National housing crisis calls for presidential candidates to outline housing plans

By Guest Columnist J. RONALD TERWILLIGER, chairman emeritus of Trammell Crow Residential Co. and founding chairman of J. Ronald Terwilliger Foundation for Housing America’s Families

America is in the midst of a housing crisis that deeply affects millions of families and jeopardizes our nation’s future prosperity.

Years of stagnating incomes have conspired with a severe shortage of affordable rental homes to make rents an ever-increasing share of family budgets. Nationally, a record number of renter households, 11.8 million, are “severely” burdened by housing costs, meaning they pay in excess of 50 percent of their income just on rent.

Ron Terwilliger

Ron Terwilliger

Here in Georgia, approximately 675,000 families – half of all renter households in the state – are considered “housing cost burdened.” In the Atlanta metro region, more than one in four renters spends in excess of 50 percent of their income on rents. While affordable rental homes are available in the city, many are concentrated in areas with the fewest job opportunities and lowest-performing schools.

High rental cost burdens can have a crushing impact.

For those families with the lowest incomes, excessive rents can mean there is little left over to pay for essentials like nutritious food. For a senior who relies exclusively on Social Security for income, it may mean less to spend on medical care and prescription drugs. For a young couple hoping to purchase a home, high rents can make it virtually impossible to save for a mortgage down payment.

As rents have soared, the national homeownership rate has plummeted to a 21-year low. The homeownership rate for African-American households has dropped nearly 8 percentage points below its high of 49.7 percent in 2004. The share of first-time homebuyers in the market has fallen to a level not seen in nearly three decades, according to the National Association of Realtors.

The bottom line is that more and more creditworthy Americans are being shut out of homeownership and the wealth-building opportunities it can offer.

What policy actions would be effective responses to these problems?

Blighted home, SE Atlanta

The housing crisis in Atlanta and the nation stems from a shortage of affordable housing. Causes include houses that may not be fit to be occupied, such as this one near Turner Field, and others that have been torn down to make way for expensive new homes. File/Credit: David Pendered

This question was raised at a recent Carter Center forum sponsored by the J. Ronald Terwilliger Foundation for Housing America’s Families and the Atlanta Neighborhood Development Partnership. The forum brought together dozens of leading housing providers and developers in Georgia and from across the southeast United States. Here are some of the ideas we discussed:

First, there was widespread agreement that the federal government must dramatically ramp up its support for the Low-Income Housing Tax Credit, which incentivizes private investment in the production and preservation of affordable housing. There is a huge chasm today between the number of lowest-income Americans and the supply of rental homes that are affordable and available to them. Greater federal support for the Housing Credit, which has leveraged approximately $100 billion in private investment since 1986, can help close this gap.

Second, the federal government’s rental assistance programs, particularly the Section 8 Housing Choice Voucher program, should be funded at levels reflective of the great need that exists. Today, fewer than one in four households eligible for these programs actually receives help and assistance is often allocated through long waiting lists and by lottery. In light of budgetary constraints, reallocating some of the $200 billion the federal government already spends on housing to help these unassisted low-income renters will likely be necessary.

Blighted homes, tear down rebuilds

These tidy homes were built near the white frame home pictured above. Credit: David Pendered

Third, local housing providers must have greater flexibility in fashioning solutions that are responsive to community needs rather than conforming to a one-size-fits-all mandate from Washington. One promising program is Moving to Work (MTW), which grants waivers from federal rules to high-capacity public housing authorities so they can experiment with strategies to promote objectives like resident self-sufficiency and employment. The Atlanta Housing Authority has participated in MTW since 2003, successfully using its enhanced powers to promote quality housing in mixed-income communities and increase the financial independence of assisted families.

Fourth, communities across the country must make expanding affordable housing opportunities a top priority. They can begin by examining the effects of their own land-use and regulatory policies and make adjustments where necessary. Regulatory requirements and red tape can increase the cost of home building by as much as 30 percent, thereby pricing out many lower-income residents.

Finally, the rental and homeownership sides of the housing market are deeply connected. Reducing excessive rent burdens should enhance the ability of families to accumulate funds for a mortgage down payment. But with millions of young, low-wealth Millennials now forming households for the first time, greater investment in alternative homeownership models like “lease-to-own” and “shared equity” will be necessary.

Responding to the crisis in housing will require strong national leadership. The general election campaign for president, now fast approaching, offers a great opportunity for the two party standard bearers to outline their housing plans. We will be listening.

 

6 replies
  1. Matt Keown says:

    Saw this first hand this year when I sold a house that was my “starter home” to move to a much larger one in a better part of Atlanta.  The “starter home” had a lot of people look at it (30 within 2.5 months), but none of them could afford it ($199k).  It ended up being bought by a company that arranges “lease/purchase” for the tenant.  At the low end of the market, it’s either younger folks that just don’t make any money or are burdened heavily by student loans and can’t afford the house, or people that can afford the payments, but can’t get qualified because of a ding on their credit from the Great Recession.  Now, the flipside – houses between $300k -$450k don’t stay on the market very long.  They get snapped up quickly.  The one we ended up buying stayed on the market all of 4 days.  This brought reality to me about the growing economic chasm in this country.  Its getting worse and I agree the next President needs to address this quickly.Report

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  2. scfranklin says:

    In the 1960’s there was a saying that captured your enthusiasm for another person’s point of view or remark. It’s use meant you not only agree but you enthusiastically agree and just might lean in to help the cause. Right on, Ron! It is not certain I can offer any assistance but the daily challenges hundreds of Georgians face should be everybody’s business.Report

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  3. Emil Walcek says:

    The Fed’s Fannie Mae & Freddie Mac and their unsustainable incentives for home buyers were a huge part of the 2008 crash. Now the “industry” is once again cranking up its rhetoric for taxpayer funded support. Have we learned no lessons? After the 2008 bubble bust it became painfully obvious that everyone is not cut out for home ownership, or home investments. Maybe the Feds should let supply and demand determine risk and reward for builders, selling agents, insurers and others who would profit from homeowners and renters. Additionally, homeowners and renters should be fully accountable for their purchasing priorities. It seems many talk out of both sides of their mouths when it comes to what problems they want government to solve.Report

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  4. ironic1 says:

    Millions of people were sidelined economically and socially by the Great Recession. Six-figure government and business leaders were not among these, and this is one reason they are so astounded by the phenomenal rise of Trump and Sanders. People are angry. They see a government that is a bottomless pit of money (taxpayers’ money) that is spent on causes that don’t yield positive results for anyone – not even the recipients.
    Public education (already free) and paying attention to family structure are essential. Unless attention is given to these areas, affordable housing – and its maintenance – will continue to be problematic.Report

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