Wednesday, August 28, 2013

Crossing the Threshold: Problems and Prospects for Accessible Housing Design

by Wanda Katja Liebermann
Meyer Fellow
America is at the confluence of two opposing demographic tides. Land use law scholar Daniel Mandelker has called the movement of people with disabilities out of state institutions into communities, in the last few decades, “one of the great migrations in recent history.” At the same time, aging baby boomers, many of whom are gradually becoming disabled in housing inadequate to their changing needs, portend a national “forced migration” in the reverse direction—into nursing homes and retirement enclaves. 

As I write in my recent working paper, our aging population is increasingly the focus of new planning and policy initiatives. Their unprecedented numbers—by 2030 the population of people 65 and over will top 20 percent—and political influence create new concerns as well as opportunities to rethink the physical, social, and legal landscape of housing, infrastructure, and service provision. Because people are much more likely to develop physical and mental disabilities as they age, the visibility of the boomer generation is helping to draw attention to the fact that, according to the 2010 National Council on Disability report, 35 million households in the US in 2007 had one or more people with some kind of disability, representing 32 percent of all American households. Because elderly and disabled people share a number of these needs, concerns long considered the marginalized province of the disabled are expanding. 

Both the disabled and elderly overwhelmingly want to live in homes in “mainstream” neighborhoods, but the ability to participate in the community depends on how well the physical environment can accommodate them. A number of legal protections developed in the last few decades have shaped the possibilities for that. The most comprehensive, the Americans with Disabilities Act (ADA), covers primarily public accommodations, leaving the bulk of housing unregulated. As AARP has shown, most people with disabilities, including older adults, live in private single-family residences, the largest sector of the housing market. Yet except for a small amount of federally-funded units, single-family housing is not covered by disabled access regulations. This creates a big gap between the supply and demand for accessible housing of various kinds. 

The left shows a metal ramp kit retrofitted to a public building entrance—an example of unintegrated thinking about access. The right is an ADA-compliant hotel room bathroom, featuring the standard “beige melamine” of mass manufactured accessible components.

Partly because it is not regulated by the ADA, private single-family housing is an area where states and local municipalities are experimenting with policy and design approaches to create more accessible options. Without building code prescriptions for specific access requirements, programs based on ideas like visitability and universal design are cropping up around the country. Universal design is especially appealing because its approach differs from ADA-based building codes by not singling out the disabled in design but by making better functioning spaces and objects through a broader reconsideration of good design practice—“design for all.” A classic example of this is the curb-ramp, originally developed for wheelchairs, which benefits parents with strollers, travelers with luggage and delivery people. Local initiatives are becoming laboratories for developing strategies with broader application.

The curb ramp is considered a classic example of universal design: developed for wheelchairs but so practical for many other uses that it seems incredible that it wasn’t thought of earlier. 

While planners and policy makers are recognizing the important role that housing, including the private single-family home, plays in public health, homebuilders have been much slower to adopt accessibility. The history of bad design for disability, among other factors, has meant that developers and homebuyers don’t yet see the benefits of accessible features, like a no-step entry. The common belief is that accessible design is ugly, diminishes the visual appeal of homes, and is only targeted at a small, specialized segment of the market. Nevertheless, some homebuilders are recognizing the looming demand for “aging in place” and “flexible” residential design. Eskaton Livable Design, one of the most ambitious of the commercial projects, is a third-party certification system, similar to LEED (Leadership in Energy and Environment Design) for sustainable design, which packages accessible features as part of an overall practical and aesthetically appealing design. 

On the left is the Livable Design model home, built in Roseville, California, developed by Eskaton to accommodate a range of abilities associated with multi-generational households. On the right sits Mr. Blundell, who commissioned this residence built with the LifeMark certification system, developed by the New Zealand government to create new access standards for the national housing market. 

There are still a number of obstacles to widespread acceptance of accessible design in housing. The current political climate makes consumer demand central to both regulatory and market reform. Yet, consumer resistance persists because of the negative perception of accessible design related to the continuing stigmatization of disability—a mutually reinforcing dynamic. While more creative and flexible approaches to improving the accessibility of housing may appeal to both homebuilders and designers, their very open-endedness may pose difficulties for implementation at a wider scale. 

And indeed, as some of the commercial initiatives evolve, they show signs of requiring similar levels of compliance with prescribed standards for certification. Real change, including the capacity to deal with the complexities of interpreting and evaluating more variable design solutions, will require a new mindset. Public officials, architects, builders, and consumers need to develop a more critical understanding of design and accessibility, away from the compliance-only approach. 

