Monday, April 20, 2015

VIDEO: An Interactive Conversation about the Role of Designers in Promoting Racial Justice in our Communities

by Jennifer Molinsky
Senior Research Associate
Earlier this month, the Joint Center for Housing Studies, together with the Loeb Fellowship and African American Student Union at the Harvard Graduate School of Design (GSD), hosted InFORMing Justice, an interactive conversation about designers’ roles in promoting racial justice in our communities. The event evolved in the wake of national discussions about the deaths of black men in Ferguson, Staten Island, South Carolina, and elsewhere, as a way for GSD students and the broader community to discuss how design and designers can promote community empowerment and ultimately justice (and its requisite parts, including equal access to safe, healthy neighborhoods and economic opportunities). 

In the opening panel, moderated by Professor Michael Hays, architects Kimberly Dowdell, Theresa HwangLiz Ogbu, and artist Seitu Jones touched on the intensely personal nature of their professional work in disadvantaged, racially segregated communities. They urged architects, designers, and planners to reflect on their own biases and assumptions as they work to build what Jones called “the beloved community;” the importance of active, intentional listening in engaging with community residents; the critical role of the design process in bringing about change; and the value of working collaboratively across disciplines. 

Following the panel, participants broke into small groups to brainstorm ideas about how design professionals can address racial injustice in the university curriculum and in practice. 

If you missed the event, you can now watch the webcast, view our Storify of tweets & images from the evening, or read more about design for equity, including contributions from panelists Liz Ogbu and Theresa Hwang.

Thursday, April 16, 2015

Slowing Growth in Home Renovations Should Stabilize by Year’s End

by Abbe Will
Research Analyst
The healthy gains in residential remodeling activity estimated for 2014 and the first part of 2015 are expected to decelerate, but then gain a little more traction by the end of the year, according to our latest Leading Indicator of Remodeling Activity (LIRA), released today. The LIRA projects annual spending for home improvements will increase a more modest 2.9% in 2015.

One of the largest contributors to this dampening of remodeling growth in 2015 is the sluggish existing home sales activity last year. Housing turnover typically sparks significant improvement spending as new owners customize their recent purchases to fit their needs and, with sales down last year, remodeling will feel the effects this year.

Moving forward, signs of higher growth in remodeling activity include strengthening retail sales of building materials. Also, rising home equity and still favorable interest rates continue to encourage owners to reinvest in their homes.”

NOTE ON LIRA MODEL:  Beginning with the first quarter 2014 release, long-term interest rates were removed from the LIRA estimation model.  For more information on the reasons for and implications of this change, please read our blog post from April

For more information about the LIRA, including how it is calculated, visit the Joint Center website.

Friday, April 3, 2015

Challenges Ahead in Housing America’s Very Low-Income Older Adults

by Jennifer Molinsky
Research Associate
The nation’s older population has grown tremendously since the first of the baby boomers turned 50 in the mid-1990s, with the number of 50-64 year olds nearly doubling between 1990 and 2010. As the baby boomers continue to age, the population aged 65 and older is projected to soar to 73 million by 2030, an increase of 33 million in just two decades. Given a larger older population, and assuming that the current income distribution remains the same, we can expect to see an increase in the numbers of lower-income older adults; indeed, in just a decade we estimate that households 65 and over earning less than $15,000 annually will increase by 37 percent to 6.5 million. Ensuring these low-income older adults are safely and affordably housed will require a great deal of leadership, creativity, and planning, particularly in the present federal budget environment.

Currently, the majority of low-income households aged 65 and over live in housing considered “unaffordable:” fully 73 percent of those with annual incomes under $15,000, and 48 percent of those with incomes between $15,000 and $30,000, were housing cost burdened in 2013 according to the American Community Survey, paying  more than 30 percent of their income on housing. Housing-cost burdened households have less to spend on critical needs like food, healthcare, and transportation (Figure 1), and for those in their pre-retirement years, on retirement savings—which has consequences not just for quality of life today, but also for financial security in the future.

Notes: Moderately (severely) cost  burdened households spend 30–50 percent  (more than 50 percent) of income on housing costs. Lowest spending quartile is a proxy for low-income households. 
Source: JCHS tabulations of the US Bureau of Labor Statistics, 2013 Consumer Expenditure Survey.

