Affordable Housing

Flexible Voucher Program Proposed for 2005
The Department of Housing and Urban Development has proposed a reform for its housing voucher program that would allow public housing authorities to set rents according to local market data. The new flexible voucher program will potentially serve more families waiting for assistance, is expected to cut operational costs and will grant performance-based incentives to public housing authorities that serve more families.
Information courtesy of the Department of Housing and Urban Development.

Housing Construction Levels in CA Highest Since 1989, State Still Has Deficit
Homebuilders in California report that new home (135,016) and apartment (56,850) construction is at its highest level since 1989. Only Florida reported more residential construction (205,000). Unfortunately it's not enough to ease the nation's most severe housing shortage. Last year the median home price rose 17 percent, decreasing the number of buyers that could afford a home to 25 percent. According to NAHB economist, Michael Carliner, "California is probably the only part of the country talking about a housing shortage." The increase in homes built is attributed to lower interest rates, which gave people more buying power even when prices were surging. The trend is expected to continue until 2005 when higher interest rates will "force a slowdown." California will need to construct more than 220,000 new homes and apartments a year until 2020 to keep up with the demand according to state officials.
Information courtesy of the San Diego Union-Tribune, "Builders in California Report Most New Houses Since 1989," January 11, 2003.

HUD Gifts Nearly $51 Million in Rental Housing Vouchers
HUD gave almost $51 million in household assistance vouchers to help families with at least one disabled member find safe, affordable housing. The families will be expected to pay no more than 30 percent the housing with HUD paying the remainder. According to a HUD spokesman, the vouchers were given because families with disabled members often have difficulty finding appropriate housing.

HUD Announces More Than $740 Million in Housing Assistance
The Department of Housing and Urban Development announce the awarding of more than $740 million in grants to assist very low-income elderly and disabled renters to find housing. A portion of funding will be used for building or rehabilitation of apartment communities group homes or condominiums. The owners will not have to repay the grant if they stay in low-income housing for at least 40 years. Additional funding will be used for rental assistance. $593 million will go to assistance for the very low-income elderly and $146 million will go to assistance for the very low-income disabled. For more information on the program, please visit www.hud.gov.

Housing Still Out of Reach for Many Working-Class Americans
Despite the booming housing market, more of America's working families are paying more than half of their income for housing or are living in substandard housing. Nationwide, full-time workers have to earn nearly triple the federal minimum wage to afford a modest 2-bedroom apartment. In 2001, 4.8 million working families faced critical housing needs. The LIHTC program, eases some of the need for low and moderate-income housing, but there is more need than federal programs can meet and the application for funds far outweighs the amount of money available. The fastest growing segment of the population in need of affordable housing makes 50 to 120 percent of the area's median income; federal programs are targeted at those earning less than 60 percent of the area's median income. Often those who are unable to afford housing include teachers and police officers, service workers, blue collar and retail workers - all of whom are vital to a municipality.
Information courtesy of Multifamily Executive, May 2003

National Housing Trust Fund
A grass-roots coalition of elected officials and private organizations is pushing a plan to build and preserve 1.5 million units of affordable housing nationwide. Currently, 205 members of Congress support H.R. 1102, the National Affordable Housing Trust Fund Act. It also has widespread public support from more than 4,300 organizations, religious leaders and elected officials. However, it is not expected to pass during this session of Congress. Advocates of the bill say that passage could be within a year or two. There is some opposition, including the presidential administration (HUD), because much of the funding from the bill comes from $34 billion in reserve money from Mutual Mortgage Insurance. The funds are reserved to bail out taxpayers in case of a severe economic downturn or increased loan losses. Others oppose the bill because it take money from homeowners that have overpaid and gives it to renters. There is a similar bill in the Senate.
Information courtesy of the San Diego Union Tribune.

Proposition 46
Last year, California voters passed a bond measure (Prop 46) in order to relieve the shortage of affordable housing in the state. Home prices average $327,000 and more than one third of all renters spend over half their income on housing. The Housing and Emergency Shelter Trust Fund Act of 2002 is designed to help fund the construction, rehabilitation and preservation of affordable housing. The main focus of the program is to increase homeownership. This includes down payment assistance for first-time homebuyers, rebates of some developer fees in new housing tracts, help for teachers, preservation of existing affordable housing, revitalization of downtown areas and mortgage insurance. Proposition 46 will create an estimated 134,000 housing programs and 276,000 jobs.
Information courtesy of the Real Estate Bulletin by the California Department of Real Estate.

