Keeping Affordable Multifamily Housing

In Iowa City affordable housing is typically discussed in terms of public safety officers and teachers, but the most at risk group of people are those hovering on the edges of poverty. Before homeownership is an option, they need affordable rental housing/transitional housing. But since the late 1980's, there has been a "war on poverty" of a different feather:

u- Nationally, housing prices increased over 20% over past 7 years; wages increased 2% in real terms.

u- More than ½ of our nation’s carpenters, kindergarten teachers, groundskeepers, retail clerks, and other service workers pay more than half of their income for rent, the HUD standard for housing is 30% of your income.

u- The number of apartments affordable to those who earn less than $16,000/yr. fell by 13% or 1.2 million between 1993 and 2003.

u- We lose hundreds of thousands of affordable apartments per year. 300,000 apartments (15% of the total) has been lost nationwide to the affordable housing inventory dedicated to serving poor people since 1995

- According to the National Housing trust, more than 2,500 affordable apartments have been lost from Iowa’s affordable housing inventory between 1995-2003.

At the Iowa City Public Library on 4/24 from 7 to 8:30 pm, Michael Bodaken, president of the National Housing Trust and an expert in the area of affordable multifamily housing will be discussing "Affordable Multifamily Housing: Exploring Solutions". There will be a Question and Answer period after the presentation.

The event is sponsored by FAIR and the Housing Trust Fund of Johnson County. It is free and open to the public. Refreshments will be served.

Dream Homes Turn To Nightmares

Housing analysts predict between 1 million and 3 million U.S. homes will be foreclosed upon in 2007. Already a wave of defaults on subprime mortgages held by those with poor credit have caused a crisis in parts of the industry, and some economists believe a recession could result.

Subprime loans allowed many Americans with spotty credit to buy into the housing boom, driving home ownership to nearly 69 percent nationwide in 2006, up from 65.4 percent a decade earlier. But teaser rates that kept interest payments low for two or three years have begun to expire, driving monthly payments through the roof.

Shanna Smith, chief executive of the National Fair Housing Alliance, said lenders often targeted the most vulnerable borrowers for subprime loans, even if they were eligible for loans with lower rates. More often than not, the borrowers had little understanding of mortgages.
"All the predatory lending that has gone on, all of the pushing of exotic loans on people of color, female-headed households, families with children, people with disabilities -- it's all coming home to roost," Smith said.

Once borrowers fall 90 days behind on payments, lenders can start the foreclosure process, which can take up to a year. Owners can try to sell the house, but with prices falling and foreclosed homes flooding the market, borrowers often end up still owing more than they can get for the house.

Ain't Nothing But A House Party!

Okay, so I'm an old school J. Geils Band kind of guy...

The Gazette reports

Housing developments receive federal funds Two affordable housing developments in Johnson County have received nearly $5 million in federal money. The Housing Fellowship of Iowa City received almost $1.2 million from the federal Low-Income Housing Tax Credit program, Gov. Chet Culver said in a press release Wednesday. The Housing Fellowship will use the money to acquire and rehabilitate 14 units for family housing across Iowa City.

Harmony Development received $3 million from the same program and almost $800,000 from the HOME Investment Partnership program to build 30 units in North Liberty for senior citizens and seniors with disabilities, the release said.

Subprime Conditions

The lower 35-50% of income earners of our country can't get a break in trying to be included in the American Dream. Because of loan policies, often their credit scores do not allow them to qualify for prime-rate loans, meaning that because they are seen as "high risk", they are more likely to be offered subprime interest rates or "programs" like adjustable rate mortgages that balloon after a set period of time.

For example:
•In 2004, John Silva refinanced the modest home he and his wife own in Willow Springs, N.C. Today, with their mortgage at almost 10 percent, he worries he's just a "hiccup" away from foreclosure.

•Ten months ago, newly divorced Tammy Myers got a no-down-payment loan to buy a house in Denver. The interest rate is now so high it's difficult to make her monthly payment.

