All posts by Ted Wimpey

Fascinating notes from all over

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A Monday potpourri that panders to our friends with short attention spans:

starbucks

  • Starbucks, which offers tuition-assistance to its U.S. employees, offers rental assistance to its workers in the U.K. After a year’s employment, they can get a no-interest loan for a rental deposit.

downsize

  • The U.K., never short of fresh approaches to chronic social problems, offers this one for the housing affordability shortage: oldsters downsizing to free up their unused extra space for youngsters. Worthy of debate, no?
  • Vermont’s recurrent lament that it’s getting too old and can’t hang on to its youth prompts the question: Where are the youth going? Well, here’s one answer, in the form of a list of cities where Millennials are buying homes in large numbers. They’re mostly out west (Des Moines! Grand Rapids!), the same territory where young Vermonters fled during the 1830s. Back then, the people they left behind wrung their hands about that exodus, too.

dubai

  • Maybe some of the fleeing youth are heading to Dubai, but if they are, they’re encountering – ta-dah! –– an affordable housing shortage, complete with 30-mile commutes from the suburbs.

 

Something to cheer in Woodstock

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The opening of Safford Commons in Woodstock earlier this week has been widely and deservedly celebrated. This 28-unit development was about a decade in the making – a decade marked by legal battles and neighborhood opposition. You can get some of that history from a Valley News story on the ground breaking a year ago, and a you can get an thumbnail idea of where things stand now from accounts on Vermont Digger and on VPR, source of this photo:

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Let’s throw a little context around this. Woodstock is an employment center, with more than 2,100 jobs in more than 270 establishments last year, according to the Vermont Department of Labor. By that measure alone, Woodstock would seem to be a prime candidate for workforce housing – that is, housing that working people can afford to live in.

Woodstock is also a relatively wealthy town, with an estimated median income of about $99,600, compared to Vermont’s average of $68,100, according to Vermont Housing Data. A smaller share of its total housing units are rented (23.5 percent) than Vermont’s average (25.9 percent), and those residents who do rent in Woodstock tend to be slightly better off than their average Vermont counterparts. Just 29 percent of Woodstock’s renters are housing-cost “burdened” (that is, they pay 30 percent of their income on housing), compared to Vermont’s average of 52 percent; and just 14 percent are “severely burdened” (they pay 50 percent or more), compared to Vermont’s average of 26 percent.

All of which suggests that many of the lower-wage employees who work in Woodstock don’t live there and have to commute from some place else.

Until Safford Commons opened, however, Woodstock had only two subsidized housing complexes (Melishwood I & II), with a total of 26 units (11 of them for elderly residents). The addition of a third affordable rental complex in Woodstock is not only welcome, it’s overdue. Here’s hoping it won’t be the last.

 

New population bulge: renters

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Renters — and the cost burdens associated with renting — are on the rise across the country. Two recent studies say so, so we might as well cite them here. One, by Enterprise Community Partners and Harvard’s Joint Center for Housing Studies, projects that renter households will increase by 4.2 million over the next 10 years. Another, by the Urban Institute, puts that number at 6 million. And the share of rental households that’s “severely cost-burdened” – that is, paying 50 percent of income or more for housing – will go up 11 to 25 percent under various economic scenarios, says the former study.

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Meanwhile, says the Urban Institute, the home ownership rate will go down for all but the oldest population segment. The explanations of these and other stark housing projects are familiar – among them, that college-debt-burdened Millennials aren’t moving into the house-buying market the way their age group did a generation or two ago.

Here we inject the good news/bad news for Vermont.

The home ownership rate here is above the national average and has not mirrored the national drop over the last few years.

vthomeownership

Rental cost-burden rates here are, however, about at the national average: 26 percent of Vermont’s renters are “severely cost burdened,” according to Vermont Housing Data.

If the renter population swells in Vermont, how likely is it that the number of affordable housing units keeps pace? Not very, without some form of government intervention. Here’s what the Enterprise/Harvard study says about that:

“The need for affordable housing is already overwhelming the capacity of federal, state and local governments to supply assistance. At last measure, 11.2 million extremely low-income households competed for 7.3 million units affordable to them – a 3.9 million unit shortfall. And with 7.7 million unassisted very low-income renters with worst case housing needs in 2013 as defined by U.S. Department of Housing and Urban Development (HUD), only just over a quarter (26 percent) of eligible very low-income households received rental assistance.”

