Tag Archives: housing subsidies

Housing news from Vermont Housing Finance Agency (VHFA), New improved Vermont Directory of Affordable Rental Housing goes live

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New improved Vermont Directory of Affordable Rental Housing goes live

Posted in VHFA News by: Leslie Black-Plumeau on June 30, 2017 – 8:54am

Based on feedback from property managers and apartment seekers, VHFA launched this week a redesigned, user-friendly Vermont Directory of Affordable Rental Housing at www.housingdata.org. We improved search tools and expanded the site to include more information people looking for an apartment need, such as rent and income limits, property photos, proximity to public transportation, accessibility features and pet policies.       Development of the new website was supported in part by TD Charitable Foundation, AARP Vermont and the Champlain Valley Office of Economic Opportunity’s HUD Inclusive and Vibrant Communities Vermont Grant.

The site’s on-line directory, updated in real-time by property managers, provides information about every Vermont apartment building that serves lower income tenants and received public subsidies during its development to help rents be affordable. “We are delighted to offer expanded information about vacancies and the status of the wait-list for occupancy in Vermont’s affordable, rental housing stock,” remarked VHFA Executive Directory Sarah Carpenter.  “Since vacancies are snapped up quickly in many parts of the state, we wanted to optimize the site’s ability to connect lower income apartment seekers to the information they need to find an affordable place to live.” Carpenter continued.

Housing managers and owners with questions or comments about the website are encouraged to contact VHFA.

 

“Housing Doesn’t Filter, Neighborhoods Do” by Rick Jacobus

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Posted by Rick Jacobus on November 4, 2016 on the “Rooflines, the Shelter Force Blog”
Read the full article (part 1) on the Rooflines, Shelter Force Blog:  http://tinyurl.com/jacobus-filterDown

“There has been a renewed interest in the role that the real estate market can play in solving our growing affordable housing crisis. For decades “affordable housing” has been the near exclusive domain of the public sector, but the crisis has reached the point where we are now calling for all hands on deck. Can private capital, private development companies, and market-rate housing developments help make housing affordable for everyone?”

…

“Housing advocates tend to agree that we need to supplement market-rate luxury development with subsidized affordable housing, but rarely do we ask the market to provide housing for people further down the income ladder. This dichotomy of new market-rate housing only for the rich and new affordable housing only for the poor has become the de facto housing strategy in most American cities. We can do better.”

Renters arise!

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 Since 2005, the number of renters in this country has gone up 9 million, to 41 million, the biggest surge of any decade on record. That brings the share of renting households to 37 percent, the highest in half a century. Meanwhile, their rents are up and their incomes are down: From 2001 to 2014, rents rose 7 percent (above inflation) and incomes dropped by 9 percent.

The biggest increase in renter households, surprisingly, came from the Baby Boomer cohort – people in their 50s and 60s. In fact households 40 and older make up the majority of renters.apartment

These are among the findings in “America’s Rental Housing,” a 44-page study out this week from Harvard’s Joint Center for Housing Studies.

Not only are there many more renters, but many more of those renters can’t comfortably afford to live where they do. In 2014, 49 percent of renters were “burdened” (meaning they paid more than 30 percent of their incomes for rent and utilities) and 26 percent were “severely burdened” (more than 50 percent). According to Vermont Housing Data, Vermont’s current rates are a tad higher: 52.5 percent and 26.4 percent.

Yes, the housing burden falls most heavily on low-income people, but it’s growing among the middle-income stratum as well:

“(T)he sharpest growth in cost-burdened shares has been among middle-income households. The share of burdened households with incomes in the $30,000–44,999 range increased from 37 percent in 2001 to 48 percent in 2014, while that of households with incomes of $45,000–74,999 nearly doubled from 12 percent to 21 percent. Regardless of income level, though, the shares of cost-burdened households reached new peaks in 2014 among all but the highest-income renters.”

Meanwhile, only about one-fourth of eligible lower-income households receive housing assistance (Section 8 vouchers are not an entitlement!); funding for HUD’s three biggest rental assistance programs is about the same (corrected for inflation) as it was seven years ago, when the economy crashed; and the HOME program, a major source of federal funding for housing programs, has been cut way back. Private developers continue to add to the multi-family housing supply, but most of the recent additions “serve the higher end of the market,” according to the report. As it happens, high-income households (annual $100,000 or more) represent a small but fast-growing share of the rental market.

The report asserts:

“The challenge now facing the country is to ensure that a sufficient and appropriate supply of rental housing is available for a diversity of households and in a diversity of locations. While the private market has proven capable of expanding the higher-end rental stock, developers have only limited opportunities to meet the needs of lowest income households without subsidies that close the large gap between construction costs and what these renters can afford to pay. In many high-cost markets, moderate-income households face affordability challenges as well.”rental1

“Diversity of locations” is an invocation of AFFH (affirmatively furthering fair housing) and the goal of ensuring that a good share of affordable housing is in “high-opportunity” neighborhoods,” as in what follows:

“Policymakers urgently need to consider the extent and form of housing assistance that can stem the rapid growth in cost burdened households. Beyond affordability, they also need to promote development of a wider range of housing options so that more renter households can find homes that suit their needs and in communities offering good schools and access to jobs. It will take concerted efforts by all levels of government to capitalize on the capabilities of the private and not-for-profit sectors to reach this goal.”

Dare we suggest that concerted efforts have yet to be mounted, or even contemplated, by government at many levels?

Affordability with an expiration date

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expireIf we’re going to address the housing-affordability shortage, two things have to happen. The first is obvious: more affordable units have to be built or developed. The second is less obvious: For the affordable units that already exist, insufficient as they are, affordability has to be preserved.