We’re already seeing a growth in the older low-income population. The number of households aged 62 and over earning less than 50 percent of area median income (a common eligibility threshold for rental assistance programs for the “elderly”) increased by 21 percent from 2003 to 2013 to almost 4 million. At latest estimate in 2011, only about a third of this group benefits from rental assistance (HUD, 2013). Of those who do not, a substantial number face worst case housing needs – defined as living in severely inadequate units, paying more than 50 percent of their income on housing (with the repercussions of reduced spending on other necessities mentioned above), or both. According to HUD, nearly 1.5 million very low income older households had worst case housing needs in 2013 – an increase of 31 percent from 2003 to 2013.

Going forward, assuming income distributions remain similar to today, the expanding older population means millions more older renters will have very low incomes and potential housing affordability problems in the years ahead. Just to keep the share receiving federal rental assistance at its current level, the number of older renters receiving assistance would have to rise by 900,000 by 2030 – which would still leave 3-4 million income-eligible renters without assistance and on their own to find housing in the private market (Figure 2), vulnerable to worst case housing needs. On top of these concerns, even as the need for assisted housing is growing, contracts for hundreds of thousands of units of units with project-based rental assistance are set to expire over the next decade.

Sources: JCHS tabulations of US Department of Housing and Urban Development, Worst Case Needs Reports to Congress 2011, and JCHS 2013 Household Projections.

These estimates are based on current income distributions, yet current trends may reshape the income profile of older adults in the future.  Fewer of today’s workers earn pensions that have traditionally provided support for moderate-income retirees.  According to the Bureau of Labor Statistics, 35 percent of all private industry workers were covered by pensions in the early 1990s, a rate that stood at only 18 percent in 2011. Increasing numbers of American have 401(k) plans but these have not resulted in the same savings achieved through pension benefits. Meanwhile, real incomes have been falling for those in their pre-retirement years, while housing and non-housing debt have been increasing for those 50-64, likely reducing assets that can be drawn upon later in life.  In addition, the older population of the future will be more racially and ethnically diverse, reflecting shifts in the population as a whole; this may shift the income distribution for older adults downward, as African Americans and Hispanics have historically had lower incomes (as well as homeownership rates).

With rapid population growth and worrisome trends in income, debt, and savings, preserving and creating more affordable units and ensuring sufficient subsidy to meet the needs of older low-income renters requires action at all levels. At the local level, communities can encourage the production of market-rate but lower cost housing options, including accessory dwelling units, rental housing in town centers, and apartments located near safe and accessible transit (particularly important because low-income renters are less likely to own cars). Though changing local regulations to allow such development and overcoming NIMBY opposition to rental housing pose challenges, increasing affordable housing options is important not just to older adults who wish to age in their communities, but also to cost-burdened rental households of all ages and composition.

Securing the resources that will help preserve and build new assisted units and ensure the availability of rental subsidies for those at the bottom of the income scale is undoubtedly an immense challenge, particularly given that pressures on non-discretionary portions of the federal budget (including Medicare, Medicaid, and Social Security) are also growing as the population ages. Yet looking holistically at the role of affordable housing in older adults’ overall health may help make the case that safe, affordable housing creates savings to the federal budget through the healthcare system. HUD and HHS are now working together to study the benefits of coordinated health services and supportive, affordable housing in Support and Services at Home (SASH) program in Vermont; evidence from this and other studies may point to the fiscal wisdom of investing in affordable housing for older adults. 

Wednesday, March 18, 2015

What Areas of the Country Do the Most Remodeling, and Who Spends the Most?

by Elizabeth La Jeunesse
Research Analyst
Every two years, the Joint Center releases a report about the national home improvement industry. This year’s report, Emerging Trends in the Remodeling Market, includes analysis of trends at the metro area level.  Metro area analysis is important since trends often vary in diverse areas of the country, especially along dimensions such as household income, home values, and age of the housing stock. 

Our 2015 report includes estimates of home improvement activity levels for the 50 largest markets in the U.S. We estimate that the median market size was around $1.4 billion in aggregate remodeling spending by homeowners in 2013. Not surprisingly, the New York metro area was the largest market at $12.2 billion. As expected given their size, other large markets included Washington, DC ($6.7B), Los Angeles ($6.5B) and Chicago ($4.5B).