Now, some might argue that if private developers are simply turned loose to produce a flood of new housing, affordability will take care of itself.

That’s not likely, either. Check out the state of affairs in Portland, Ore.,  a place that has experienced both a building boom and an unaffordability boom, and where the mayor just declared a “state of emergency for housing and homelessness.”

 

Teachable moments in New Hampshire

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If you think New Hampshire is a socio-political backwater, from its license plate slogan to its lack of an income tax, think again. The state has been grappling with its affordable housing shortage for years — certainly since 2008, when a “landmark law” (as state housing officials termed it) sought to goad towns into taking action.

New Hampshire’s Workforce Housing Law mandates that every municipality provide “reasonable and realistic opportunities” for the development of workforce housing. What is “workforce housing”? As defined by the law, it means housing for that’s affordable (a cost burden of no more than 30 percent of income) for families making up to 100 percent of median income, and for renter families who make up to 60 percent of median income. (Click here for the income numbers.)

Now, “reasonable” and “realistic” may be subject to varying interpretations, as a recent discussion at a City Council meeting in Londonderry suggests. Londonderry officials are trying to open up more opportunities after an examination of the towns ordinances last year revealed impediments. The current push, as this news article indicates, is both for multi-family developments and increasing density in single-family zones.

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The latter got pushback at the meeting. (We’d recommend that people in Londonderry and elsewhere watch our “Thriving Communities” webinar when it becomes available on our site, because it shows, among other things, how neighborhoods of the same density can be designed well (aesthetically pleasing) or badly (cookie-cutter ugly).

In any case, we’d argue that this kind of discussion – from the opening up of restrictive land-use practices to the acceptance of residential density in workable and appealing forms — could be going on in Vermont towns, as well. Never mind that Londonderry, N.H., with population of about 24,000, is bigger than every Vermont community except Burlington. The same challenges apply here, on a Vermont scale.

 

An elegant solution: home sharing

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We all know that no single approach will alleviate the affordable housing crisis. Government, which bears the lion’s share of the responsibility, is not fully up to the task, and as we’ve mentioned, the issue is not even getting its share of attention in public forums or political campaigns.

Here and there, private and nonprofit initiatives peck away at the problem. Among those initiatives is home sharing, which addresses two of Vermont’s well-known trends: a greying population that wants to be able to age in place; and unaffordable housing costs for the younger set, including the proverbial young professionals.

homeshare

Home sharing matches older homeowners with younger renters willing to help out who can’t afford market rents. An apt match is a win-win, as this article in Monday’s Valley News explains.

Granted, this program  is a drop in the housing-unaffordability bucket, with fewer than 200 shared properties. But it’s a drop that deserves to grow, along with the post-65 population bulge that makes Vermont, by some measures, the oldest state in the country.

 

Parsing the disparate-impact ruling

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Fair Housing Law cognoscenti will be happy to learn of new journal article by Robert G. Schwemm, acknowledged to be a principal academic authority in these matters. In a Columbia Law Review sidebar, Schwemm takes on the recent U.S. Supreme Court ruling on disparate impact and sorts through the ramifications, “What’s new and what’s not.”

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Even for non-cognoscenti this article can be useful, given that it’s a fairly breezy (for a law journal) way of catching up with fair housing developments.

The court’s opinion – which essentially upheld the longstanding theory that discrimination is legally actionable by virtue of its effect, not merely intent, was celebrated by fair housing advocates all over the country. The impact on Vermont remains to be seen, however, because disparate-impact arguments typically rely on statistics, and Vermont communities are so small that statistics are not always meaningful.

Still, Schwemm ‘s article makes several points worth Vermonters’ notice, among them:

–the established practices, since the mid ‘70s, of using disparate impact to challenge “exclusionary zoning and other land-use restrictions by local governments that blocked or limited housing proposals of particular value to racial minorities or persons with disabilities.”

