Thursday, August 21, 2014

Older Homeowners Want to Age in Place but Aren't Focused on Accessibility

by Abbe Will
Research Analyst
With many baby boomers reaching retirement age this decade, a major shift in the age distribution of U.S. households is underway. According to recent Joint Center projections, the number of householders age 65 and over is set to increase by 9 million from 2010 to 2020. Many of these older adults will choose to remain in their current homes and “age in place” while others will look to move into homes that are better suited to their changing needs. New survey data from The Demand Institute—a joint venture between The Conference Board and Nielsen—sheds light on homeowner attitudes toward aging in place and accessibility needs, including major motivations for upcoming remodeling projects. This extensive survey, fielded in the summer of 2013, asked households about their housing attitudes, household finances, major household purchases, community and commuting, future moving intentions, housing and neighborhood needs, and home improvement plans and motivations.

A preliminary analysis of the Demand Institute’s consumer housing survey data indicates that older homeowners do not consider aging in place and home accessibility as going hand in hand. Although the vast majority of homeowners age 50 and over report that being able stay in their home as they age is very important (88 percent ranked this statement 8, 9, or 10 on a scale of 1 to 10, where 10 is extremely important), less than 35 percent of older owners place the same level of importance on having a home that is accessible to persons with special health needs or disabilities.

Indeed, 7 out of 10 older homeowners do not have any plans to move in the future, meaning they intend to age in place. But even among those who do plan to move at some time in their later years, only 36 percent cite accessibility as an important characteristic of their next home. This is a meaningful statistic given that the 2011 American Housing Survey estimates that almost 30 percent of older homeowners have a disability or significant difficulties doing typical activities around the home without assistance, which would indicate some need for home accessibility features. The share of homeowners with disability or impairments rises dramatically with age to 46.4 percent of homeowners age 70 or older.

Unfortunately, older homeowners are largely not focused on accessibility needs as part of aging in place. While 45 percent of older owners report being somewhat or very likely to do a major remodeling project (costing $2,000 or more) on their primary home in the next three years, few of them are likely to list “accommodating health needs” or “making the home easier to live in as they age” as major reasons for their next renovations. Only 8.0 percent of homeowners age 50 and over who plan to do a major remodeling project in the next three years plan to do so to accommodate the health needs of someone in the household, and only 15.3 percent want to renovate specifically to make their home easier to live in as they age. Even those older owners reporting that accessibility is important to them are not much more likely to cite accessibility (16.0 percent) and aging in place (23.4 percent) as major reasons for upcoming remodels.

Notes: Major renovations are defined here as costing $2,000 or more.  Homeowners placing high importance on accessibility ranked having a home that is accessible for people with special health needs or disabilities as 8, 9, or 10 on a scale of 1 to 10 where 10 is “extremely important.” Source: JCHS tabulations of the Demand Institute’s 2013 consumer housing survey data.

Certainly as the number and share of older households increase significantly in the coming decades, the demand for homes with accessibility features for safely aging in place will also grow substantially. Yet, given the attitudes of today’s older homeowners, the remodeling industry will need to bridge a significant gap between owners wanting to age in place and being able to do so safely with appropriate accessibility features.

On Tuesday, September 2, the Harvard Joint Center for Housing Studies and AARP Foundation will release a new report, Housing America's Older Adults—Meeting the Needs of An Aging Population, which will look at these and other issues affecting America's aging population.

Join us for the live webcast at 11:00 a.m. (Eastern) on September 2, and follow the conversation on Twitter with #housing50.

Thursday, August 14, 2014

What is Affordable Housing & What Does it Mean to Preserve It? (Five New Case Studies)

by Alexander von Hoffman
Senior Research Fellow
Even people in the housing field are not always sure what affordable housing is, and what it means to preserve it. Generally speaking, “affordable housing” connotes any privately owned dwellings that low-income people can afford to rent, and is distinct from public housing owned by government agencies.  Most often, however, people use the term to signify properties whose owners received government subsidies to help reduce the rents.

To “preserve” affordable housing means to save financially or physically endangered properties, usually by renovating and refinancing them, so that low-income tenants can still live in them. Starting in the 1960s, the federal government implemented a series of programs that gave private developers various incentives to develop and run low-income rental housing.  But these incentives – whether low-interest mortgages, rent supplements, or tax credits – all have time limits, and each year since the mid-1980s tens of thousands of them have expired, eliminating a large portion of the low-income housing stock. In addition, many of these properties have suffered the ravages of time, and required a large injection of capital to keep them habitable.