•Susie Smith – a retired social worker who's too embarrassed to use her real name – almost lost the house in St. Paul, Minn., she had lived in for most of her life. That was after she refinanced it and her monthly payments more than doubled from $675 to more than $1,400 a month.

The API reports that the market for subprime mortgages "exploded during the housing boom, from fewer than 5 percent of all new mortgage loans in 1994 to an estimated 20 percent currently, or $600 billion."

Foreclosures among high-risk U.S. mortgages could create the worst mortgage crisis since the 1980s, a published report said Friday. Rising foreclosures and defaults have pushed more than 20 lending companies into bankruptcy, The Christian Science Monitor says.

Some housing specialists worry the mortgage industry will respond by raising its lending standards so high that would-be homeowners with less-than-perfect credit will be frozen out, extending the current U.S. housing slump.

'It`s the most serious threat to the economy,' Mark Zandi of Moody`s Economy.com says. 'It has the potential to set the housing market back another big notch since there could be a whole class of people who can`t get credit.'

Affordable Housing and County Housing Trust Funds

There is no question that Iowa's low income housing situation is bad. Since the 1980's, publicly-funded housing has marched steadily backwards putting states, counties, and cities in the position of trying to patch together housing options that meet the needs of communities. Iowa, in 2002, ranked 47th (per capita) for the amount of state revenue spent on housing. Funding from the state for housing and housing assistance programs has been cut by $10 million in the last three years.

In Iowa, there are three county housing trust funds (in Dallas, Johnson, and Polk counties). The purpose of housing trust funds, according to the Center for Community Change, "systemically change reliance on annual budget allocations by shifting to committing dedicated public revenue to affordable housing through the creation of housing trust funds. There are now nearly 600 housing trust funds in operation. They dedicate in excess of $1.6 billion to help address critical housing needs throughout the country."

The Housing Trust Fund of Johnson Countyis a little over two years old, receiving funds from a variety of sources including the State of Iowa, HUD, local governments and individual and corporate contributors. All Trust Fund moneys support homes for households at or below the $58,000 level for a four person household. Funding is intended to be a layer of financing that is offered at attractive terms to help make more affordable housing financially feasible in a very expensive housing market.

Funding is limited to organizations, businesses and governments because the Trust Fund is not set up to administer the application, funding and monitoring processes involved in funding individual funding requests. HTFJC is currently staffed by one part time employee.

Learn more.

Next Issue: Affordable Housing

The housing bubble has burst. According to Harvard University "Across the nation, government cutbacks on construction, maintenance, and subsidies for low-income housing, combined with the booming economy's overheated real-estate market, have created what many experts are calling an affordable housing crisis. They predict that the problem is likely to get worse because of a widening income gap and a shrinking stock of low-income units." There is little doubt that those in need of affordable housing (Housing is generally considered "affordable" when its cost does not exceed 30 percent of the median family income in a given area.) were left out of the mix in the early With the median price of housing hovering in the $200,000 range, there are a significant number of lower income families (earning less than 50% of the median annual income) that have housing insecurity.

Why does housing matter so much. Stable family situations are recognized as one factor of student success in school housing stability, particularly in the early grades. Stable housing and is tied to lower domestic abuse rates, more community involvement, and lower crime rates.

Add to this the social justice aspect of persons having a basic need met. Affordable housing should not be a privilege, but a civil liberty, just as adequate food and clothing are necessary to sustain life. All persons should have access to safe, clean housing. The question is, how do we accomplish the goal?

One possibility is to take away the incentives to own rental housing, unless for the specific purpose of providing to housing to those who would otherwise be unable to afford it. In college towns it is a widely accepted practice to purchase real estate for investment purposes. The effect is to push up the rents for housing by relying on a captive audience who can afford a higher rent than the local lower income person can.

Another is to work with public/private partnerships to build housing that is affordable and can be financed creatively to allow those who are "high risk" to have a home and the informed responsibility to keep it.

Your thoughts?