Current practices for procuring affordable housing: The Canadian context

Abstract

This article describes the current housing system in Canada, focusing particularly on the various mechanisms still available for providing affordable housing. Beginning with an overview of the Canadian housing system, it provides a brief history of Canadian housing policy and program initiatives instrumental in developing the inventory of affordable housing available today.

Current practices and procedures in private lending for affordable housing are highlighted. A discussion of current initiatives available to provide affordable housing follows, with a focus on the role of government, the third sector, and new partnership arrangements implemented to encourage more affordable housing. The conclusion highlights recent changes, the current state of the affordable housing sector, and the impact these changes may have on low‐ and moderate‐income households in Canada.     

Manufactured housing: A study of power and reform in industry regulation

Abstract

This article is a case study of the National Commission on Manufactured Housing and its attempt to reform the regulatory system. It describes the importance of manufactured housing as an affordable alternative to site‐built housing and tells how efforts to reform the regulatory system through a consensus process initially succeeded but ultimately failed.

The article shows that while the consensus process was essential to get agreement among conflicting parties, consensus will hold only when all parties are sufficiently dissatisfied with the status quo to endure the cost of change. While the short‐term prospects for reform are dim, the long‐term prospects are more promising, as a few large manufacturers offer better warranties and as programs devolve from the federal government to the states.     

The role of limited‐equity cooperatives in providing affordable housing

Abstract

This article develops an economic analysis of the role of limited‐equity cooperatives (LECs) in providing affordable housing. Using a model of the user costs of housing that focuses on housing externalities, it examines methods for overcoming externalities in multiunit rental dwellings.

Investment in management can reduce these externalities and thereby improve the quality of the housing environment, but the added cost excludes low‐income households from housing with a high level of management. LECs can reduce housing externalities without imposing the dollar costs of management on residents. They do this principally by attempting to attract a favorable resident population and by substituting self‐management for traditional hierarchical management. Given these findings, the article makes recommendations regarding the structure of a federally sponsored LEC program and draws implications for affordable housing policies in general. Finally, it calls for further empirical research into the desirable (and undesirable) features of self‐managed affordable housing.     

Public housing authorities: Determining an appropriate role in a national preservation strategy

Abstract

This paper examines the obstacles and issues involved in developing a comprehensive preservation agenda for public housing and explores the capacity of public housing authorities (PHAs) to meet the current and future demand for affordable housing. The paper discusses the current challenges facing the public housing program and PHAs and examines the roles and functions PHAs can assume in the current preservation and affordable housing crisis. Six specific roles for PHAs are included: resolving the equity/community dilemma, improving management, articulating modernization needs and carrying out modernization programs, preventing the loss of public housing units through sales and demolition, assuming management of privately owned subsidized housing, and developing new public housing. Although there is also much potential in nonprofits as providers of low‐income housing, they must be joined by PHAs in a comprehensive low‐income housing production and preservation strategy.     

Does the Likely Demographics of Affordable Housing Justify NIMBYism?

ABSTRACT

NIMBYism (not in my backyard) decreases the amount of affordable housing construction. A possible motivator for this is an existing homeowner’s fear that proximity to affordable housing depresses property value. Using a hedonic regression analysis of the sales prices of homes in Sacramento County, California, this study finds that increases in the demographic characteristics in a census tract that are likely to increase if more affordable housing is built there lower the sales price of a home. This finding holds even after controlling for the percentages of racial/ethnic groups more likely to face discrimination. Policymakers should recognize this economic element of NIMBYism as they consider instruments to increase the amount of affordable housing built. We conclude with a suggestion for a knowingly controversial policy mechanism based upon cap and trade with the hope it will spur further debate on this issue.     

The case for a right to housing

Abstract

America has the resources to guarantee everyone a right to decent, affordable housing, making real the now 50‐year‐old congressionally promulgated National Housing Goal. The issue is one of values—constantly expanding notions of social, civil, and economic rights—and can only be won through political struggle, as has been true historically of all rights expansions.

The costs of not attaining this right, to those suffering from substandard housing conditions and unaffordable costs as well as to society as a whole, should be acknowledged and offset against the increased government outlays required to attain this goal. Ways in which some housing rights now exist are identified as a basis for wider expansion to a true right to decent, affordable housing.     

Comment on Jennifer Steffel Johnson and Emily Talen's “affordable housing in New Urbanist Communities: A survey of developers”

Abstract

A long‐time criticism of New Urbanism has been that the housing it provides is affordable only to middle‐ and upper‐income families. Johnson and Talen's survey of New Urbanist developers and developments is intended to see whether this criticism is justified. Although the methodology is limited, the results of this survey would seem to indicate that it is.

Because Johnson and Talen's survey is restricted to New Urbanist developments, it is not possible to compare the results with those for other, more conventional developments to see whether New Urbanist developments may actually contain more affordable units than comparable conventional projects. Also, limiting the definition of affordability to the cost of housing alone prevents the authors from seeing whether the housing New Urbanist communities provide would be considered less expensive if housing and transportation costs were combined.     