But definitions are a bit dry.  It’s more interesting to come face to face with actual projects and try to understand how they came to be developed and preserved.  I recently had the opportunity to investigate local efforts by nonprofit organizations to preserve affordable rental housing in the cities of ScrantonAshevilleChicago, Roseville, MN, and Boston.

The first question that occurred to me was: what do these places look like?  Most of us have a sense of public housing – usually a negative image of a dilapidated high-rise in an inner-city neighborhood – but few can picture subsidized housing for low-income people.

In fact, affordable rental housing, both subsidized and unsubsidized, comes in a wide variety of types, locations, and conditions.  Yes, such housing can be found in poor, inner-city neighborhoods, but unlike public housing, much of it is also located in downtowns, middle-class neighborhoods, and suburbs. Most subsidized rental properties exist in multifamily structures, but they may take the form of traditional urban apartment buildings, modern-looking low-rise suburban-style complexes, or even elegant former hotels.

Franklin Park Apartments, Boston, MA

The origins of affordable housing projects, I discovered, vary as well.  Some were existing privately owned rental properties that were converted with the help of government subsidies. In Boston, for example, in the 1970s, an idealistic African American city planner began restoring old apartment buildings to halt the physical deterioration of the minority neighborhoods. In Chicago, community activists, alarmed at the disappearance of single-room occupancy hotels, acquired and restored a decaying apartment building to create healthy homes for those who would otherwise live on the street.

In other cases, a private developer conceived and built low-income rental housing from scratch. In 1973 a California company developed Skyview Park, a compound of one- and two-story brick buildings containing 188 one- to three-bedroom apartments, in Scranton, Pennsylvania. The developer used a government mortgage subsidy for moderate-income residences and later acquired project-based rent subsidies, which allowed very low-income tenants to live there.

Skyview Park, Scranton, PA

Contrary to stereotypes of the poor, the tenants of affordable rental housing are a diverse lot.  Often they reflect the character of the low-income population of the area in which their housing development is located. Hence, if many poor immigrants, homeless, or elderly live in an area, they will be heavily represented in the local affordable housing population.  Asheville, North Carolina, is a popular retirement community, and a large portion of the tenants of Battery Park Apartments (an elderly housing project located in the heart of the city) are poor people who, like many other city residents, came to Asheville to retire.

In contrast, some affordable housing projects function as entry points for low-income newcomers to an area. In Scranton, for instance, some 60 percent of the poor are white, but, due to a recent surge of Hispanic migrants to the area, some 70 percent of the residents of the Skyview Park development are Puerto Rican or from other Hispanic regions. The housing development has also attracted Bhutanese immigrants from Nepal, who have only just begun to arrive in Pennsylvania.

Different circumstances dictate when and why owners will go about preserving properties for low-income tenants.  Sometimes the buildings have fallen into such miserable condition that they become imperiled. In the town of Roseville, a suburb of Minneapolis-St. Paul, the aging owner neglected a modest apartment complex built years before, and the deteriorating property attracted abandoned cars and illicit activities.  A prominent Minneapolis nonprofit housing organization, Aeon, bought the property, restored its 120 small apartments, and for good measure added a new building with fifty family-size units.

Sienna Green Apartments, Roseville, MN

The situation became far worse at Scranton’s Skyview Park, which in the 1990s earned a fearsome reputation for drug dealing, shootings, and stabbings, not to mention apartments with gaping holes in the wall. When National Housing Trust/Enterprise Preservation Corporation and Evergreen Partners finished renovating Skyview Park in 2009, they had not only preserved it but they had also made it a safe place to live.

Other circumstances are not as dire but nonetheless urgent.  In 2006 Mercy Housing Lakefront in Chicago acquired Malden Arms Apartments as part of a merger with its nonprofit owner, only to discover that the building was undercapitalized and under-maintained.  Sky-high utility bills resulting from old and inefficient water and heating systems were financially bleeding the Malden Arms’ balance sheet. In addition, the property’s federal low-income housing tax credits were due to expire.  Although some urged a sale of the property, MHL successfully sought ways to refinance and renovate the Malden Arms.