–the additional protected classes that Vermont (and many other states) added in their own fair housing laws are specifically preserved under the federal Fair Housing Act. Those additional categories in Vermont include receipt of public assistance (e.g. Section 8), sexual orientation and gender identity. The implication is that, because of the Supreme Court decision, disparate-impact claims could be made successfully for people in these, state-specific categories as well. Assuming, that is, that the plaintiff could get the necessary numbers in order.

 

An affordable-housing outlier

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A common refrain in the national “conversation” about the affordable housing crisis, or shortage, is that development of new multi-family rentals is, well, costly … even unaffordable, in some cases.

One standard cost we’ve seen bandied about is $200,000 per unit. That’s the figure set out in the Windham & Windsor Housing Trust’s treatise on this topic, “Why does it cost so much to construct affordable housing?”

The other day we stumbled across an article about a developer in Portland, Ore., who operates on a different model — tight scheduling, efficiency, no frills, and remarkably, all-private financing — without public subsidies. The result: a unit cost of around $70,000. Here’s a glimpse:

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We can’t vouch for the economics of this, but the website of the developer — Home First Development — links to an article, “Building affordable units for less,” that offers a thumbnail accounting of the approach taken with a 27-unit apartment complex built for $1.89 million. This development is in east Portland, a few miles from downtown, so we presume the land was less costly than for a comparable site close in.

Another, more recent development, also in east Portland, comprises 78 one- and two-bedroom units that rent for $395 to $775 a month, according to the news story that sparked our interest. The cost of building that project? $5 million.

In each case, the developer began by estimating how much low-income tenants (e.g., $24,000 a year) could afford to pay for housing, then worked through the financing with that constraint.

Might such a model be replicable? You be the judge.

 

Mapping the rental-affordability shortage

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The Urban Institute has a tidy synopsis of the rental-affordability crisis that we keep referring to, complete with an interactive national map with data at the county level. Key points in the narrative: the rental population is increasing, the availability of affordable units for poor people is declining, and the responsibility of the federal government to do something about remains paramount. (We might add that the penchant of national leaders is in decline.)

Nationwide, in 2013, there were just 28 affordable living units per 100 renter households of extremely low income, down from 37 in 2000. Here’s the national map:

crisis3

The darker counties have more units per low-income population. (Jones and Wayne counties in Mississippi are at or near the top, at 71. Click here for the interactive map.)

Vermont does a little better than the national average. Here’s the Northeast map, with Lamoille County highlighted:

crisis5

The figures for Vermont counties:

Caledonia, Lamoille, Orleans, Washington: 29 affordable units per 100 extremely low-income households.

Grand Isle: 32.

Chittenden, Franklin: 35.

Addison, Bennington, Rutland: 47.

Orange, Windham, Windsor: 49.

Those numbers may look impressive compared to some other states, but don’t forget that a majority of the extremely low income population is still out in the cold.

 

And you thought things were bad here!

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Now and then it’s nice to get an international perspective even on the most domestic of concerns, like housing. Poking around for comparisons, we stumbled across the “11th Annual Demographia International Housing Affordability Survey: 2015.” This is an interesting document, but rather limited:

  • The domain is restricted to six Anglophone countries,  plus Japan, Singapore and Hong Kong.
  • The “affordability” measure reflects home prices, not rental rates. That measure, the “median multiple,” is the median house price divided by gross annual household income. A median multiple of 3.0 or below is deemed “affordable”; 3.0 to 5.0, “moderately affordable”; and above that, least affordable.”

Anyway, the United States comes off pretty well among this selective international contingent, with an average multiple of 3.4. Canada (3.9), Japan (4.4), Singapore and the U.K. (5.0) are all higher, as are New Zealand (5.2), Australia (5.5) and Hong Kong (17.0). Ireland comes in at most affordable, at 3.0

(Hong Kong’s figure is astounding, but we suspect it’s not uniquely high, world-wide, and we look forward to future surveys that include the likes of Qatar and Luanda, Angola.)