H.R. 1985
The National Association of Home Builders has asked Congress to increase the loan limits of the FHA's mortgage insurance program in order to increase the amount of affordable housing in high-cost municipalities. NAHB wants legislators to pass H.R. 1985 (the FHA Multifamily Loan Limit Adjustment Act of 2003) which would allow multifamily insurance programs in expensive housing markets. It is difficult for builders to stay below the per unit cost limit in urban areas - even with modestly priced units. The bill would allow expensive markets such as New York, Los Angeles, San Francisco and Providence to build more low-cost housing.

Affordability Problems Affect Many
According to the annual needs assessment by United Way of America 40 percent of American families meet the criteria for being rent-burdened (spends more that 30 percent of income on housing). In addition, the National Low Income Housing Coalition (NLIHC) found that a full-time minimum wage earner "cannot afford to pay fair market rent for a two-bedroom unit anywhere in America." The average American worker would have to earn at least $13.87 an hour for a modest two-bedroom apartment according to NLIHC. Most problems are on a local rather than national scale however. Many municipalities prevent the construction through exclusionary zoning, and pass and enforce stringent laws that cause rents to rise and result in the closing of some forms of low-income housing.

The Growing National Housing Crisis
After a 17-month study, a Congressional panel released a study detailing the growing national housing crisis. Although the vast majority of Americans are well housed, affordability has become a serious problem for millions of families. Affordability is measured as the relationship of income to housing costs. Spending 30-to 50 percent of income on housing is considered a moderate affordability problem. Spending more than 50 percent is the accepted definition of a severe affordability problem.

Click here to view the results of the study (Microsoft Word format).

Information courtesy of the San Diego Union Tribune, "Report Outlines Housing Pinch," by Emmet Pierce. May 31, 2002.

Home Sales
With implications for apartment operators, the National Association of Realtors reports that it expects 2001 to be the second-best year on record for existing home sales, and a record setting year for new home sales. The association says historically low interest rates and the country's continued economic growth will continue to fuel the housing sector.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update April 20, 2001

What Buyers Really Want
Recent building trends don't reflect what homebuyers want and need according to a survey conducted by the National Association of Home Builders. According to the survey most people prefer at single-story homes on large lots away from urban centers. However the number of these homes has actually decreased with builders building multiple-story homes on smaller lots in order to save money. In addition, the trend towards "smart growth" has caused more high-rise homes to be built in the urban cores. These options tend to make homes more expensive, but the bulk of the population is growing older. Older buyers have progressed up the housing ladder and usually have more money to spend on homes. Other things homebuyers wanted included more bedrooms and larger family rooms instead of living rooms. To read the full article, go to www.sosd.com.
Information Courtesy of the San Diego Union Tribune, "Shopping for Options," by Lew Sichelman, December 23, 2001.

Employer Assisted Housing
The Joint Center for Housing Studies at Harvard University has published a working paper on employer-assisted housing. The paper analyzes the roles of public, private and nonprofit sectors and can be ordered by calling 617-495-7640.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update January 26, 2001

Affordable Housing
A new report issued last week by HUD documents a decrease in the number of renter households with worst case housing needs, defined as either households paying more than 50 percent of their monthly gross income for rent or living in severely inadequate housing. Between 1997 and 1999, the number of such households decreased eight percent, reversing a 10-year trend where the number of worst-case need grew. Despite the improvement, however, five million renter households still have worst-case needs. Additionally, while income growth among very low-income households reduced the number of worst case need households, the shortage of affordable housing accelerated. During the same period, the total number of units affordable to renters with very low incomes fell by 1.14 million (seven percent). The full report is posted at www.huduser.org/publications/affhsg/wc99.html.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update January 26, 2001

Rental Assistance Termination
Even though HUD regulations allow housing authorities to terminate rental assistance payments if any member of a recipient's family residing on the property is convicted of a violent crime, a Pennsylvania court declined to terminate tenant-based Section 8 assistance to a woman whose sons were convicted of assault and auto theft. (Powell v. Housing Authority of Pittsburgh, 2000 WL 1224725.) HUD regulations permit the termination of payments when such activity threatens the health or safety of the premises, its residents and persons residing in the immediate vicinity of the property. In this case, the attack and theft occurred several blocks away, leading the court to overturn the housing authority's termination order because the distance between the property and the crime was outside of HUD's scope.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update December 15, 2000