Malden Arms Apartments, Chicago, IL

Fortunately for these projects, state and local government officials strongly supported the cause of preserving affordable housing.  State housing finance agency officials were crucial because they allocated federal low-income housing tax credits, which typically provide the bulk of underwriting for low-income housing projects.  Because officials wanted to see these properties maintained for low-income tenants, they advised the developers about ways they might tailor their proposals to meet state criteria for tax credits.

In Pennsylvania, state housing officials suggested that the out-of-town developers involve a local civic leader who supported housing and whose word city officials trusted.  In the case of New Franklin Park Apartments in Boston, housing finance officials enlisted the developer, The Community Builders (TCB), to acquire and preserve the project.

Battery Park Apartments, Asheville, NC
Once funding and financing are secured, however, actual renovations to low-income housing can be almost as complicated as garnering support. In Asheville, National Church Residences (NCR) took over a building fully occupied by elderly tenants, who were extremely anxious about the renovation plans of a new landlord. In addition to holding frequent meetings with residents and distributing a reassuring informational flyer, NCR and its construction company minimized the disruption by moving tenants to furnished hospitality units while their apartments were being remodeled.  At New Franklin Park Apartments in Boston, TCB faced an even more complicated problem of rehabilitating apartments (and temporarily moving their tenants) in a scattered property consisting of fifteen buildings at a dozen sites.

Some groups added another dimension to their renovation projects by using them as an opportunity to implement sustainable development.  In Roseville, for example, Aeon worked with experts from the University of Minnesota to install energy-efficient appliances, effective ventilation systems, and a storm water management system that created an attractive landscape of plantings and pools that also filtered rain water.

At a time of skyrocketing housing costs, preservation of affordable housing provides low-income people with a reasonably priced place to live, and at less expense than building new dwellings.  The idea of affordable housing preservation seems relatively simple.  I discovered in the course of my research, however, that the actual projects, people, and processes involved in carrying it out are intriguingly complex and varied.  It is my hope that this work will inspire others to take a closer look at this important part of America’s social safety net.

Thursday, August 7, 2014

Selection, Matching, and the Rules of the Game: Landlords and the Geographic Sorting of Low-Income Renters

by Eva Rosen
Meyer Fellow
In recent years, federal housing policy has shifted toward a system that is increasingly reliant on tenant-based subsidies. Of the five million households across the country that federal housing programs now assist, over half are housed in privately owned properties. The Housing Choice Voucher (HCV) program has been expanded to house 2.2 million low-income households nationwide, with the intent to provide opportunities for poor families to escape disadvantaged neighborhoods and access desirable ones. But even though a voucher can be used in any neighborhood with an affordable unit, recent research shows that voucher holders are concentrating in neighborhoods with moderate to high poverty rates, and black voucher holders live in poorer and more segregated neighborhoods than white voucher holders. This raises an important puzzle: why don’t voucher holders move to better neighborhoods when they are provided the opportunity to do so?

In order to answer this question, previous research has considered explanations that focus on the residential choices of the voucher holders themselves, such as housing preferences, social networks, and perceived discrimination. Research has also shown how policy shapes the supply and distribution of affordable housing. For example, voucher holders are more likely to live in distressed areas when this is where affordable units are concentrated.

However, we know surprisingly little about an important intervening force related to both supply and demand: the landlord. My new working paper proposes that landlords are a missing piece of the puzzle. Recent work has revealed that landlords affect residential instability and the reproduction of poverty through eviction. But how do landlord practices serve to sort residents into homes across urban areas? Landlords function as gatekeepers, affecting where people end up on a simple and fundamental level. Every renter who wants a home must go through a landlord.

I spent a year in Baltimore talking to and observing landlords to better understand their role in sorting low-income renters across the modern metropolis. I draw on ethnographic observation and in-depth interviews with twenty landlords, and sixty-two residents in Baltimore, over a fifteen month period.

