Our Priorities: Housing Supply and Affordability

The biggest problem for America’s housing market is that there aren’t enough homes available. The sales slowdown probably won’t do much to alleviate the situation and over time could make it even worse. The National Association of Realtors on Wednesday said 5.12 million previously owned homes were sold in June, at a seasonally adjusted annual rate, down from May’s 5.41 million. It was both the lowest level since the early months of the pandemic and below the prepandemic trend. It reflects just how much the affordability problem, driven by the sharp rise in mortgage rates and sky-high home prices, is weighing on sales. What is needed is for housing to somehow become more affordable. Read the full article on The Wall Street Journal   [rsnippet id="12" name="About APOA and Sign Up for Updates"]

As the value of homes rise, many empty nesters are faced with a difficult financial dilemma: stay in a home that's too large and costly to maintain, or purchase a smaller — but just as expensive — home, on top of rising interest rates. Learn why rising property values aren't always positive. Read the full article on Business Insider   [rsnippet id="12" name="About APOA and Sign Up for Updates"]

Home prices have skyrocketed by nearly 20% over the last year and mortgage rates have risen faster over the past three months than they have in decades. But the high cost to buy a home is not the only obstacle prospective buyers are facing. Other hurdles include a lack of available homes for sale that fit the buyer's criteria, bidding wars, and failing to have enough money for a down payment, according to a new study from the National Association of Realtors and Morning Consult. Read the full article on CNN   [rsnippet id="12" name="About APOA and Sign Up for Updates"]

One of the advantages to buying a home is that mortgage payments can be cheaper than renting — provided you have enough money saved up to afford a down payment and other costs of being of a homeowner. However, even though U.S. rent prices surged in the last year, that rent growth has been outpaced by rising mortgage payments in recent months as home prices continue to rise. Read the full article on CNBC   [rsnippet id="12" name="About APOA and Sign Up for Updates"]

Throughout America’s history, influential women have shaped the housing opportunities, social services, and vibrant communities we have today. As we celebrate Women’s History Month, The American Property Owners Alliance (The Alliance) is recognizing three female leaders who took a stand to create essential resources for those in need and build diverse and resilient communities.

Catherine Bauer was an influential leader in the fight for affordable housing. Her forward-thinking approach to housing policy led her to be the primary author for America’s first affordable housing legislation — the U.S. Housing Act of 1937. Bauer influenced housing and urban planning strategies throughout the terms of three different United States presidents.1

Patricia Roberts Harris made history as the first African American woman to hold a cabinet position when she was appointed to Secretary of Housing and Urban Development (HUD) in 1977. As HUD Secretary, Harris brought aid to deteriorating neighborhoods and worked to bring business back to impoverished areas.2 Harris was known for her leadership in battling housing discrimination and rehabilitating neighborhoods.

Jane Jacobs was a writer and activist who championed a community-based approach to city planning. In Jacob’s 1961 treatise, The Death and Life of Great American Cities, she claimed, “Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.”3 Jacobs was known for her innovative approach to building vibrant communities that prioritized parks and public spaces that served the needs of residents.

These are just a few of the influential women who have or are improving America’s housing opportunities through advocacy and forward-thinking policy. It’s up to us to continue the mission to make housing more accessible and equitable. The Alliance is a nonpartisan, nonprofit that advocates for public policies that support property ownership and strengthen communities. If you’re interested in supporting this mission, join our efforts today.

 

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Home prices are going up, along with mortgage interest rates. Is now the time to buy — before conditions worsen?   [rsnippet id="7" name="Global Article Footer"]

Homeowners who need financial assistance with their mortgages and other housing-related expenses can apply for help via the Homeowner Assistance Fund (HAF), a federal program designed to help households who have fallen behind due to COVID-19.   [rsnippet id="7" name="Global Article Footer"]

Construction of new homes in the U.S. rose for the third consecutive month in December and data released Wednesday suggests that the frantic pace of building will continue this year.

 

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The Covid-19 pandemic upended the home-buying process. Historically-low mortgage rates coupled with an inventory shortage created a red hot market with houses selling within hours of being listed, often for well over asking price.