Wednesday, August 21, 2013

Despite Upswing in City Population Growth Rates, Suburbs Still Outpace Cities in Numerical Growth

by George Masnick
The Census Bureau recently released 2012 population estimates for cities and towns to complement the 2012 population estimates for metropolitan areas released in March.  With these two sets o f data it is possible to examine the split between primary city and suburban population growth trends.  My favorite blogger about census data, Bill Frey of the Brookings Institution, quickly released a commentary on these new data with the lead sentences: “Big cities could be making a growth comeback after a rocky decade. Their growth rates are rising and, for the second year in a row, they are growing faster than their surrounding suburbs.” 

He goes on to note that: “Among the 51 metropolitan areas with more than one million residents, 24 saw their cities grow faster than their suburbs from 2011 to 2012. That was true of just 8 metro areas from 2000 to 2010. Metropolitan areas exhibiting the largest city growth advantages included Atlanta, Charlotte, Denver, and Washington, D.C.”

Frey based his analysis entirely on growth rates, but it is the growth numbers that are more relevant for understanding city versus suburban housing demand.  When population growth numbers are examined, only 12 metros had greater numerical growth in the cities versus in their suburbs. Only seven metros on Frey’s list of 24 cities with higher growth rates than their suburbs also had higher numerical growth (Austin, Columbus, Louisville, Nashville, New Orleans, New York and San Diego).  Cumulatively, overall suburban population growth in the nation’s 51 largest metro areas outstripped overall primary city growth for 2011-2012 by a ratio of almost 2:1 (Table 1).  Atlanta, Charlotte, Denver, and Washington, DC, the four metro areas Frey singled out for their large city growth advantage, had suburban growth numbers that exceeded city growth numbers in 2011-2012.  (Click table to enlarge.)

** Abbreviated name.  Primary cities are defined as the metropolitan area’s largest city and up to two additional cities with populations exceeding 100,000.

Nor are the places where cities have a numerical growth advantage necessarily trending to increase that advantage. Of the 12 metros where cities had more absolute growth in 2010-11, six didn't sustain that advantage in 2011-12, and four saw a decline in the advantage.  Only two metros had city growth advantages that increased in 2011-2012 (data not shown).

The key to explaining the differences between growth rates and growth numbers, of course, is the fact that for most large metro areas the suburbs have more people than the cities. Of the nation’s 51 largest metro areas, only five had greater primary city populations in 2012.  Three are sprawling metros located in the South and West (Austin, San Antonio and Jacksonville), and the remaining two in this category butt up against other metros and geological barriers to suburban growth (San Jose and Virginia Beach).  The vast majority of suburbs contain more population than primary cities, with Atlanta having more than 11 times as many people living in the suburbs; Hartford, Orlando, Providence, and St. Louis around eight times as many, and Washington, DC over 6 times.  Percentage rates of growth calculated on such disparate population bases are really not comparable.

Primary city population growth has been reinforced in recent years by the aging of the echo boom into the young adult population, because young adults often move to cities to go to college or to work.  Large gains since 2005 in the 18-34 age group have helped turn city growth rates positive in many cases.  There were 3.8 million more 18-34 year olds in 2011 than there were in 2005.   Young adults who move to primary cities of large metros have made the 18-34 age group the largest of the three age groups plotted in Figure 1.  In the suburbs of these metros, the 55+ age group is the largest. 

Source: 2010 Decennial Census.  For a list of metro areas see Table 1.

There are three main demographic drivers of population change in the suburbs of large metropolitan areas.  First, and most important, is the aging of the suburban population. An aging population creates two pressures for population growth to slow.  The children of these households are themselves becoming adults, fleeing the nest and often heading for the city or to places outside of the 51 largest metro areas.  As these suburban households age, deaths also increase and births decrease. 

The second driver of suburban population growth is the housing turnover of aging baby boomers.  Household dissolution from death or divorce could create opportunities to boost population growth from younger and growing households who replace them. Life cycle migration out of the suburbs of large metro areas by smaller baby boomer households as they enter the empty-nest stage or retire from the labor force does the same.  However, the Great Recession and its slow recovery has dampened housing turnover in recent years through a variety of mechanisms.  Among the most salient of these are high unemployment and slow wage growth; owners who would like to sell but are underwater with their mortgages; tight mortgage lending by banks; more people working past age 65; loss of home equity wealth that was counted on to partly fund retirement plans; and lower immigration levels reducing housing demand.

The third driver of population growth in the suburbs has historically been new housing construction that attracts in-migrants.  Again, new construction during the Great Recession and its slow recovery has been at historic lows, and suburban growth has slowed as a consequence. 