Selection, Triage, and Retention
Since 1992, the number of public housing units in Baltimore has significantly diminished, while the number of vouchers has nearly doubled. Baltimore has one of the highest rates of voucher use in the country, where it makes up almost ten percent of the rental market. The advantages of the voucher program in recent years have prompted landlords to strategically orient their businesses towards attracting voucher holders. I find that these strategies are linked to residential sorting patterns through three steps:
  1. Selection, where landlords favor certain types of tenants, for example voucher holders over market-rate tenants;
  2. A matching process, where landlords cherry-pick certain types of tenants for certain types of units;
  3. The selective retention of tenants who do not have the means to leave. 
These decisions can have an important impact on which voucher holders end up in which properties, and how long they stay.

There’s a tenant for every house
Landlords have a range of properties across different types of neighborhoods, some of which are distinctly harder to keep occupied. One landlord, Oscar, highlights the key to his strategy for finding tenants for these hard-to-rent units:

"The thing is, you don’t need a lot of help when it’s a good area. But in the bad area, that’s when it’s hard. The key is, you got to understand that everyone needs somewhere to live. There’s a tenant for every house. You’ve just got to find the right tenant."
Finding the right tenant for a property means matching tenant characteristics – such as age, family size, race, voucher status, and financial risk – to property characteristics – such as size, condition, and location. For example, it can be can be hard to find and attract market tenants who pay their rent reliably in disadvantaged neighborhoods. This provides an incentive for landlords to find voucher tenants to occupy units in these areas.

Together, these tactics of selection, matching and retention form a powerful instrument that sorts and at times even traps voucher holders where they can be most profitable to landlords. These happen to be the very neighborhoods that policymakers would like to provide them the opportunity to leave. The voucher case demonstrates the ways in which landlord practices can intervene to pervert the process of residential choice, revealing the limits of a market-based solution to a complicated and entrenched social problem.

Tuesday, August 5, 2014

New Book Identifies Lessons Learned from the Housing Crisis

by Jennifer Molinsky
Research Associate
Though the national homeownership rate rose to its highest level ever in 2005, millions of Americans saw their hopes of building wealth through homeownership dashed in the foreclosure crisis that followed, at enormous financial, psychological, and social costs. With tighter credit in the wake of the crisis, purchasing a home today can be very difficult, particularly for those with limited resources. Despite the challenges and risks, however, Americans overwhelmingly still aspire to homeownership, and many advocates continue to view it as an important wealth-building strategy for low-income and minority households.

A new Joint Center book, published by the Brookings Institution Press, Homeownership Built to Last: Balancing Affordability, Access, and Risk after the Housing Crisis, reexamines the goals of homeownership and explores lessons learned from the housing crisis. The book features contributions from some of the country’s preeminent housing, real estate, and finance experts and scholars, and focuses on a variety of themes, including homeownership as a policy goal in the wake of the housing crisis, supporting the home buying process for low-income households, balancing affordability and access to homeownership while mitigating risks, the government’s evolving role in housing finance, and sustaining homeownership particularly for owners who encounter distress.  

Some of the book’s key findings include:

  • Those who managed to sustain homeownership through the worst housing market crash since the Great Depression experienced significant gains in household wealth, while most of those who did not keep their homes did not end up financially worse off than those who rented through this period. Importantly, low-income and minority households were no less likely to benefit from sustained homeownership.  (Chapter 2; Christopher Herbert, Daniel McCue, and Rocio Sanchez-Moyano)

  • Americans continue to have strong aspirations to own a home for both financial and non-financial reasons, and strategies are needed to ensure people make good decisions about tenure and financing in the face of “optimism biases” that may influence financial decisions. (Chapter 4; Carolina Reid)

  • It is possible to responsibly extend credit to a significant percentage of targeted borrowers without undue risk by allowing different risk factors to offset each other.  However, tools such as an automated underwriting scorecard, while useful, are not a panacea, and other methods for preparing and supporting borrowers at higher risk of default are also needed.  (Chapter 7; Marsha Courchane, Leonard Keifer, and Peter Zorn)

  • State housing finance agencies (HFAs) provide a prominent example of successful specialized lending to higher-risk homebuyers, utilizing a combination of counseling, careful underwriting, and diligent servicing. Still, there are a variety of questions about whether this approach can be scaled to a national level. (Chapter 8; Stephanie Moulton and Roberto Quercia)

Even with all of the implied hardships, owning a home is still a classic path to building substantial financial and social benefits. Homeownership Built to Last is an important compilation of research, showcasing solutions and strategies to create an affordable, fair, and sustainable future, particularly for the low-income and minority population in the United States.