Preservation is necessary because affordability typically derives from public subsidies, such has low income housing tax credits, that expire – after 15 years, in the case of LIHTC. As the expiration nears, a private owner might well be tempted to convert the units to market rate or to sell to a new owner who will have no affordability restrictions. Such a sale might be particularly tempting in hot real estate markets.

A wave of coming expirations across the country prompted this ominous Blooomberg headline last week, “A lot of cheap housing is about to get very expensive.” The story drew from an Urban Institute blog post on a review of 1.2 million project-based rental assistance units around the country that found about one-third were at risk of losing their affordability status in the next couple of years. The Urban Institute researchers recommended that local preservationists (such as housing non-profits and land trusts) focus their efforts on units in “high-opportunity” or low-poverty areas, where owners’ temptation to convert to market rates might be particularly strong.

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Vermont, mercifully, has benefited from a concerted preservation effort since the late ‘80s – a combined initiative of state agencies (Vermont Housing Finance Agency and Vermont Housing & Conservation Board) that marshal state and federal dollars to provide and extend subsidies, and non-profit organizations, such as land trusts, that step in to acquire properties before they disappear from affordability ranks.

A survey last year turned up 822 units in privately owned apartments in Vermont with subsidies due to expire before 2020. An additional 1,649 units controlled by non-profits were found to be eligible for new investments, such as capital improvements or subsidy-extensions, before 2020.

Whether Vermont will be able to maintain its historically high rate of preservation for these units will depend, in large part, on the availability of public funds to underwrite the needed subsidies and investments, and the outlook for that, at both state and federal levels, is dubious.

burlingtonapt

And even if Vermont could preserve the affordability in perpetuity of all the current affordable units, there aren’t anywhere near enough of them to meet the demand. Many more affordable units have to be developed, and more public money will be necessary for that, too. That’s money that won’t be available until political leaders make housing a priority.

 

Stuck in the middle

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Couple with daughter together in front yard
 

Middle-class financial struggles have occupied the public discourse for some time, but wouldn’t you know, we’re starting to hear more about housing unaffordability as a stresser for this beleaguered population segment.

The annual “State of the Nation’s Housing” report from Harvard took note this summer:

While long a condition of low-income households, cost burdens are spreading rapidly among moderate-income households. The cost-burdened share of renters with incomes in the $30,000–45,000 range rose 7 percentage points between 2003 and 2013, to 45 percent. The increase for renters earn­ing $45,000–75,000 was almost as large at 6 percentage points, affecting one in five of these households. On average, in the ten highest-cost metros—including Boston, Los Angeles, New York, and San Francisco—three-quarters of renters earning $30,000–45,000 and just under half of those earning $45,000–75,000 had disproportionately high housing costs.”

Granted, much of the news about middle-class housing unaffordability is coming out of the big cities – places where “middle income” is construed to reach far above Vermont standards. For example, Cambridge, Mass., is taking steps to reserve a share of “affordable” housing in a new Kendall Square building for families with incomes in the low six figures! San Francisco is also considering measures that would expand affordable housing eligibility and help out renters in the $100,000 to $140,000 bracket. And Portland, Ore., where the “housing emergency” is apparently wide-ranging, is looking at a form of inclusionary zoning that make apartments available to people making 100 120 percent of the median income (Up to $96,875 for a family of four).

Perhaps it’s a testament to the severity of the housing crisis around the country, and/or to the fragility of the middle-income stratum, that the terms “middle class” and “subsidy” are suddenly being spoken in the same breath.

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Here’s the thing: To qualify for most subsidized housing, applicants can’t earn more than 80 percent of the local median income. Where does that leave people who draw an average salary, or perhaps a little more? Perhaps in a place where they can’t readily afford housing but can’t get any help, either. How many such people there are in Vermont is unclear; plenty, no doubt.

(Note: Middle-income earners are not beneficiaries of Burlington’s inclusionary zoning ordinance, which aims to provide affordable rentals for people earning up to 65 percent of the median; and for sale, up to 75 percent.)

For an illustrative display of how housing costs compare to standard incomes, the National Housing Conference’s interactive “Paycheck to Paycheck” shows bar graphs for each of the nation’s metro areas – and just one in Vermont, Burlington/South Burlington. One graph compares salaries to the pay needed to afford a median-priced home; another does the same thing for 1- and 2-BR apartments at HUD’s “fair market rent.”

Below are the charts for 10 occupations that might be considered to be middle class. As you can see, eight of the 10 would be hard pressed to afford purchase of an average home in Burlington:

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They do a little better in the rental market, but still, six of 10 can’t comfortably afford a two-bedroom apartment in Burlington:

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Here a subsidy, there a subsidy

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Housing subsidies diminish income inequality, while the mortgage-interest deduction, together with the real-estate-tax deduction, has the opposite effect.

mansion1

This makes intuitive sense: housing subsidies disproportionately benefit low-income people, and mortgage-interest/real-estate deductions, the well-to-do. We don’t need a study from the Urban Institute to convince us of that. “Housing Tax and Transfer Programs Decrease Inequality” goes further, though: it says that the equalizing effects of housing subsidies outweigh the disequalizing impact of the tax benefits.

There’s not much comfort in that, however. Only about one in four eligible families gets federal housing assistance. Low-income housing subsidies, totaling about $36 billion in rental vouchers, are less than half the combined total of mortgage-interest ($70 billion) and real-estate-tax ($28 billion) deductions.

Still, housing subsidies and housing tax breaks deserve to be mentioned in the same breath, as part of the same policy conversation. Members of Congress who support cuts in housing subsidies don’t necessarily go along with eliminating the mortgage-interest deduction – although getting rid of that deduction has periodically gained support variously as a form of tax-code simplification or as tax fairness.