Comment on Martin D. Abravanel's “Public knowledge of fair housing law: Does it protect against housing discrimination?"—Organize! the limits of public awareness in ensuring fair housing

Abstract

Public awareness may contribute to enforcement of fair housing law. But available resources would be more productively used if they were invested directly in more aggressive and innovative law enforcement activities. Emerging debates over land use practices, particularly those pertaining to sprawl and affordable housing, may create new avenues for fair housing activity. The overriding challenge for the fair housing community, however, is to organize an effective constituency that can demand greater attention to education, enforcement, or other actions to achieve fair housing goals.     

RTC's affordable housing program: Reconciling competing goals

Abstract

Congress gave the Resolution Trust Corporation (RTC) authority to sell modestly valued housing at below‐market prices and with concessionary financing to enable lower income families to become homeowners and to expedite sales. Nonprofits and public agencies seeking to buy properties for occupancy by lower income people also qualified for these favorable terms. Setting a precedent for future housing policy initiatives, Congress conditioned access to this special program on the imposition of permanent low‐income use and affordability restrictions.

This paper considers whether the RTC can reconcile its mandate to maximize preservation of affordable housing with its duty to maximize return on assets and minimize negative impacts on local markets. This issue is addressed through a comparative review of property disposition programs administered by three other federal agencies. The author concludes that the RTC's three goals can be harmonized and suggests criteria for evaluating the RTC's performance in meeting its affordable housing mandate.     

Preventive servicing is good for business and affordable homeownership policy

Abstract

This article documents the growing importance of preventive servicing—business practices that emphasize early intervention in delinquency and default management practices that also help financially troubled borrowers avoid foreclosure. We suggest that the loan servicing side of the affordable housing delivery system may be underappreciated and undercapitalized.

We use a database of more than 28,000 affordable housing loans to test several preventive servicing‐related propositions and find that after we control for loan and borrower characteristics, the likelihood that a delinquent mortgagor within this universe will ultimately default varies significantly across servicers. This suggests that loan servicing is an important factor in determining whether low‐ and moderate‐income borrowers who fall behind in their mortgage payments will end up losing their homes through foreclosure. It also suggests a need for policy makers to incorporate preventive servicing into affordable homeownership programs.     

Preservation policies in perspective

Abstract

This paper looks at the housing stock serving low‐income households and provides recommendations for future analysis and action. It concludes that too little attention is being paid to preserving the stock of unassisted units affordable by very low‐income families. This stock has shrunk in recent years, while the number of poverty‐level families has increased. Several recommendations for action by local governments are enumerated. Moreover, while much attention is focused on preserving projects developed under early federal assistance programs, policies for preserving units developed under the Section 8 program are needed to preserve owners’ incentives for maintaining these projects. Additionally, preservation issues must be considered in designing any new production programs. The paper outlines one option for a new program with a radically simplified financing structure.     

Whose shortage of affordable housing?

Abstract

Shortfalls of low‐rent units are repeatedly cited as the rationale for programs to expand the supply of affordable housing. But the poverty‐level rents studied fall well below those of major supply programs. To reassess whether HOME and the low‐income housing tax credit (LIHTC) address actual shortfalls, this article compares numbers of units with renters by measuring both affordability and incomes with the median‐income‐based metric used for all federal rental programs.

During the 1980s, there were growing surpluses of units affordable to renters with incomes between 50 and 80 percent of their area's median income, a “low‐income” range that includes most HOME and LIHTC rents. By contrast, shortages were severe and growing only at rents affordable to households with incomes below 30 percent of area median. Examination of these shortfalls and the problems they create implies that programs to expand supply are not widely needed.     

Market Rental Housing Affordability and Rapid Transit Catchments: Application of a New Measure in Canada

Abstract

In high-income cities, the availability of affordable rental housing in locations served by fast and frequent public transportation enables low-income households access to more opportunities, including jobs, without the costs of owning and operating automobiles. This study operationalizes a residual income approach to identify market rental housing that is affordable to two household configurations (couples with children and couples without children) in two categories below the median income. The study is carried out on Canada’s least and most expensive major metropolitan housing markets, Montreal and Vancouver. In addition to spatially disaggregating the results into inside and outside rapid transit walking catchments, the results are spatially disaggregated into four zones (Urban Core, Inner City, Inner Suburbs, and Outer Suburbs). Implications of the uneven distribution of affordable rentals with respect to transit access are discussed.     

Homeownership and Wealth among Low- and Moderate-Income Households

Abstract

Although currently neither politically nor fiscally feasible, the notion that access to inexpensive, presumably high‐quality housing should be a government‐guaranteed universal right would be a terrible idea even if it were popular and affordable. The proposition fails on three counts. It isn't necessary. It doesn't make economic sense. And, most compelling, were such a policy to be implemented, its putative beneficiaries would not thank us.

Even if we should not promulgate “a right to decent, affordable housing,” we want to assure that all Americans have access to decent, affordable housing. Happily, we can count on the private housing market (coupled with rising prosperity) to serve 95 percent of the country's households. Serving the remaining 5 percent requires concerted measures to scale back onerous housing regulations that prevent the private housing sector from meeting the needs of lower‐income and untypical households.     