Looking forward, the aging of the baby boom will continue to dampen population growth in the suburbs.  Most baby boomer households will simply age in place and decline in size. Over the next two decades, some housing that is freed up by household dissolutions by cohorts born before 1945 and by the oldest boomers, or by housing released by these cohorts who do retire to other places, will help mitigate population loss in the suburbs because those buying their houses are likely to be younger than the sellers and have larger household sizes.  But the greatest opportunities for housing turnover in the suburbs will not take place until baby boomer households dissolve in significant numbers beginning in 2030.

During the next decade, some of the factors that have depressed housing turnover in the suburbs in recent years should run their course.  New housing construction will be needed to accommodate adult population growth from aging echo boomers, and possibly the next wave of immigrants. This should largely take place outside of primary cities - where land is more readily available. 

While I do concur with Frey’s point that large city population growth is a welcome positive for their health and vitality, I also agree with his suggestion that a rebounding housing market could lure echo boomers, immigrants, and retirees out of large cities in the future.  While suburban growth rates will never approach the levels experienced in their earlier years, the suburbs should continue to grow in population now and well into the future.

Wednesday, August 14, 2013

Beyond Energy Efficiency: The Future of Sustainability in the Housing Market

by Kermit Baker
Director, Remodeling
Futures Program
For the past 40 years, since the OPEC oil embargo in the early 1970s dramatically pushed up international crude oil prices, energy conservation and energy efficiency have been national economic and policy priorities. Households have directly borne the brunt of these higher prices. Since 1973, while overall consumer prices have increased fourfold, housing costs as measured by the consumer price index have moved up at the same pace, but home energy prices have jumped by half again as much; six times as high as they were in 1973.

In response to higher prices, households have reduced their home energy consumption. The initial reaction was to cut back on heating in the winter and air conditioning in the summer, but as energy costs remained high, households have made investments to improve the energy efficiency of their homes. (A recent blog post by Mariel Wolfson describes how early efforts to address energy efficiency gave rise to concerns about indoor air quality.)  More recently, state and federal tax incentives have encouraged even greater levels of home energy efficiency spending. Joint Center analysis indicates that almost a third of homeowner improvement spending at present is for projects where there is likely to be an improvement in energy efficiency, such as window replacements, adding insulation, or upgrading the HVAC system. This share is up from a quarter of spending a decade ago.

The results of these investments have been impressive: between 1980 (when households started thinking more seriously about investing in energy efficiency retrofits) and 2009 (the most recent national survey on energy consumption) per household energy consumption has declined almost 22%. Since home sizes have actually increased over this three decade period, the per square foot decline in home energy use has been an even more impressive 30%.

However, given changes in the domestic energy situation, the days of strong incentives from rising energy costs to improve home energy efficiency are likely behind us. While the controversy surrounding the environmental and health concerns of hydraulic fracturing have generated a lot of discussion, its impact on energy production generally has attracted less attention. For example, a 2012 report from the International Energy Agency predicts that the U.S. will become the largest global oil producer by around 2020, becoming self-sufficient in net energy terms later that decade and a net oil exporter by 2030. We’ve already seen the impact of this increased production on home energy costs: since 2008, overall home energy prices have remained stable, while natural gas prices for home energy use have declined by a third.

If rising and uncertain home energy prices drove the interest in energy efficiency investments, then the expected stable prices moving forward should remove many of these incentives. Where does that leave sustainability as a priority for homeowners? In fact, growing sensitivity to environmental concerns has created a lot of momentum behind energy efficiency as well as other sustainability concerns such as the use of renewable building materials and the use of recycled products in the homebuilding and home improvement process, water conservation and reuse, indoor air quality and healthy homes, home automation, and even renewable energy sources. Beyond the third of expenditures on energy efficiency measures noted above, Joint Center surveys of home improvement contractors have determined that somewhere between 20% and 25% of home improvement projects on a dollar basis have environmental sustainability other than energy efficiency as a stated goal of the project.

If consumer demand exists for increasing sustainability in housing, the likelihood is that the market will respond, and there is evidence that it is doing so. Entrepreneurs are developing new products in these areas. A recent Joint Center survey of home improvement contractors asked if they were seeing new products or technologies related to sustainability emerge in recent years, and if so, in which areas. Despite declining energy costs, energy efficiency and insulation techniques still topped the list, with about half of respondents indicating that they were installing or seriously considering installing new products or technologies in these market niches. However, also high on the list were products and technologies related to other sustainability objectives. As manufacturers figure out ways to produce them in a cost-effective manner, and contractors receive training and market their skills at installing these new products, interest in these areas is unlikely to diminish regardless of what happens to home energy prices.