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Here’s the survey’s summary of 378 “major markets”:

 Housing Affordability Ratings by Nation: All Markets
 

Nation

 Affordable (3.0 &

Under)

 Moderately Unaffordable (3.1-4.0) Seriously Unaffordable (4.1-5.0) Severely Unaffordable (5.1 & Over)  

Total

  

Median Market

 

 

Australia 2 1 15 33 51 5.5
Canada 5 16 9 5 35 3.9
China (Hong Kong) 0 0 0 1 1 17.0
Ireland 3 1 1 0 5 3.0
Japan 0 1 1 0 2 4.4
New Zealand 0 0 3 5 8 5.2
Singapore 0 0 1 0 1 5.0
United Kingdom 0 3 14 16 33 5.0
United States 88 97 32 25 242 3.4
TOTAL 98 119 76 85 378 3.8

As usual, major market” data exclude Vermont. Vermont’s “median multiple,” by our rough calculation using numbers from Vermont Housing Data, hovers around 4.0 (3.7, based on adjusted family income, and 4.2 based on household income).

By this measure, we’re considerably less affordable than cities in the western hinterlands:

 Affordable Major Metropolitan Markets
Rank Nation Metropolitan Market Median Multiple
1 U.S. Detroit, MI 2.1
2 U.S. Rochester, NY 2.4
3 U.S. Buffalo, NY 2.6
3 U.S. Cleveland, OH 2.6
5 U.S. Cincinnati, OH-KY-IN 2.7
5 U.S. Grand Rapids, MI 2.7
5 U.S. Pittsburgh, PA 2.7
5 U.S. Saint Louis, MO-IL 2.7
9 U.S. Atlanta, GA 2.9
9 U.S. Indianapolis, IN 2.9
9 U.S. Kansas City, MO-KS 2.9
9 U.S. Louisville, KY-IN 2.9
13 U.S. Columbus, OH 3.0
13 U.S. Oklahoma City, OK 3.0

We do have plenty of license for Schadenfreude, however, when we look at these places:

 

 10 Least Affordable Major Metropolitan Markets
Rank: Affordability
Least Rank (Out of Median
Affordable 86) Nation Metropolitan Market Multiple
1 86 China Hong Kong 17.0
2 85 Canada Vancouver, BC 10.6
3 84 Australia Sydney, NSW 9.8
4 82 U.S. San Francisco, CA 9.2
4 82 U.S. San Jose, CA 9.2
6 81 Australia Melbourne, VIC 8.7
7 80 U.K. London (GLA) 8.5
8 79 U.S. San Diego, CA 8.3
9 78 N.Z. Auckland 8.2
10 77 U.S. Los Angeles, CA 8.0

 

According to the survey, the median multiple in most of these countries remained in the manageable 3.0-plus range for many years until rural-to-urban migration ran up against land-use restrictions (“urban containment polices”) that drove up prices and made housing unaffordable for middle-income people as well as the poor. The survey’s authors argue that urban containment policies — “smart growth” would be one example — unduly limit housing development on the urban “fringe.”

Hmmm. Are they saying that sprawl is the price of affordability?

 

Segregation back on the table

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Here are a couple of readings that expand on some of our previous posts on the inexorable AFFH theme:

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“Segregation 101” takes off from an August Times story on Section 8 (that is, racial) discrimination in metropolitan St. Louis. One obstacle to locating more Section 8 voucher holders in middle-class suburbs, the story notes, is a relative lack of rental apartments in such suburbs — in part because of zoning practices that favor single-family homes.

“Segregation Conversation Goes National” offers another rebuttal to the controversial Edsall op-ed and advocates a dual approach to the housing affordability crisis: investing in poor neighborhoods and, on one hand, and settling more poor people in “opportunity-rich” middle-class neighborhoods, on the other. (That seems to be the strategy that Justice Kennedy implicitly endorsed in his disparate impact decision, as we noted previously.)

There’s also a reference to a regional program in Chicago that helps disperse urban Section 8-holders to outlying suburbs. (For an account in The Atlantic, click here.) Elements of that might translate well to Vermont, where the Section 8 program outside of Burlington and several other cities, is already administered by a “regional” agency (Vermont State Housing Authority) that covers the rest of the state.

Meanwhile, the Times lands another editorial today another segregation motif — racial discrimination by real estate agents around the country.