The changing demography of multifamily rental housing

Abstract

The residents of multifamily rental housing are different from both homeowners and single‐family home renters, and these differences have implications for the housing market and for public policy. This article describes apartment residents today, discusses recent changes in their number and characteristics, projects their future growth and composition, and highlights business and policy implications of future changes.

For purposes of business and public policy, a segmentation of apartment residents into three submarkets is useful: the “affordable” market serving low‐ and moderate‐income households, some of which receive government housing assistance; the “lifestyle apartment market” serving higher‐income adult households; and the substantial “middle market.” The number of apartment renters is likely to grow moderately over time. The combination of multifamily structure type and rental tenure form offers unique opportunities not only for provision of affordable housing but also for revitalization of downtown areas and balanced “smart” growth in suburban areas.     

Transit-Induced Gentrification: Who Will Stay,and Who Will Go?

Abstract

Transit-oriented development (TOD) has been promoted by planners and policy advocates as a solution to a variety of urban problems, including automobile traffic congestion, air pollution, and urban poverty. Since the enhanced accessibility offered by transit proximity is often capitalized into land and housing prices, many express concern that new transit investments will result in the displacement of the low-income populations likely to benefit most from transit access, a phenomenon which we term transit-induced gentrification. Whereas policy advocates have proposed a variety of interventions designed to ensure that affordable housing for low-income households is produced and preserved in areas proximate to transit stations, little is known about the effectiveness of these policy proposals. This article relies on an integrated land use/transportation model to analyze how TOD-based affordable housing policies influence the intraurban location of low-income households. We find that affordability restrictions targeted to new dwellings constructed in TODs are effective tools for promoting housing affordability and improving low-income households’ access to transit while simultaneously reducing the extent of transit-induced gentrification.     

Affordable housing in New Urbanist Communities: A survey of developers

Abstract

Despite the unequivocal goal of income diversity as expressed in the Charter of the Congress for the New Urbanism, one of the more significant challenges facing the movement has been the creation of socially diverse neighborhoods, especially ones that include a mix of incomes. Although recent reports show that most New Urbanist developments are being built for upper‐middle‐class residents, some projects have managed to support income diversity. This article takes a closer look at those projects, reporting on the results of a nationwide survey of New Urbanist developers.

We found that many developers have used complex, creative schemes to make affordable housing possible within the New Urbanist context. Developers created affordable opportunities by combining available government programs, partnerships with nonprofits, and innovative design solutions. These efforts have provided important sources of affordable housing within the context of walkable communities—serving as examples that should be emulated by future developers.     

New York city and subsidized housing: Impacts and lessons of the city's $5 billion capital budget housing plan

Abstract

New York City has devoted far more resources to the development and rehabilitation of affordable housing than any other U.S. city, investing more than $4 billion from 1986 to 1997. This article surveys the impact, status, and implications of New York's housing programs. It looks at correlations between publicly funded housing starts and changes in the housing stock, welfare rolls, and crime and at the economic impact of the city's housing investments within low‐income neighborhoods.

New York's housing programs have transformed neighborhoods, replacing large swaths of abandoned shells and vacant land with new housing and preserving thousands of buildings at risk of abandonment. While these housing investments correlate most strongly with reductions in vacant units and vacant lots, they also show significant correlations with reductions in welfare rolls and violent crime, but uneven economic impacts as well. New York's housing programs are important nationally less for the specifics of particular programs than for the institutional collaborations on which they are founded.     

The contributions of historic preservation to housing and economic development

Abstract

Historic preservation contributes greatly to housing and economic development. Historic preservation has produced almost 250,000 housing units through use of the federal historic rehabilitation tax credit. Additionally, heritage tourism is a multibillion‐dollar industry, and preservation projects help further community revitalization.

Historic preservation also has a downside. Preservation's growing popularity may dilute its imperative and market prowess, and some argue it is used to thwart new development. Preservation requirements may impede affordable housing production and displace area residents. These undesirable consequences are not givens, however. Preservationists are working to become more flexible, and we suggest ways to practice historic preservation while mitigating some of its negative consequences—for example, tax credit changes, more flexible building codes, and a “tiered” system of designating historic properties at varying levels of significance.     

Housing needs and effective policies in high‐tech metropolitan economies

Abstract

What are the most effective ways to provide low‐income housing to those left behind in new economy housing markets? Do winners and losers in high‐tech competition require federal housing strategies geared to metropolitan differences? This article examines 45 large metropolitan areas grouped along a high‐tech spectrum to see who is dis‐advantaged and to deduce effective local low‐income housing strategies from market characteristics.

Finding affordable housing was, on average, more difficult for low‐income renters and owners in high‐tech economies in the 1990s. Nonetheless, high‐tech metropolitan economies, like other local/regional markets, vary greatly. Sharp differences among and within metropolitan markets make it essential that federal strategies allow local policies to respond to local conditions. To most effectively provide low‐income housing to those left behind in all markets, federal policy should target sufficient resources to severe housing needs through many more vouchers and programs that permit and encourage effective local choices.