“Some 5.6 million single-family homes sold last year — more than at any time since the housing bubble — and the prices of those homes were up 9 percent from a year before, according to the National Association of Realtors. The organization expects average housing prices to go up another 9 percent this year — another huge jump from the typical 3-5 percent annual price growth and far above the rates at which people’s income is rising.
Though not the root cause, the pandemic did accelerate those costs, as schooling and working from home made having a nice, large living space all the more important.
“It has reminded us all of the importance of home and how essential it is to have a safe space of shelter from the outside world,” Zillow Group principal economist Chris Glynn told Recode.
The pandemic also allowed subsets of Americans who remained employed — usually those who were more gainfully employed in the first place — to save money for a downpayment, as there was less for them to spend their money on.”
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“The reasons are demographic as well. Millennials, who make up the largest living cohort, have arrived at the age where they’re forming new households and buying their first and even second homes (though that milestone happened later than in previous generations). And as millennials with growing families flock to the housing market, the supply of homes has not been enough to keep up.
Many people, including older Americans who don’t move as much as young ones or who were afraid to let people visit their homes in the pandemic, are holding onto their homes longer, meaning many existing homes — which make up the vast majority of home sales — have not been entering the market.
Additionally, new home construction, though it has ramped up lately, has been depressed since the Great Recession devastated the construction industry. High lumber prices are also delaying and driving up the cost of new housing.
Finally, investor interest in renting out single-family homes as an asset class has led them to buy up much of the housing stock that individuals once would have. Buying homes to rent means there are fewer to buy to live in, which, by extension, has led more potential buyers to rent.”
“Estimates about the amount of back rent owed across the country range from $8.4 billion to $52.6 billion, meaning that the $45 billion allocated should cover the vast majority of need, especially considering that renters have indirectly received other forms of aid from the federal government.
The vast majority of renters have figured out how to make rent payments. According to the National Multi-Family Housing Council’s rent payment tracker, “80.0 percent of apartment households made a full or partial rent payment by May 6.” The previous month’s data shows that by the end of the month, 95 percent of renters had made a full or partial rent payment.”
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“While 23.7 percent of renters have missed at least one payment over the past year, only 8.6 percent of renters have missed more than two payments.
But that doesn’t mean that over 90 percent of renters are doing fine. In order to make those payments, many renters have had to deplete their savings, max out their credit cards, or take on loans from family, friends, or payday lenders.
And it’s not clear when rental assistance will reach those people.”
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“Turner, a renter living in North Carolina, told Vox that his application for relief was initially accepted by a program in Wake County, but he was eventually denied aid after he paid rent.
“We sold all of our belongings in our apartment to pay the rent,” Turner told Vox. Now, he says, he’s caught in an impossible place. If he doesn’t pay his rent, he’s at risk of receiving an eviction notice — a black mark on any renter’s history that can make it harder to get housing in the future — but without showing proof that he’s behind on his rent, he’s unable to get help to stay solvent.”
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“Turner’s story might seem to indicate that these programs are running low on funds, but all reports indicate that very little has actually made it into the pockets of at-risk renters. The Treasury Department is collecting data on how much states have allocated and to whom, but it has yet to be released. Tenant advocates I spoke with in California and Washington, DC, told me they didn’t personally know anyone who had actually received aid.
Georgia’s Department of Community Affairs told me that it has distributed more than $4 million in rental assistance funding to landlords and tenants; the state has received over $552 million for that purpose. Delaware’s State Housing Authority told me that it has distributed $40,000 in rental assistance — 0.02 percent of its allocated funds. The Idaho Housing and Finance Association told me it has distributed $6.1 million of the $175 million it received from the December congressional rent relief allocation. Colorado’s dashboard shows $2.8 million has been approved from the $247 million it has received. Arizona’s dashboard shows $4.38 million has been disbursed out of the $289 million it has received.
More has reached tenants — those state numbers don’t include the spending done by programs at the county and city level — but it indicates the pace of these programs may not be fast enough to meet the urgent, coming crisis.”
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“Time, knowledge, and bureaucracy: These are the challenges facing rent relief programs racing to dole out funds.
States and localities have never before had to set up rent relief programs to distribute federal aid. To do so, programs needed to hire staff, set up websites, comply with any additional regulations or goals set by their state legislatures, and conduct outreach. Even with best efforts, most experts Vox spoke with were skeptical that it would have been possible for programs to move fast enough to get all the aid out the door before the end of June.”
