Thursday, April 30, 2015

Democracy and the Challenge of Affordability: The Case of Housing

by Quinton Mayne
Harvard Kennedy School
This post kicks off a month-long series that our colleagues at the Ash Center for Democratic Governance and Innovation are doing on affordable housing as a challenge to the health of American democracy, and in particular local democracy in the United States. The series, edited by Harvard Kennedy School Assistant Professor Quinton Mayne, is part of the Ash Center’s Challenges to Democracy series, a two-year public dialogue inviting leaders in thought and practice to name our greatest challenges and explore promising solutions.

Over the past two years, the Ash Center has welcomed leading experts from across the country to debate the structural weaknesses preventing the United States from achieving its democratic potential. Democracy demands an equal right of participation; but as the Challenges to Democracy public dialogue series has shown, the formal design and practical workings of America’s political institutions are preventing the full realization of participatory equality. Some of the key challenges covered in our series to date include the erosion of voting rights and access, the decline of social movements, and the integration of immigrants into political life.

In addition to metrics of participation related to voice and input, democracy can also be judged by its outputs. When public officials produce policies responsive to the needs and demands of citizens, democracy would appear to be in good health. But are elected politicians enacting laws and designing programs in line with popular preferences? Answering this question from the point of view of affordability, there is good reason to question the health of American democracy.

Long before the Great Recession struck in 2008, affordability posed a major problem for the American middle-class dream. The rising costs of health care and college education have made the headlines for many years now. Energy and gasoline prices also cycle in and out of the news, and in the past half-decade or so the cost of child care has grown in importance. The devastating effects of the recession on individuals and families across the nation, coupled with the organized groups and movements that emerged and strengthened in defense of those affected by the recession, brought a much-needed urgency to the issue of affordability.

Despite this heightened attention and the public policies and programs it has produced, democratically elected officials in city halls, state capitols, and the corridors of power in Washington, D.C. are struggling to systematically respond to the challenge of affordability.

Nowhere is the democratic challenge of affordability more obvious than in the case of housing. According to a 2014 report issued by Harvard’s Joint Center for Housing Studies, 35 percent of U.S. households in 2012 were in housing that they could not afford. In other words, just over one in every three American households was paying in excess of 30 percent of their income in housing alone. If we break down this statistic and look just at renters, more than 50 percent are cost-burdened. The picture becomes even more alarming when we train our gaze on Americans with lower levels of income. Among households with annual incomes of less than $15,000 – which roughly equates to working year-round at the federal minimum wage – more than four out of every fifth household spent 30 percent or more of its income on housing, and almost 70 percent spent more than half their income on housing.

These are shocking statistics. They are also politically troubling ones because they suggest that large numbers of Americans with pressing need are being underserved by the democratic process. Governments across the U.S. may not be able to eradicate housing unaffordability, but they certainly have the tools and means to reduce it greatly below current levels. That they have not been able to do so to date poses a major democratic challenge, and one that we will be looking at in this series of seven posts on the Challenges to Democracy blog.

Over the next month we will be publishing commentaries and thought pieces from authors that we have invited to examine the issue of housing affordability principally through the lens of local government. As a complex issue shaped by a variety of social and economic forces, the problem of affordable housing cannot be addressed by cities alone. State and federal policy is also fundamentally important. That being said, many cities have fiscal and legislative resources at their disposal that can be used to improve the current situation.

Some of these municipal resources can increase residents’ access to affordable housing through indirect means. This includes investments in public transit and the regulation of local labor markets. Other resources are more direct: cities can increase the supply of affordable housing through financial support and direction provision. Crucially, cities also enjoy far-reaching land-use and zoning powers that can profoundly affect Americans’ access to affordable housing. In the blog series we will be looking at how and why city governments are succeeding and failing in using their resources and powers to tackle the widespread burden of housing costs.

The opening blog posts focus on the problem at hand. In the first post, Adam Tanaka, a doctoral student in urban planning at Harvard’s Graduate School of Design, interviews officials overseeing a newly created innovation lab that aims to tackle the problem of housing affordability in the City of Boston in the coming years. The second post by Margaret Scott, a Master in Urban Planning candidate at the Graduate School of Design, considers how housing affordability has been suburbanized in recent years and the difficulties that this new geography poses for those hoping for government action.

The next two blogs focus squarely on the real demands that responding to the challenge of housing affordability places on politicians and the public sector. Given the magnitude of the problem, achieving an adequate supply of affordable housing requires local politicians with bold visions for the future who are able to build and manage broad coalitions of economic and social actors. The third post, also from Adam Tanaka, addresses this question of the pressing need for coalition building and governmental ambition by considering the affordable housing plans recently announced by Mayor de Blasio of New York City. As in many other advanced industrial democracies, public housing authorities have long served as important vehicles for local governments in the U.S. to meet affordable housing need. In our fourth post, Margaret Scott reflects on whether public housing could hold the key to unlocking supply to address the current housing affordability challenge.

The final posts turn to the role that grassroots activism plays in alleviating the burden of unaffordable housing. Focused on a non-profit that has operated in Boston for four decades, our fifth post by Adam Tanaka looks at the power of community organizations not only to place demands on elected politicians to get more affordable housing but also to serve as partners with the public sector to plan and deliver affordable housing. Our final post is by two documentary filmmakers, Andrew Padilla and King Williams, who were featured speakers in our November 2014 panel discussion, The Politics of Displacement in the American City. In their post, Padilla and Williams reflect on the role that they and other filmmakers have played in raising awareness of the problem of housing affordability and galvanizing support in favor of more effective government action.

As the blog series will show, the challenge of generating an adequate stock of affordable housing in the United States does not appear to be wanting for policy prescriptions or technical solutions. The problem instead appears to lie at the feet of elected politicians. That so many Americans are today burdened by the cost of housing (as well as the cost of child care, health care, and college education) is attributable to policy choices made by governments over many years. This is not to downplay the difficulty of tackling the problem of affordability either in the past or the present. As our blog posts confirm, the task at hand is a demanding one: elected officials must attend to a complex and changing constellation of forces and actors, and they cannot act alone. That being said, the challenge of responding to the clear and present need for affordability remains fundamentally a democratic one.

Read more posts in the Challenges to Democracy series.

Quinton Mayne is Assistant Professor of Public Policy in the Kennedy School of Government at Harvard University and a member of the Joint Center for Housing Studies Faculty Committee. His research and teaching interests lie at the intersection of comparative and urban politics.

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.