparts.

The vast majority of home sales in New York City in 2014 were at prices unaffordable to Low-Income and Moderate-Income households, which comprised 51 percent of New York City households. Of the nine percent of sales in the city affordable to these households, three percent were affordable to Low-Income households and an additional six percent were affordable to Moderate-Income households. Home sales with prices that were affordable to Low-Income and Moderate-Income households in 2014 were, for the most part, concentrated outside of Manhattan.

Prospects for homeownership were not much better for Middle-Income households. In 2014, Middle-Income households, which comprise 15 percent of New York City households, could afford an additional 13 percent of sales (based on a total purchase price of up to $364,000), leaving 78 percent of sales out of reach for households with incomes of less than $83,000 annually. Less than half of sales in 2014 (42%) were affordable to 77 percent of New York households, including those characterized as NYC-Middle-Income.

Moving outside of New York City does not necessarily improve a New York City household’s potential to buy a home. In Westchester County, only two percent of sales were affordable to New York City Low-Income and Moderate-Income homebuyers combined in 2014. In Nassau County, only 24 percent of sales were affordable to New York City Low-Income, Moderate-Income, and Middle-Income homebuyers in 2014. In Suffolk County, 42 percent of sales were affordable to New York City Low-Income, Moderate-Income, and Middle-Income households. (4)

New Yorkers, and a lot of non-New Yorkers, are going to eat up the graphs in this report (what IS the median sales price in Brooklyn?!?), so it is worth a read for the real estate obsessed (yes, you). But it also has policy implications about the housing stock of the City and the surrounding region. The report itself does not make any policy recommendations, but it offers a stark reminder of how important rental housing policy is to any effort to maintain socio-economic diversity in the City.

 

Creating Safe and Healthy Living Environments

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photo by Will Keightley

The Center for American Progress has released Creating Safe and Healthy Living Environments for Low-Income Families. It opens,

A strong home is central to all of our daily lives. People in the United States spend about 70 percent of their time inside a residence. As the Federal Healthy Homes Work Group explained, “A home has a unique place in our everyday lives. Homes are where we start and end our day, where our children live and play, where friends and family gather to celebrate, and where we seek refuge and safety.” Understanding how fundamental homes are to everything we do, it is troubling that more than 30 million housing units in the United States have significant physical or health hazards, such as dilapidated structures, poor heating, damaged plumbing, gas leaks, or lead. Some estimates suggest that the direct and indirect health care costs associated with housing-related illness or injuries are in the billions of dollars. The condition of housing is even more important for children, the elderly, and people with disabilities who need housing structures that support their particular needs.

The condition and quality of a home is often influenced by the neighborhood in which it is located, underscoring how one’s health and life expectancy is determined more by ZIP code than genetic code. According to a recent report by Barbara Sard, vice president for housing policy at the Center for Budget and Policy Priorities, living in neighborhoods of “concentrated disadvantage”—which are characterized by high rates of racial segregation, unemployment, single-parent families, and exposure to neighborhood violence—can impair children’s cognitive development and school performance. Residents of poor neighborhoods also tend to experience health problems—including depression, asthma, diabetes, and heart disease—at higher-than-average rates. This is particularly troubling given that African American, American Indian and Alaskan Native, and Latino children are six to nine times more likely than white children to live in high-poverty communities.

The country’s affordable housing crisis is partially to blame for families and individuals tolerating substandard housing conditions and unhealthy neighborhoods. Half of all renters spend more than 30 percent of their income on housing—the threshold commonly deemed affordable—while 26 percent spend more than half their income on housing. While housing assistance programs such as public housing and the Housing Choice Voucher program, commonly referred to as Section 8, provide critical support to families struggling to meet housing costs, only one in four households eligible for rental assistance actually receives it due to limited federal funding. Furthermore, millions of Americans face evictions each year. As work by Harvard University sociologist Matthew Desmond has highlighted, eviction is not just a condition of poverty but a cause of it, trapping families in poverty, preventing them from accessing and maintaining safe housing or communities, and corresponding with higher rates of depression and suicide.

This report provides an overview of the conditions of the nation’s housing stock, barriers to accessing housing for people with disabilities, the effects that neighborhood safety has on families, and recommendations for improving these conditions. Given how central homes and communities are to people’s lives, federal and local leaders must work to ensure low-income families have access to living environments that are conducive to their success. (1-2, footnotes omitted)

There were rapid improvements in housing healthy and safety over the 20th century. Since the time of Jacob Riis’ How The Other Half Lives, we went from outhouses being common to the public subsidy of modern apartment buildings in cities and the suburbanization of the rest country.

As a result, many people do not realize the extent to which many households continue to live in substandard housing. Lead paint exposure is perhaps the most known of the  risks, but it is not the only one.

This CAP report also highlights the risks that neighborhoods can present to their residents. Being safe in your home does not mean that you are safe on your street, on your walk to school or on your daily commute.

The report provides provides a useful overview of the challenges that low-income households face, inside and out of their homes.

The Looming Housing Crisis for Seniors

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photo by Brett VA

Senior Housing in Seattle

TheStreet.com quoted me in Inside the Nation’s Looming Senior Housing Crisis. It opens,

Every day, 10,000 Americans turn 65. That will be true for the next 15 years as the Baby Boomers slide into retirement. Here’s the question: where will they live?

Know that the Social Security Administration said that if you turn 65 today, you will live to 84.3 if you are a man. If you are a woman, it is 86.6. Added SSA: “And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of ten will live past age 95.”

Our retirement savings also are paltry. A Government Accountability Office 2015 study said that average Americans between 55 and 64 had about $104,000 in savings. Many have nothing saved.

In 2015 SSA said the average monthly check it issued was for $1,335.

Will there be enough housing to put a roof over every gray head? How will they pay the rent?

When the Bipartisan Policy Center, a Washington, D.C. think tank, recently looked at senior housing, it said in a detailed report: “The current supply of housing that is affordable to the nation’s lowest-income seniors is woefully inadequate. As more low-income Americans enter the senior ranks, this supply shortage — currently measured in millions of units — will become even more acute.”

The good news: many are scrambling to meet the need. There are efforts to provide low income public housing, private affordable housing, and many companies are engaged in developing senior housing for the affluent.

Public housing has been the traditional go-to for those lacking means, seniors included, and many big cities – such as New York, Philadelphia and Chicago – have extensive inventory of income tested senior housing. But there is nowhere near enough. In much of Chicago, the waiting list for senior public housing is over two years. In New York, it is over four. In Philadelphia the public housing waiting list is presently closed, and said the housing authority, it has 104,000 on the wait list. The Philadelphia Housing Authority added: “Due to low turnover, applicants may not reach the top of the waitlist for ten years.”

“Public housing continues to have extremely long waiting lists, so it is not a practical option for many seniors,” said David Reiss, a professor at Brooklyn Law and an expert on housing.