 

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It was a rough 2020 for the police in the city of Boston. Like every other police force in America, not only were they caught up  in the social awakening in the aftermath of the death of George Floyd at the hands of Minneapolis officers, but the Boston PD had to deal with its own overtime pay scandal This only further separated the gap in trust between the force and the citizens of the city. Amid the fervor, then-Mayor Martin Walsh and the City Council decided that the police overtime budget would be slashed by $12 million, and that the money would be used to help address racial disparities in Boston. Recently, the city has put action behind those words, and it is helping marginalized people be able to buy a home. In February, the Mayor’s office announced that it was earmarking $250,000 of those cut overtime funds, plus an additional $75,000 to create a matching-grant program that would help lower- and middle-income individuals or families to buy a home in Boston. The grant program establishes $5,000 for each qualifying “first-generation” home buyer who was able to contribute $2,500 of their own money toward a down payment. The grant program is part of a partnership with the Massachusetts Affordable Housing Alliance (MAHA), a non-profit organization that concentrates on helping families in need to prepare to buy a home in Boston. At the time of the announcement, Walsh, who was confirmed as Secretary of Labor for President Biden’s administration in March, released a statement that, in part, said, “Now, more than ever in Boston, we must take steps to create equitable opportunities and access to resources for all Bostonians. Improving pathways to homeownership can help address disparities in wealth.” Boston is no different than most large cities in America, where the wealth gap between whites and blacks is stark. The city is hoping that their new program can become a model for other cities nationwide to help close that gap and improve communities one new homeowner at a time. Homeowners are more likely to have accumulated wealth than renters, thanks to home equity – which can help financially in many ways, whether its’s to start a small business, help pay for college education or simply to pass on to the next generation so they can buy their own home as well. MAHA initially launched its program two years ago using multiple grants provided by Wells Fargo, Boston Children’s Hospital, and the Boston Real Estate Board to help these homebuyers – and they classify them as first-generation, not first-time, in order to include people whose parents didn’t own a home or who lost one in foreclosure. According to the Boston Globe, MAHA had enrolled 168 people into classes they offer on homebuying preparations and of that group, 14 went on to actually buy a home. The hope is those numbers will grow with the assistance of the city’s partnership. Improving homeownership, especially in Latino and Black communities, had been a top priority for Walsh and his administration. In his tenure, the city has approved the development of thousands of new apartments in an effort to increase supply and stabilize housing costs. Kim Janey has taken over as acting mayor for now, but an election for the office will be coming in November, when housing advocates hope that homeownership and affordable housing are tops on the list of priorities for all candidates running for Mayor. [rsnippet id="7" name="Global Article Footer"]

But, could provide a development boon in the future.

BY ANTHONY SANFILIPPO

Even during the time of COVID-19, there remains a glaring need for affordable housing. Sure, demand is down right now, and with that prices may fall a little bit. But the reality is, an economic recession in the near term will only slow the development of more affordable housing moving forward.

Many local governments have tried to stimulate the development of affordable housing by providing increased funding. However, as a result of the impact of COVID-19, there is a real risk that those same governments might not be able to adequately support such measures – either to build more or to preserve existing affordable housing.

“For the commercial developers who would build the needed affordable housing units, finding the financing necessary - especially from cautious lenders during a time of uncertainty - may be a lot harder to come by.”

In California, where the affordable housing crisis was worse than every other state prior to the pandemic, Gov. Gavin Newsom announced the state will have to significantly slow spending as a result of the response to COVID-19. Specifically, in San Francisco, where low- and middle-income earners rarely find housing they can afford, a budget deficit of more than $1.5 billion is expected.

As for the commercial developers who would build the needed affordable housing units, finding the financing necessary – especially from cautious lenders during a time of uncertainty – may be a lot harder to come by.

Below-market rate debt that comes from government lenders, such as Fannie Mae or Freddie Mac, is likely to become less available. Similarly, the market will make it harder to get the kind of equity desired from low income housing tax credits, which are used in a vast majority of affordable housing projects. This is because they afford tax credits to owners in exchange for financing a residential unit that charges a rent at 60 percent or lower of the median income for a specific area.