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““One of the things that this pandemic has made very clear is that there’s a lot that we don’t know about our housing market,” Vincent Reina, director of the Housing Initiative at the University of Pennsylvania, told me. “The vast majority of cities don’t have full registries of every owner in their city. … It shows we often don’t know who owns properties and what’s going on with these properties or which tenants are experiencing financial hardship.”
If states had been collecting detailed information about where struggling tenants are and how much back rent was accumulating, it’s likely this process would have moved faster.”
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“there are some success stories. A representative from the Alaska Housing Finance Corporation, for instance, told me that by May 10 the state had paid out $18.2 million and 9,000 applications had been approved. When I checked back nine days later, the representative told me they had approved more than 1,300 additional applications and sent a total of $25.9 million in payments. The state’s total allocation is $200 million, so they still have a way to go, but they credit their progress to the fact that they “offered a unified application that was optimized for mobile” as well as measuring how long it was taking to process applications and making it “as easy as possible for applicants and landlords or utility companies” to submit required documentation.”
“Bans on duplexes, fourplexes, accessory dwelling units, and apartment buildings ensure that the only homes that get built are single-family residences that are necessarily more expensive. The laws that dictate this are referred to as “exclusionary zoning.” To estimate the impacts of these policies, one study looked at Silicon Valley, where demand to live surged starting in the 1970s (but population between 1970 and 2010 “grew at less than half the rate that California did”). At the time, house prices there were only slightly above the national median. But its suburbs undertook a “multifaceted” effort to restrict the types of homes that could be built and “limit further densification.” Now, half a century later, house prices in Silicon Valley are “commonly ten times the national median.””
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“As part of the $2 trillion infrastructure package the administration introduced last week, Biden proposed a “purely carrot and not stick” program to allocate $5 billion to a new competitive grant program that “awards flexible and attractive funding to jurisdictions that take concrete steps to eliminate such needless barriers to producing affordable housing.”
The approach is similar to President Barack Obama’s Race to the Top program for education, which also set aside a few billion for states to compete over. And in some ways, modeling zoning reform similarly to education reform makes sense — both have been designated as local issues, and a lot of the infrastructure for direct reform exists at the local level.
However, while with education everyone has the same goal of “better schools” or “better-educated children” even if they disagree on methods, not everyone agrees with the goal of ensuring abundant housing.
At the local level, cities and suburbs (often with a high proportion of Democratic voters) have enacted policies and procedures that drive up the cost of housing, often due to aesthetic preferences for single-family homes and the people who usually reside in them.”
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“Many of the most exclusionary localities are uninterested in the extra money changing these rules would give them. After all, they’ve already left potentially billions on the table: According to a 2015 study by University of Chicago economist Chang-Tai Hsieh and UC Berkeley economist Enrico Moretti, researchers find that because metropolitan areas have made it prohibitively expensive for middle- and low-income Americans to move to high-productivity areas, US aggregate economic growth was lowered by more than 50 percent from 1964 to 2009.
“It doesn’t mean it’s a bad idea; it just means that it’s limited in its ability to impact change,” Yonah Freemark, senior research associate at the Urban Institute, told Vox. “The fundamental problem we’re facing is the cities and suburbs that are most interested in excluding people are also the ones that are least needing of additional grants to pay for things.”
If Biden and his administration want to truly “eliminate exclusionary zoning,” as they claim, they’ll need a stick to go along with their carrot”
“The fight is over whether Connecticut’s towns and cities need to change the rules that dictate what types of homes can be built and where. Currently, it is illegal to build anything other than single-family homes in the majority of the state — over 90 percent of zoned land is set aside for single-family housing.
These homes are necessarily more expensive than other types of homes, like duplexes, multiplexes, townhomes, and apartments. There are also other rules such as the number of parking spaces you have to build per home, or restrictions on the height of your property, or bans on allowing homeowners to build a separate small structure in your backyard. All of these rules have the effect of fewer homes being built, even as demand continues to grow.”
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“According to one measure by researchers at the University of Pennsylvania’s Wharton School, Connecticut has the 15th-most regulated residential building environments. In doing so, it has confined poorer people to small parts of the state and likely discouraged countless more from ever moving to the state.
Another measure, the Opportunity Atlas created by Harvard University researchers, maps opportunity in the state. The map of Connecticut (pictured below) shows a sea of blue with pockets of dark red. Residents in the blue counties can expect their children to grow up and make a good living. But the map also reveals the segregationist effects of localities’ zoning policies. Poverty is concentrated in a few tiny pockets, so much so that in some of the red areas, a child born there could expect to grow up and have their household earn less than a third of what a child in a nearby dark blue area would earn.