Inclusionary Zoning
The National Housing Conference has produced a new publication highlighting how inclusionary zoning policies can encourage the production and preservation of affordable housing. The 37-page booklet includes scholarly articles and case studies on the topic, highlighting in particular the successes achieved in Montgomery County, MD. Inclusionary Zoning: A Viable Solution to the Affordable Housing Crisis is available by calling NHC at 202/393-5772, ext. 19 or online at www.nhc.org.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update December 1, 2000

Affordable Housing
Minimum wages still fall far short of making housing affordable for low-wage workers, according to the National Low Income Housing Coalition's annual Out of Reach survey. For the second year in a row, nowhere in the U.S. can a full-time minimum wage worker afford the fair market rent (FMR) for a two-bedroom apartment. In order to afford the median FMR on such an apartment and limit housing costs to 30 percent of income, a worker would have to earn 242 percent of the current $5.15 federal minimum wage ($12.47 per hour) or work 97 hours per week. The Housing Wage increased in 98 percent of the 3,646 local jurisdictions examined, by an average of three percent from 1999 to 2000. More than 100 local jurisdictions had an increase of more than 10 percent, far exceeding recent gains in wages. The full report, which has income and rental housing cost data for the 50 states by state, metro area and county/town, can be found online at www.nlihc.org/oor2000/.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update October 13, 2000

Housing Goal
Despite Apgar's remarks about the importance of a balanced housing policy, HUD's draft six-year strategic plan sets a goal of raising the homeownership rate nearly three percent by 2006 to 70 percent. Democratic presidential candidate Al Gore is also on record as promising to pursue a 70 percent homeownership rate if elected. Additionally, HUD has unveiled a new program allowing the nation's 1.4 million Section 8 voucher holders to use their rental assistance to buy a home. The new homeowner program goes into effect nationwide in October. Despite the election year rise in homeownership initiatives, NAA/NMHC continue to educate policymakers that a housing policy focused only on homeownership disadvantages the growing number of renters; overlooks the potential disadvantages of homeownership; and fails to appreciate how apartments can help several modern-day problems, such as suburban sprawl, urban decay, affordable housing shortfalls, and housing of our aging parents.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update September 22, 2000

Section 8
The National Low Income Housing Coalition (NLIHC) has issued a report on voucher use suggesting that contrary to conventional wisdom, the variability of voucher program success rates between locales may not be the result of market "tightness," but rather of how effectively the program is administered. The study gives examples of inefficiencies that discourage private owner participation, including late rental payments and the use of different forms and procedures by different administrators in the same housing market. The complete report is available at www.nlihc.org/bookshelf/scarcity/index.htm.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update August 25, 2000

Democratic Platform
The Democratic Party platform, released during last week's Democratic National Convention, reaffirms the party's support of the Low-Income Housing Tax Credit program (LIHTC) and its commitment to address the problem that "owning or renting an affordable home seems an impossible dream" in too many communities. The platform also stresses the importance of transforming "out-of-control sprawl to well-planned smart growth, "specifically calling on government to "encourage the renovation and construction of affordable housing closer to places of work and to mass transit." The transcript is posted at www.cnn.com/chat/transcripts/2000/8/16/riddle/index.html.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update August 25, 2000

Affordable Housing
A new report by Lend Lease Real Estate Investment says the nation's affordable housing shortage has been exacerbated by a decrease in the overall stock of low-cost housing and by recent rent inflation that has outpaced income growth. Between 1996 and 1998, the Consumer Price Index for Residential Rent rose 6.2 percent, while renter households' median income rose just 0.3 percent in real dollars, and their median net worth declined nearly 20 percent. The study's authors expect the situation to worsen during the next decade because of an inevitable economic slowdown and the entry into the housing market of the large Baby Boom Echo generation. It calls for an increase in the annual allocation formula for the Low-Income Housing Tax Credit, but says that even this much-needed step will not eliminate the affordability problem. The complete report is available on the Internet at www.lendleaserei.com.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update July 21, 2000

Affordable Housing
The lack of affordable housing is a significant barrier to successful welfare reform efforts, says the Center for Budget and Policy Priorities. In a new report, the Center says that research increasingly indicates that government housing subsidies can help promote work among long-term welfare recipients. The Center theorizes that housing subsidies may help stabilize the lives of low-income families, making it easier for them to retain jobs. They may also free up funds for job-related expenses, such as childcare and transportation, and they may make it possible for families to move to areas with better job opportunities. The Center is calling on Congress to fund the 120,000 new housing vouchers requested by President Clinton's FY 2001 budget. The full report can be found at www.cbpp.org/6-27-00hous.htm.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update July 21, 2000