Like the lenders, investors are also leery because of the uncertainty of how owners of affordable housing developments are going to manage the shortfall that is sure to come from renters being unable to afford rents during the pandemic.

Federally backed mortgages are allowing for mortgage forbearance for up to six months for these owners/landlords, but that only accounts for about 40 percent of owned multi-family units in the country.

Not only that, owners/landlords are dealing with increased costs because a predominance of residents are staying-at-home through the pandemic. As such, increased trash and higher use of utilities are happening.

But there is a glimmer of hope once COVID-19 is under control.

Affordable housing development could stabilize quickly once there is a return to normal because unlike market-rate housing, the rents in affordable housing are generally below market, meaning the operation risk of managing these properties wouldn’t be as high during a recession.

“With interest rates low and expected to remain that way until the economy rebounds, developers may be able to take advantage and borrow the money they needed to break ground on new multifamily projects."

Additionally, because demand for affordable housing is likely to grow as more Americans lose income, more investors could line up to develop affordable housing once the pandemic passes. Couple that with banks being incentivized by government regulations to process loans for housing in areas deemed low or middle income, and the market for affordable housing could quickly rebound, even during an overall economic downturn.

With interest rates low and expected to remain that way until the economy rebounds, developers may be able to take advantage and borrow the money needed to break ground on new, multifamily projects. The recession may actually lower the cost of land and even make construction costs drop.

Overall, the immediate pipeline for funding of affordable housing is definitely a concern. But once the pandemic passes, the market very well may course correct and in the next 18 to 24 months, a much-needed uptick in this kind of housing could come to pass.

You can spend hours Googling how-to articles on homeownership, but we’ve rounded up these four documentaries on affordable housing to provide you with a one-stop-shop for all relevant information about homeownership.

Not only do these documentaries highlight affordable housing across the United States, they also have a large focus on ending the housing crisis across the globe and the homelessness calamity, particularly amongst America’s youth in VICE’s documentary ‘Shelter’.

Read on below to understand the focus of each of these recommended documentaries:

Transformation of Affordable Housing in Rural Areas of the U.S.

This short documentary produced by Greystone focuses on how USDA’s Rural Development Division, and partners, have been working to conserve affordable housing for elderly and low-income residents in rural America. In the film, experts such as Robert Barolak of Greystone discuss the affordable housing preservation process. “There are still a great number of lower-income and elderly folks who live in rural America and who need affordable housing. But it’s aging. It’s deteriorating, and some of it deteriorating quite rapidly. It needs to be renovated and refreshed. It needs to be repositioned for the next 30 or 40 years,” Barolak shares. Greystone has taken that into account and made active changes both financially and in regard to redevelopment.

Greystone manages the repositioning and renovation of apartment complexes in small rural rental communities across the country, primarily in the southeastern states. As Tanya Eastwood, the president of Greystone Affordable Development, shares the company’s plans, “We came up with a creative innovative plan to preserve this much-needed housing. We basically pooled them together in a statewide portfolio type transaction and are able to have a major impact in their real estate schedules that they own.” Recently, Greystone was able to refurbish 1,362 apartments in 44 different communities across rural Georgia with $117 million in financing. In addition to USDA, Greystone actively worked with the Athens Housing Authority, Georgia Department of Community Affairs, and Fannie Mae to assemble the necessary financing.

Sold Out: Affordable Housing at Risk

This PBS documentary was produced with the MN Housing Partnership and shares numerous stories from tenants on how they pushed through the housing crisis to find affordable solutions. Ever-changing economic power and urban development have been closing in on low-income communities for ages, and in turn, negatively impacting the affordable housing market. With each passing day, low-income residents have fewer options when it comes to housing and once we see those families and residents move to more affordable areas, local businesses start to see the lack of patrons immediately and struggle to make ends meet. As shared in the documentary, “Folks at the bottom end of the income spectrum are losing out in this very competitive situation.”

