A New Twist on Housing Policy

As a campaign issue in this 2004 election, housing distinguished itself by its absence. The war in Iraq, terrorism and the economy eclipsed any meaningful debates over affordable housing policies. But as a Red Sox fan and ardent optimist, I have great hope for the new and returning leaders at both ends of Pennsylvania Avenue. Here’s why.

After one of the most bruising and divisive campaigns in history, the nation needs a healing balm and focus on an issue that unites – affordable housing is it. According to the July 2004 National Housing Opportunity Pulse poll, housing ranks as voters’ third greatest concern, just behind health care and the economy. The poll found that 81 percent of registered voters want to see elected officials place a higher priority on housing needs for both renters and buyers. This represents a virtual mandate for those taking office to ensure more housing opportunities for low- to moderate-income households. One initial step in this direction is a recently released report published by the Joint Center for Housing Studies entitled Opportunity and Progress: A Bipartisan Platform for National Housing Policy. Authored by two former HUD secretaries, Henry Cisneros and Jack Kemp, and the Joint Center’s Nicolas Retsinas and Kent Colton, the report presents 12 common sense recommendations for improved housing conditions.

I see two paths toward improving the vitality of our nation’s housing: Working to empower demand with educated consumers who are well prepared for the responsibilities of homeownership, and increasing the supply of affordable housing.

Demand
Putting a new twist on the law of supply and demand, many in the community development field are working to wrest more power for consumers by placing an educated thumb on the demand side of the scale. Through education and counseling, we are creating an informed, empowered force of consumers who realize that achieving the American dream of homeownership requires more than wishful thinking. Low-income borrowers need this support to overcome common constraints like inexperience with lenders, nonexistent or poor credit history and a lack of trustworthy sources of help in choosing and buying a home. NeighborWorks recently launched an initiative to promote national quality standards for homeownership education and to provide training to counselors throughout the country.

Studies show that credit and prepurchase homeownership education can lower mortgage delinquency rates by up to 34 percent. Despite these benefits, only an estimated 15 percent of first-time homebuyers receive quality training in advance. And the number of consumers who could benefit from such education is growing at a pace too fast to serve. At the current rate, from 2005 to 2025, 15.8 million first-time buyers will go uncounseled.

In order to close the projected counseling gap of the next 20 years, we need a proactive growth strategy. Marketing to consumers and defining counseling as the “first step for first-time homebuyers” must intensify, with the help of housing activists, commercial lenders and elected leaders at all levels. If successful, our work to fortify demand will provide more leverage in increasing the supply of affordable housing in America. We’ve made remarkable progress and stand to gain much more by seizing this momentum.

Supply
In 1949, when the promise of safe, decent and affordable housing was first made in the National Housing Act, only 45 percent of Americans owned their homes. Today, nearly 73.5 million families hold title to the roofs over their heads, and for the first time, a narrow majority of minority families can count themselves among the ranks of homeowners. In fact, minorities accounted for two out of every five net new homeowners from 1994 to 2003. This incredible success in increasing homeownership over the past decade has been fueled in part by the Community Reinvestment Act.

While these statistics are certainly encouraging, homeownership opportunities are still not evenly distributed by race, income or location. While at an all-time high, minority homeownership still lags behind white homeownership by nearly 25 percent.

The desire to own a home is strong across all socioeconomic groups, but not everyone is ready. Many community development activists have been drawn into a false argument around what is the most important sector of the housing continuum on which to focus. Neither the White House, Congress or housing advocates should buy into the scarcity argument that sets up a Hobson’s choice between rental and homeownership opportunities.

Recognizing the importance of rental housing with rents affordable enough for occupants to accumulate savings, members of our network continue to address the problems of affordable rental housing. They own and manage more than 45,000 affordable rental homes for low- and moderate-income families and they preserve and develop about 2,500 affordable rental homes per year. Rental housing is not only an incubator for future homeowners, but research shows that the strongest communities feature safe, stable rental housing as part of a full complement of housing options.

Federal, state and local political leaders must meet the challenge to provide a full-range of affordable housing options. The Kemp-Cisneros report provides a ready blueprint. Their recommendations include best practices at the local level as well as a challenge for governments to match housing resources to demand and to eliminate barriers to a diversity of housing types. The report’s directives to preserve and expand programs that support people’s access to opportunity are too pragmatic and important to ignore.

As advocates and stewards of taxpayer money, we stand ready to lock arms and work actively for a national housing policy that gives priority to housing needs commensurate to the importance the American people give it. We all have a stake in the continuing vitality of our neighborhoods. And every time a new owner opens the door to that first home, we all become a little richer.

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Ken Wade is senior community affairs executive at Bank of America.

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