One clear example of this is the capital city of Hartford, which NBC Connecticut reports has a poverty rate of 31.2 percent, while the surrounding suburbs see a poverty rate of only 7.8 percent.”
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“fewer homes but growing demand means higher prices for everyone.”
“For 12 years, the 25 residents of a “tiny house” community known as Walden EcoVillage managed to live in peace with both nature and local zoning officials in the town of Peterborough, New Hampshire.
That peace ended on December 15, when the city ordered the eviction of all the community’s residents, whose diminutive dwellings, many of which were less than 400 square feet, offered an inexpensive but technically illegal housing option. An application from the village’s owner to add more units to the property had alerted planning officials to the fact that its cottages and casitas were not permitted as full-time residences. A site visit also discovered a host of building code violations, including supposedly dangerous wiring.”
“Los Angeles politicians’ plan to preserve affordable housing might just end developers’ incentive to ever build more of the stuff in the city.
Last week, the Los Angeles City Council passed a resolution directing city agencies to explore options for freezing rents at privately owned buildings with expiring affordability covenants. These covenants require building owners to keep their rents at below-market rates for a specified period of time, typically 30 to 55 years, in exchange for various government subsidies—including tax credits, low-interest loans, and relief from zoning restrictions.
Covenants covering thousands of these units are set to expire within the next few years, allowing landlords to raise rents to market rate. Lower-income tenants benefiting from affordability restrictions could be faced with unaffordable rent increases.”
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“A rent freeze would be a pretty radical move, particularly when compared to other policies people have floated to preserve affordability covenants. That California Housing Partnership report recommended more subsidies and tax credits to preserve affordable units.
HCIDLA has proposed forgiving building owners’ debt they owe the city in exchange for extending affordability covenants, or, in the case of debt-free buildings, subsidizing owners for forgoing market-rate rents.
All those ideas involve compensating property owners for voluntarily keeping their rents low. Cedillo’s proposal would require them to eat the entire cost of maintaining below-market-rate rents.
That would be a huge disincentive for anyone to ever participate in future affordable housing programs, says Dan Yukelson, executive director of the Apartment Association of Greater Los Angeles.”
“Neighborhoods matter. As Vox’s Dylan Matthews reported, researchers Raj Chetty, Nathaniel Hendren, and Lawrence Katz found in 2016 that moving to a wealthier neighborhood not only increased the likelihood that kids would go to college, but also increased earnings by roughly 31 percent by the time they’d reached their mid-20s.
Part of what has kept Kennetha out of living in Franklin is exclusionary zoning. Single-family zoning, which means it’s illegal to build anything other than single-family homes, is prevalent in the suburb. Single-family homes are more expensive than apartments, townhomes, or duplexes, and that makes rent costly, too. Houses in Franklin go for an average price of $550,000, far above the average in Nashville of $335,000.
In some parts of Franklin, it is illegal to have a property smaller than 2 acres. And even in its “mixed residential district” — which allows for duplexes and multiplexes — the town has ordained minimum lot sizes that force builders to make units larger than they otherwise might have. And the bigger the apartment, the more expensive it is.”
“The bill Trump is referencing is the Housing, Opportunity, Mobility, and Equity (HOME) Act, sponsored in 2019 by Sen. Cory Booker (D–N.J.). It would attach conditions to funding from the federal Community Development and Surface Transportation block grant programs, requiring states to implement strategies for making housing more affordable and “inclusive.”
Biden’s housing platform endorses the HOME Act. It also says that he would direct his transportation and housing secretaries to identify other federal grant programs that can be amended to require states and localities to amend their zoning codes.
The HOME Act would require recipients of federal housing and transportation funds to file strategic plans and annual progress reports detailing “transformative activities” they’ve taken to “reduce barriers to housing development, including affordable housing, and increase housing supply affordability and elasticity.”
The bill offers a detailed menu of policies that states and localities could adopt to boost affordable housing production, including removing restrictions on multi-family housing, eliminating off-street parking requirements, shortening permitting timelines, and removing height limits on new construction.
It is this—encouraging new construction in tightly regulated areas—that Trump calls the death of the suburbs. It’s also an approach some free marketers have embraced, given the deregulatory nature of many, though not all, of the HOME Act’s policies.”
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“Before the president adopted his “war on suburbs” rhetoric this year, he favored a limited version of this very approach: requiring recipients of federal housing dollars to report on specific things they’re doing to deregulate their housing markets.”
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“the more leverage the federal government has over state and local governments’ land use policies, the greater the risk that leverage is used for policies that have little to do with free markets.”