One heart-wrenching example, tenants who had called their Richfield, MN apartment home for up to 15 years received 30-day notices that they had to leave, even after signing 12-month leases, once the complex was sold. The new owners of the huge apartment complex, Crossroads Apartments, immediately put in a set of policies designed to ultimately remake the tenant population, such as increasing rents 30% and stopping all involvement in any government programs.

This vicious cycle seems to be never ending, but ‘Sold Out: Affordable Housing at Risk’ shares solutions to the crisis and eviction scares. The short film also touches on communities of color, asking important questions such as “Is what’s wrong the concentration of communities of color, or is it the way in which we treat concentrations of communities of color?” As said in the documentary, “This issue of housing sits at the center of our wellbeing.”

SHELTER

VICE’s documentary ‘SHELTER’ focuses on America’s youth homelessness crisis specifically. The crew set off to New Orleans to chat with the staff and residents of America’s largest non-profit shelter – Covenant House. The perspective from the alarmingly young residents and passionate staff in the documentary shines a light on the severity of the issue and ultimately prompts directors Brent and Craig Renaud (as well as viewers) to urgently address the plight of homeless youth.

The Covenant House has been protecting at-risk youths for over 40 years and has no plans of stopping. The documentary informs viewers of the day to day struggles the staff handles to keep vulnerable members of society safe and off the streets. With a large majority of these teens being survivors of sex trafficking, physical abuse, mental health issues, addiction, and abandonment, the Covenant House isn’t just a place to lay their head, but a home. Homelessness affects over half a million people in the U.S. and the number of unhoused people increased nationally for the first time since 2010, based on data from the U.S. Department of Housing and Urban Development (HUD). In Louisiana specifically, where the short film is based, at least 3,000 unhoused people were reported in 2017.

High Quality and Affordable

This documentary from Gaaleriie centers on affordable housing in Vienna, which is nearly a utopian community when it comes to social housing. Vienna currently has two systems of subsidized housing. One is social housing, owned by the city, where no new private units are built within this sector. The nonprofit sector has been greatly strengthened over the years by working with nonprofit developers such as this one. Roughly half of the population is living in this sector of public housing. Within this subsidized sector, there is a lot of experimentation allowing them to introduce new sustainable housing standards such as energy consumption and integration programs to assist immigrants in Vienna.

Another aspect of Vienna’s affordable housing, which makes them the star pupil of the world, is that every large new housing estate has to go through an in-depth competition process. A team consisting of a nonprofit developer, an architect, a landscape architect, and other experts have to present a “complete product” to the city. These extensive steps ensure that the appropriate amount of time, effort, and consideration has been put into the new development to guarantee it is a safe and beneficial home for those who are seeking affordable housing.

Each of these four documentaries highlight obstacles that the housing crisis puts on lower income populations. A lack of affordable housing doesn't only leave people unhoused, but it also has a huge impact on small businesses, schools, and the overall community. The U.S. can certainly take notes from Vienna's progressive affordable housing system, and with the right financial guidance and support, America can match up with some of Europe's public housing success.

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The nation is struggling with an affordable-housing crisis. There is not enough housing in communities across the country, including here in Philadelphia. This means families must pay more for their housing, renters have less to get by on at the end of the month, homeownership is out of reach for too many, and those of modest means are forced to live farther from decent jobs.

Homebuilding collapsed during the housing crash more than a decade ago and has been slow to recover. Construction of high-end homes and apartments recovered first, and there is now an oversupply in some urban areas across the country.

However, the construction of affordable housing — homes reasonably priced for lower-income households to rent or own — has only recently begun to increase and continues to lag demand. The shortfall is so large that it would take an extra year of construction at its current pace to close it.

The lion’s share of the undersupply is concentrated in areas that offer significant economic opportunity, driving up house prices and rents for low- and moderate-income families precisely where they want to live.