On average, just under one in three homeowners undertook one or more projects in 2013, and the average amount spent per owner was around $2,500 (or just over 3 percent of homeowner incomes). Average homeowner spending in fact ranged widely from less than $2,000 in areas such as Detroit and Las Vegas to as high as $5,000 in Boston and Washington, DC. Our interactive map illustrates the range of spending among the nation’s largest markets. As the map shows, average remodeling expenditures per owner were highest on the coasts.

One finding that surprised us, however, was that the share of homeowners undertaking projects of any amount was actually higher in interior markets of the country. For example, more than a third of homeowners undertook projects in Louisville, Milwaukee, Buffalo, Denver, Phoenix, Indianapolis, Kansas City, Pittsburgh, Oklahoma City, and Rochester. The older age of the housing stock in many of these areas is likely driving some of this higher-than-average project activity. 

By comparison, coastal areas typically saw lower shares of project activity. For example, in Boston and Washington, DC, the share of owners undertaking projects was less than a third, and in New York and Los Angeles only around one in four homeowners undertook a project. Major coastal markets in Florida (Miami, Jacksonville, and Orlando) saw even lower shares at 23 percent or less. 

Although activity rates were lower, average per-owner-spending levels were higher on the coasts, owing mainly to higher property values and incomes, which allows some households to perform more high-end projects. For example, we looked at the share of homeowners spending at least $50,000—a considerable price tag for many households. The segment of households undertaking these high-cost projects is very small, not exceeding 2 percent of all homeowners. Yet this small group of power-spenders considerably boosts average market spending in many coastal metros.

This map shows those markets with the largest share of high-end spending, including Boston, Washington DC, and New York. 

Source: Table A-5, Improving America’s Housing—Emerging Trends in the Remodeling Market, The Joint Center for Housing Studies, 2015.

For more detailed information on remodeling activity in metro areas, see Chapter 4 of our recent report.

Monday, March 9, 2015

What Does the President’s Budget Mean for Affordable Housing?

By Irene Lew
Research Assistant
In his ambitious Fiscal Year 2016 budget submission to Congress last month, President Obama requested funding increases for nearly all of HUD’s programs, with significant boosts for rental assistance and homeless assistance programs. In total, the president’s budget has proposed $49.3 billion in gross discretionary funding for HUD programs, nearly $4 billion higher than the amount that Congress enacted in FY 2015 (Figure 1).

Source: White House Office of Management and Budget; HUD

Proposed Funding Increases Prioritize Housing Affordability and Supportive Services

As HUD’s budget documents indicate, nearly three quarters (72 percent) of the requested $4 billion funding increase is dedicated to two core assisted housing programs: project-based rental assistance and housing choice vouchers (Figure 2). Together, both programs currently serve 3.6 million low-income households, according to HUD administrative data.

Source: White House Office of Management and Budget; HUD 

The president’s request of $10.8 billion for the project-based rental assistance program is 11 percent higher than the FY 2015 appropriation and would fully fund 12-month renewals of all contracts and contract amendments. A complete calendar year of funding would eliminate the uncertainty of funding for owners with contracts that received less than 12 months of funding in FY 2015 due to the shift of the program from a fiscal year to a calendar year funding cycle.

The budget has also proposed a 9 percent increase for HUD’s largest rental subsidy program, housing choice vouchers, which had been hit hard by sequestration cuts in 2013. The increased funding request would renew all existing vouchers for 2.2 million of the country’s most vulnerable households and restore 67,000 vouchers that were lost to sequestration.  The voucher program assists households with the lowest incomes who would have difficulty paying for housing without a subsidy: 68 percent of voucher households have annual incomes of less than $15,000. If the president’s requested appropriation of $21.1 billion for the housing voucher program is enacted, the program would serve an additional 200,000 households (for a total of 2.4 million households).  However, as market rents rise and renter incomes continue to fall, the growth of the voucher program has not kept up with the growing unmet need for rental subsidies over the past decade. Between 2001 and 2013, the share of very low-income renter households without assistance who paid more than half of their income for rent, lived in severely inadequate housing or both (those with worst case needs) jumped by 53.9 percent, according to a preview of HUD’s 2015 Worst Case Needs Report cited in the agency’s budget documents. Yet, the voucher program expanded by just 11.6 percent over the same period, addressing only a fraction of the growth in very low-income renters with worst case needs.

