Two interesting new studies have been released over the last 60 days. On their
face they seem unrelated, but there may be a real need to connect the dots,
perhaps even connect a dot back to the Demos
report on appraisal fraud that we have been discussing over the last week
The Housing Landscape for America's Working Families 2005
last week was conducted by The Center of Housing Policy
, the research
affiliate of the National Housing Conference (NHC)
and funded by Freddie
Mac. The report found a striking increase in the number of this country's working
families that are facing "critical housing needs." The study defined this
condition as the necessity of paying more than half of a family's income for
housing and/or living in physically dilapidated conditions
According to the report, in 1997 2.4 million working families spent more than
half their income on housing but by 2003 that number had increased to 4.2 million.
Working families are defined as low-to-moderate-income families working a full-time
or equivalent job and earning from the annual minimum wage of $10,700 up to
120 percent of the median income in their area. More than one of every eight
working families had critical housing needs. Those that were not paying excessive
portions of their incomes were living in physically dilapidated conditions.
In 1997 those families with critical housing needs were roughly split between
owners and renters. However, the more recent study found that homeowners represented
the majority of those in distress by a margin of 55 to 45 percent. Homeowners
were more likely to be paying over 50 percent of their income for housing but
less likely by half to be living in dilapidated conditions.
42 percent of all working families with critical housing needs
lived in the suburbs in 2003 compared to 39 percent in central urban areas.
This puts a small ding in the Conventional Wisdom about urban housing. The owner/renter
dichotomy continues to skew the numbers above: more than half of home owners
with critical housing needs live in the suburbs while most renters reside in
The study also found that immigrant working families are 75
percent more likely than native-born Americans to pay more than half of their
income for housing. A total of 15 percent of immigrant families are in this
category compared to 8 percent of the native-born. These figures do not just
apply to the recently arrived; 50 percent of those in the survey have resided
in the U.S. since before 1990. In fact, more recent immigrants appear to fare
better; 25 percent of those that arrived between 1990 and 1996 and 23 percent
of families that arrived after 1996 were classified as having critical housing
This Freddie Mac study, upon reflection, does have a lot in common with a study
released in mid-March by the National Multi Housing Council (NMHC)
and the National Apartment Association (NAA) in that both seem to indicate
the dangers of home ownership for those who are not financially positioned to
own a home.
Let us first of all acknowledge that the sponsors of the latter study have
an agenda. Nothing wrong with agendas, as long as they are understood and cam
be used as a filter. In this case, NMHC defines itself as a "national association
representing the interests of the nations larger and most prominent apartment
firms. NMHC advocates on behalf of rental housing,
conducts apartment related research, encourages the exchange of strategic business
information, and promotes the desirability of apartment living." NAA defines
its mission in slightly different words, but the above will do.
Their report "Pushing Back on Homeownership: Recent Studies Question
the Wisdom of Aggressive Homeownership Incentives" makes the following
- There is mounting evidence that homeownership, as a national goal,
is being pushed beyond what is good for working families and the communities
in which they live;
- There is such a thing as too much homeownership;
- Homeownership is not for everyone and "universal homeownership
won't make our nation stronger." The nation needs a more balanced
housing policy "that includes incentives for, and values the role of apartments
in our housing system."
The NMHC/NAA report goes on to incorporate 11 reports that support its three
statements above. These come from widely and wildly divergent sources including
the Joint Center for Housing Studies (Harvard), the Children's Defense
Fund, the Fannie Mae Foundation and the U.S. Department of Housing and Urban
Development. We will, over the next weeks, review and report on some of these
But, to connect the dots.
Maybe the Freddie Mac report and the NMHC/NAA study are both reporting on the
same phenomena. If so, have we, as a nation, become fixated on homeownership
as a magic bullet solution to many urban, economic, and sociological problems?
Have we, as a consequence, neglected other programs that would improve the availability
and condition of the rental housing stock? What about programs to empower, prepare,
and support homebuyers as they embark on that most important home purchase?
And to connect the Demos appraisal dot, it was surprising to see similar references
pop up in two of the three reports we have recently reviewed. One reference
was to an incredible foreclosure situation in the Pocono Mountain region in
Pennsylvania. The Demos report uses the situation to illustrate the economic
devestatation that appraisal fraud can unleash; the NMHC/NAA study talks about
it in terms of the vulnerability of (low-income) buyers to fraud and excessive
Of course, this also opens up the entire subject of foreclosures: how they
happen, how often they happen, the process, the impact, and what help may be
available to those confronting the situation.
It should be an interesting year.