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President Joe Biden wants to use an historic amount of federal dollars to create more affordable housing in America. But to do so, he is going to have to find his way through a wall of seemingly impenetrable red tape so that federal money can influence local governance. It’s not going to be easy, and some are doubting that he can make it happen. But Biden is going to give it a try by putting the wooden rabbit out in front of the Greyhound American Mayors and see if they’ll chase it. Much of the cost of building new housing is determined at the local level. Almost 20% of the cost of building a single-family home comes from state and local regulations such as permitting and development fees, zoning rules and land-use restrictions. With all of these costs, building affordable housing is next to impossible. However, Biden wants to try to tackle the problem with a new competitive grant program. This would entice state and local governments to scale back costly zoning and land-use policies. That’s a start, but is it enough? “To say, ‘We’re not going to give you money for affordable housing if you don’t make it easier to build affordable housing, [which is hard] because you don’t want affordable housing,’ — it’s ridiculous,” David Dworkin, president and CEO of the National Housing Conference, an affordable housing advocacy group told Politico. “You need carrot and stick, not carrot or stick, to make it work.” Dworkin added that if there was a serious effort to make a push to cut through some of the exclusionary zoning red tape, that it would tie federal transportation dollars to the elimination of these barriers, and that’s a much larger pot of gold at the end of the rainbow than is usually shared with states. The reason the Biden Administration has dodged the notion of putting more pressure on local officials to change these regulations is because it puts the President in a boxing ring without any gloves against some haymaker throwing Mayors who have basically drawn a line in the sand about tying local regulations to federal dollars. “All these places are reluctant to touch zoning, or it would have been done already,” Jim Parrott, a former housing adviser to the Obama White House, also told Politico. “(It) depends totally on how big the carrot is and whether they deploy sticks.” Carrot and stick analogies aside, it’s not just housing folks who are wondering if Biden’s plan will ever come to fruition as outlined, or if it will require some more federal muscle. Some Democrats have argued that there isn’t enough federal money to back this idea, meanwhile Republicans are arguing that infrastructure plan as a whole contains too much federal spending. With there being pushback on both sides of the spectrum, as well as concern being expressed by housing advocates, it could make it hard for Biden to get this proposal across the goal line and make homes more affordable for many Americans. Biden’s pitch calls for two million affordable housing units to be developed, preserved, or rehabilitated using a whopping $213 billion. Homebuilders also have their doubts about Bien’s plan. After all, two million homes is a huge number. To make that happen, Congress is going to need to get creative – maybe take Biden’s plan and use it to spark something more appealing and realistic. Biden wants to commit $40 billion to create more public housing. Progressive Democrats feel that’s not enough and want to see that number nearly double. Meanwhile Republicans feel building more public housing is taking a step backwards because of its dependency on the government. Many experts believe that Biden’s infrastructure plan will pass through both the House and Senate, but not as currently proposed. The question is, when it’s done, will there be a boon or a bust for affordable housing in America? Only time will tell. [rsnippet id="7" name="Global Article Footer"]

President Biden recently unveiled his infrastructure proposal, asking Congress to approve $2 trillion in spending. And while much of that proposal involves basic repairs to roads and bridges, as well as upgrades to the electrical grid and expanding access to broadband internet, the plan calls for a whopping $213 billion to create more affordable housing. Adding to the housing stock is a priority of the Biden administration, and the plan would build or rehabilitate more than 500,000 dwellings for low- and middle-income homebuyers, as well as retrofit more than two million commercial buildings and affordable housing units, to create more affordability in the marketplace. Specifically, Biden is asking Congress to approve the Neighborhood Homes Investment Act - legislation that would provide an additional $20 billion in tax credits for affordable housing through 2026. There are other incentives tied to affordable housing, such as creating a grant program for local jurisdictions that eliminate red tape that slows or prevents new housing development, like exclusionary zoning laws. The big debate that will certainly take place in Congress is where this vast amount of funding will come from. President Biden’s plan is to raise taxes on large and multinational corporations to offset the cost of his infrastructure goals.  His Made in America Tax Plan would raise the corporate tax rate to 28% from the 21% rate that was put in place as part of former President Trump’s Tax Cuts and Jobs Act of 2017. The top corporate tax rate was 35% prior to 2017.  The plan also provides an increase in taxes for the earnings American companies make outside of the U.S. The Department of Transportation is certainly linked to this latest proposal as well, as prior to the unveiling of the plan it announced it was seeking applicants for the 2021 Infrastructure for Rebuilding America grant program, which provides $889 million to fund national and regional transportation projects. This is important to the affordable housing piece of the plan as the department will consider whether a development project is in a federally designated community development zone or opportunity zone. If so, improvements in transportation in those areas could pique the interest of real estate developers to also take advantage of those opportunity zone incentives to build affordable housing close to new transportation hubs, or at least areas that have easy access to new transportation. [rsnippet id="7" name="Global Article Footer"]