Building on successful federal efforts to reduce homelessness among veterans using housing vouchers, about 45 percent of the restored vouchers (30,000) will be targeted toward additional groups such as homeless families and Native American households, as well as survivors of domestic and dating violence, and youth aging out of foster care. Unlike previous years, there won’t be any new VASH vouchers for homeless veterans; vouchers for this group will be rolled into the total pool of new vouchers. The President’s budget also includes a 16 percent increase in homeless assistance grants from the FY 2015 enacted level, which would help fund more than 25,000 new units of permanent supportive housing for the chronically homeless. Since the 2010 release of the first federal strategic plan to end homelessness, appropriations for homeless assistance have increased by 14 percent.

In good news for many affordable housing advocates, the FY 2016 budget also estimates that $120 million in mandatory funding will finally be provided for the National Housing Trust Fund, the first new housing production program targeted to extremely low-income families since the launch of the Section 8 program in 1974. The Housing Trust Fund was signed into law in 2008 with the directive that it would be financed with contributions from the GSEs. However, before Fannie Mae and Freddie Mac could begin paying into the Trust Fund, they were hit hard by the financial crisis and were placed into conservatorship by FHFA in 2008; FHFA also suspended GSE contributions to the Trust Fund, stalling its implementation. In December 2014, after determining that the financial situation of the GSEs had stabilized, FHFA director Mel Watt finally lifted this suspension and directed Fannie Mae and Freddie Mac to set aside funds for the Trust Fund starting January 1, 2015.

Additional budget highlights for FY 2016 include the proposed expansion of existing HUD programs focused on improving the economic self-sufficiency of tenants with vouchers and those in public housing, including expansion of the Moving to Work demonstration program, an additional $10 million for the Family Self-Sufficiency program, and an $85-million increase in funding for Jobs-Plus. The proposed funding increase for Jobs-Plus will be used to extend the program to Native American households. This year’s budget also outlines several new pilots, including a $300 million mandatory appropriation for a new local housing policy grants program and a rental assistance demonstration program in consultation with the Department of Health and Human Services (HHS) that aims to help older tenants in Section 202 housing avoid institutional care by integrating health and wellness into a housing-and-supportive-services model. 

Proposed Increases for FY 2016 Do Not Reverse Substantial Cuts to Other HUD Programs Over Last Decade  

With a continued emphasis on demand-side subsidies such as housing vouchers, federal funding for necessary repairs to public housing—the nation’s oldest subsidized housing program—and other HUD programs such as Section 202, HOME, and the Community Development Block Grant (CDBG) is still well below typical levels a decade ago (Figure 3)

Source: White House Office of Management and Budget; HUD 

The $455 million request for the Section 202 program is up 8 percent from the FY 2015 enacted level but includes no new construction funds and does not reverse a $327 million reduction in appropriations over the past decade. Furthermore, the requested FY 2016 appropriation for HOME is 18 percent higher than the previous year’s appropriation, but does not restore the 53 percent decline in funding between FY 2005 and FY 2015. 

The CDBG program was the only HUD program that did not see any funding increases for FY 2016, with the president’s budget proposing a 7-percent reduction in funding for the CDBG program from $3 billion in FY 2015 to $2.8 billion in FY 2016. This proposed reduction comes on the heels of a 37-percent decline in appropriations for the CDBG program over the past decade. However, part of the proposed decrease for the CDBG program in FY 2016 also reflects federal efforts to overhaul and modernize the 40-year-old program, including improved targeting of grants to the neediest communities. The CDBG and HOME programs will be part of a new HUD and Department of Health and Human Services (HHS) initiative proposed in the FY 2016 budget that enables states and localities to streamline and combine their CDBG, HOME, and HHS block grants into one flexible fund.

Meanwhile, in spite of a proposed $95 million increase (5 percent) between FY 2015 and FY 2016 for the public housing capital program, the entire increase in funding would be used to expand the Jobs-Plus program and would not mitigate a 28-percent decline in federal appropriations for the public housing capital repairs fund over the past decade. However, the proposed expansion of the Rental Assistance Demonstration (RAD) in FY 2016 would continue to leverage private investment to help address the estimated $26 billion backlog in necessary repairs for public housing by converting public housing units to long-term project-based section 8 contracts. The budget has proposed eliminating the current RAD cap of 185,000 conversions and has requested $50 million to finance the conversion of another 25,000 public housing units.