Homeownership
On June 10, HUD Secretary Andrew Cuomo announced a new initiative to increase minority home ownership rates above 50 percent in three years. Currently, 73.4 percent of white households own their homes, but only 47.8 percent of African American households and 45.7 percent of Hispanic households are homeowners. To reach the new goal, the Federal Housing Administration (FHA) has already committed to insuring mortgages for more than 765,000 African American and Hispanic families in the next three years. The Department says it also hopes to work with industry trade groups and Fannie Mae and Freddie Mac to achieve higher minority ownership rates. Minority homeowners accounted for 40 percent of the net new homeowners since 1994, even though minorities account for just 23 percent of the population.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update June 30, 2000

Military Housing
The U.S. General Accounting Office (GAO) has issued a report expressing concern about the Department of Defense's (DOD) five-year military housing privatization pilot. The complete GAO report is available at www.gao.gov.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update May 5, 2000

Affordable Housing
A new study by the U.S. Department of Housing and Urban Development (HUD) reports that the affordable housing crisis is worsening. The number of low-income households not receiving any government housing assistance and either paying more than half their income for housing or living in severely distressed housing reached 5.4 million as of 1997 (the most recent data available). This figure is up four percent from 1995 and 12 percent since 1991 when the economic recovery began. The report also finds that working households with worst case housing needs grew three times as fast as all other very low-income renters. The stock of affordable housing continues to decline, according to HUD, with the number of rental units affordable to families with incomes below 30 percent of area median income dropping five percent between 1991 and 1997. The complete report is available at www.huduser.org/publications/affhsg/worstcase00.html.

The vast majority of public housing residents are satisfied with their living conditions. A new survey of public housing residents by HUD shows that 87 percent are satisfied or very satisfied with the services and overall living conditions that public housing authorities provide, up from 75 percent last year.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update April 7, 2000

Growth Control
New research by the National Association of Realtors suggests most homeowners and renters believe that growth restrictions lead to higher priced housing. Sixty percent of renters and 55 percent of house owners surveyed believe growth limitations have contributed to housing price increases, and 74 percent of renters said higher housing costs could prevent them from buying their first home. The survey also found that 95 percent believe that growth management decisions should be made by neighbors and local governments, not states or the federal government, and 68 percent said market forces, rather than governments, should regulate growth. Three-quarters of the sample said government policies should employ incentives rather than penalties to control growth.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update April 7, 2000

Suburban Sprawl
New research by Anthony Downs of the Brookings Institution suggests that contrary to popular belief, urban decline is not caused by suburban sprawl (Housing Policy Debate, vol. 10, no. 4). While sprawl does aggravate many growth-related problems, concentrated poverty and other inner city problems would occur even if sprawl were replaced by more compact forms of growth, says Downs. The true cause of our most serious urban problems is the underlying nature of the U.S. development process, which undermines the fiscal strength of many large cities. Specific policies that contribute to urban ills include: (1) stringent building codes that make new housing unaffordable for most poor households without subsidy; (2) fragmented control over land use; (3) basing funding for local governments on the wealth of its residents (its tax base), which creates strong incentives to minimize affordable housing; and (4) racial segregation in the housing markets. Downs concludes that policies specifically aimed at sprawl will not affect inner-core problems. Poverty will remain concentrated until "housing subsidies for suburban communities are widely available to the poor households." Other recommended tactics include: some type of urban growth boundary; regional coordination of local land use planning; regional tax-base sharing; and regional transportation systems.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update March 3, 2000

Affordable Housing Survey
HUD has announced (Notice PIH 2000-02) that it will begin surveying Section 8 voucher holders to gather information on the residents' satisfaction with their housing and neighborhoods. The Department indicates that it will release monthly or quarterly reports on the survey results.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update January 28, 2000

Affordable Housing A December 29 statement from the White House reports that the President's next budget will include $690 million for 120,000 new Section 8 vouchers. After four years of zero new housing vouchers, the Administration successfully secured 50,000 new vouchers in 1998 and 60,000 in 1999.
*Courtesy of National Multi Housing Council/National Apartment Association Washington Update January 7, 2000

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