It was a rough 2020 for the police in the city of Boston. Like every other police force in America, not only were they caught up  in the social awakening in the aftermath of the death of George Floyd at the hands of Minneapolis officers, but the Boston PD had to deal with its own overtime pay scandal This only further separated the gap in trust between the force and the citizens of the city. Amid the fervor, then-Mayor Martin Walsh and the City Council decided that the police overtime budget would be slashed by $12 million, and that the money would be used to help address racial disparities in Boston. Recently, the city has put action behind those words, and it is helping marginalized people be able to buy a home. In February, the Mayor’s office announced that it was earmarking $250,000 of those cut overtime funds, plus an additional $75,000 to create a matching-grant program that would help lower- and middle-income individuals or families to buy a home in Boston. The grant program establishes $5,000 for each qualifying “first-generation” home buyer who was able to contribute $2,500 of their own money toward a down payment. The grant program is part of a partnership with the Massachusetts Affordable Housing Alliance (MAHA), a non-profit organization that concentrates on helping families in need to prepare to buy a home in Boston. At the time of the announcement, Walsh, who was confirmed as Secretary of Labor for President Biden’s administration in March, released a statement that, in part, said, “Now, more than ever in Boston, we must take steps to create equitable opportunities and access to resources for all Bostonians. Improving pathways to homeownership can help address disparities in wealth.” Boston is no different than most large cities in America, where the wealth gap between whites and blacks is stark. The city is hoping that their new program can become a model for other cities nationwide to help close that gap and improve communities one new homeowner at a time. Homeowners are more likely to have accumulated wealth than renters, thanks to home equity – which can help financially in many ways, whether its’s to start a small business, help pay for college education or simply to pass on to the next generation so they can buy their own home as well. MAHA initially launched its program two years ago using multiple grants provided by Wells Fargo, Boston Children’s Hospital, and the Boston Real Estate Board to help these homebuyers – and they classify them as first-generation, not first-time, in order to include people whose parents didn’t own a home or who lost one in foreclosure. According to the Boston Globe, MAHA had enrolled 168 people into classes they offer on homebuying preparations and of that group, 14 went on to actually buy a home. The hope is those numbers will grow with the assistance of the city’s partnership. Improving homeownership, especially in Latino and Black communities, had been a top priority for Walsh and his administration. In his tenure, the city has approved the development of thousands of new apartments in an effort to increase supply and stabilize housing costs. Kim Janey has taken over as acting mayor for now, but an election for the office will be coming in November, when housing advocates hope that homeownership and affordable housing are tops on the list of priorities for all candidates running for Mayor. [rsnippet id="7" name="Global Article Footer"]

Many people believe that before buying a home, they’ll need to have 20% of the purchase price ready in cash to use as a down payment. That can make the possibility of home ownership seem overwhelming, as even buying a small property priced at $80,000 means needing $16,000 in cash at the ready, a difficult sum for many households to save.

But the notion that homebuyers need to put down 20% is a common misconception. There are lenders that can help you get a mortgage if you don’t have that much saved for the down payment. Depending on your situation, it may even be possible to get a mortgage without putting any of your own cash on the line.

However, just because you can potentially buy a house or apartment without putting down 20% doesn’t mean you necessarily should. Let’s take a look at the advantages and disadvantages and see if it still makes sense to make a 20% down payment when you buy a home...



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