Wednesday, August 7, 2013

Lessons for Helping Distressed Homeowners - and Avoiding Distress in the Future

by Jen Molinsky
Research Associate
In April of this year, the Joint Center convened a symposium entitled Homeownership Built to Last: Lessons from the Housing Crisis on Sustaining Homeownership for Low-Income and Minority Families. With the financial, psychological, and social costs of the recent housing crisis fresh in mind, the symposium gathered policymakers, industry leaders, housing advocates, and scholars to examine how the nation can move forward to ensure safer homeownership opportunities for low-income and minority families, many of whom suffered disproportionately in the foreclosure crisis. (In an earlier blog, Sarah Rosen Wartell, president of the Urban Institute, presented thoughts she delivered in a keynote address at the event.)

The symposium featured new research and analysis from 15 leading scholars and practitioners on the value of homeownership post-housing crisis; consumers’ tenure and housing choices; ways to balance affordability, access, and risk; the government’s role in the evolving mortgage market; and strategies to help homebuyers sustain ownership over the long term. We have begun posting these papers to the Joint Center for Housing Studies website, starting with three on the theme of sustaining homeownership. In their papers, Mark Cole and Patricia McCoy each explore lessons learned in the housing crisis about helping distressed owners, while Jeffrey Lubell examines shared equity homeownership as a potentially safer and more cost-effective form of homeownership, one that can help individuals sustain homeownership and help communities maintain affordability.

In her paper, Patricia McCoy (Connecticut Mutual Professor of Law and Director of the Insurance Law Center at the University of Connecticut School of Law) draws lessons from a thorough critique of servicer and government foreclosure prevention efforts in the recent crisis. Among her findings, loan modifications that do not lower monthly payments often failed: early in the crisis, the majority of loan workouts increased owners’ monthly payments, a serious difficulty for those whose distress stemmed from disruptions to income such as job loss. In contrast, decreasing monthly payments through interest rate reductions, lengthening of loan terms, or – most effectively – principal reductions, have been shown to lower the chances of redefault. Going forward, McCoy emphasizes the need to rethink servicer incentives; as she notes, “Today, servicers are overpaid for servicing current loans and underpaid for processing delinquent loans.” And loan modifications should not be delayed: McCoy notes that redefaults occur less frequently when homeowners receive loan modifications earlier.

In his paper, Mark Cole also emphasizes the importance of early intervention to help distressed homeowners, in his case through counseling. Cole (former Executive Vice President and COO of CredAbility and now President of Critical Mass Solutions) offers insights learned from CredAbility’s work engaging and counseling distressed homeowners in early intervention and post loan modification support programs. Data gathered from 1.6 million first counseling sessions reveals how the profile of distressed owners changed over the 2007 to 2012 period: by 2012, the average owner seeking counseling was older (51 instead of 44), more likely to be middle class, and less likely to be a minority. Drivers of distress evolved too: at the start of the subprime mortgage crisis, overspending and over-obligation were the top reasons for mortgage delinquency and default, but as the recession took hold, reduction in income became a more important factor. CredAbility is also observing that financial troubles are increasingly stemming from multiple issues rather than single problems. Emphasizing that homeowner distress often originates from more than housing debt, the average CredAbility client over 2007 to 2012 had a 32.5 percent monthly housing cost-to-income ratio but a 54.1 percent total monthly debt payments-to-income ratio. Cole argues that one-time financial transactions such as loan modifications are not likely to change habits by themselves; rather, long-term contact with owners through counseling that takes into account households’ comprehensive financial picture is needed.

Finally, in his paper, Jeffrey Lubell urges us to think beyond the binary “own/rent” decision by considering “shared equity” options that fall somewhere in the middle of the continuum, such as community land trusts, limited equity cooperatives, deed restrictions, and shared appreciation loans to limit owners’ likelihood of becoming distressed. Not only can shared equity approaches limit downside risk, their loans often perform better: Lubell (former Executive Director of the Center for Housing Policy and current Director of Housing Initiatives at Abt Associatescites data finding that less than half a percent of large sample of Community Land Trust homes were in foreclosure in 2011, while the rate for the broader market was 4.63 percent. In addition, most shared equity approaches involve long-term affordability provisions that can help successive owners. While they require a subsidy and implementation challenges are significant, Lubell estimates that shared equity could assist from two to five times as many households with the same amount of money as current grant programs.

Taken together, the three papers make the case for active, early engagement with distressed owners, with solutions that address their entire financial picture and make sense given the circumstances that have led to delinquency or default. Counseling can play a critical role, as the intervention of a trusted third party who knows the system can go far toward helping owners confront and resolve delinquencies. In the future, shared equity forms of ownership that offer more support and help contain downside risk can offer new opportunities for more affordable and sustainable homeownership.