Crisis in Home Ownership for Working Families and Minorities

San Jose much for sale but few are being sold (Karl Mondon/Bay Area News Group)

Much for Sale in San Jose   (Karl Mondon/Bay Area News Group)

New Orleans   Something big is happening in housing. Maybe big and bad. Maybe big and unknown, but scary in its uncertainty for the future.

Here are the facts that frighten.

Home ownership dropped again in the last quarter of 2016 and when it did so, it fell below 63% to the lowest level in 50 years.

Mortgage loans to African-American families fell in the review period between 2004 and 2014 from 7% of total mortgages for blacks to only 5% of mortgages issued. Hispanic families budged up slightly from 7 to 8%, Asian families stayed at 5%, and mortgages to white families zoomed up from 58% to 69%.

This analysis of Home Mortgage Disclosure Act data was done by the National Association of Real Estate Brokers. They argue in their report that this drop has to do with a tightening of credit standards after the 2007 housing meltdown. Couple that information with another recent statistic that prices in the housing market now are only 2% lower than their historic highs achieved in 2006 before the bubble burst. For the real estate brokers, it is in their interest to have their cake and eat it, too. A return of high prices means happy days for them. Claiming the decrease in much of minority-based lending is based on a change of standards, rather than a clearer manifestation of discrimination is also squarely in their interest.

The Wall Street Journal reported that one of the reasons that minorities are getting a smaller share of loans is the return of the jumbo mortgages to “more affluent borrowers with loans exceeding $417,000.” Mumbo-jumbo. Report after report also indicates with this surge in pricing what used to be “jumbo,” is now just standard operating procedure. Average housing prices have now hit $1 million San Jose for example. Meanwhile other reports speak to housing and income growth in center cities around the country, including in areas like Detroit and Philadelphia and deterioration of income and housing prices and values in working class areas of cities, along with the paradox of millennials wanting to live downtown which is pushing the prices up now, while Pew Research surveys are also saying they are only committed to living downtown for five or ten years. What then?

Anyway we shake-and-bake these figures, it is hard to maintain a belief that that part of the American Dream that included home ownership is still alive. We can’t have both stagnant incomes and rising home prices with narrower lending parameters and believe that home ownership can increase among low-and-moderate income families. The conservative blame-game that tried to saddle the housing collapse not on Wall Street recklessness but on lax lending standards has mutated into a form of de facto national housing policy.

Does that mean there will be more affordability in the rental market? There’s no indication of any new trend there, and in fact market-rate construction for the millennials is still the driver. Meanwhile neither political candidate has a program around housing, much less affordable housing, and if values are falling in low-and-moderate income communities that are not on the gentrification list, that also means that citizen wealth will continue to drop like a rock.

Housing is now on the trajectory from problem to issue to crisis, and the silence around solutions is depressing and deafening.

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Please enjoy East Coast Girl by Butch Walker. Thanks to KABF.

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Citizens Desperate for Effective Public Policies to Save Affordable Housing

Screen Shot 2016-03-19 at 10.33.38 AMHalifax    The discussion of fights between tenants and landlords was a central part of the organizers’ agenda in the ACORN Canada head organizers’ meeting. In Ottawa it was another fight to save the 1300 unit, Herongate, a frequent target. In Toronto and Halifax landlord licensing is an ongoing fight and there were steps forward around inclusionary zoning, but ground zero for much of the struggle was the blazingly hot housing market in British Columbia cities of Vancouver and its satellites cities, where most of our members live, in Burnaby, Surrey, and New Westminster.

Average home prices in Vancouver are now considerably over $1 million. The Premier was in The Globe and Mail promising to end “shadow flipping,” which is a good example of how overheated the market is. Shadow flipping involves a real estate agent, who represents a seller, recommending and securing a “sales contract” from a new purchaser at a fixed price, and then continuing to try to get another buyer to pay more than the original contract and pocketing the difference from the higher price before the deal goes to closing. Shadow flipping is just a fancy term for felony robbery.

What’s the fix for low and moderate income families being pushed out of affordable housing? That was the question before the organizers.

Burnaby was about the worst case. The council has approved something called a “density bonus” for developers, which allows them to pay more, millions more to the city, to go up higher with more units. 20% of the so-called bonus goes to a fund for the creation of affordable housing, though little has been approved or built. 80% goes for civic improvements and amenities in Burnaby. The result is that the city council has a huge incentive to allow for total displacement and gentrification!

Vancouver supposedly has a program of one-for-one replacement for every rental unit lost. The RAP or Rental Assistance Program is supposed to require placement of the tenant before a rental unit can be converted or demolished in comparable housing within a range of 10% of the rent they were paying within a reasonable distance from their current residence. Sometimes this will stop the redevelopment, but in other cases this and other programs are subverted by developers who simply throw money at the lower income tenant which is too good to resist, inducing them to vacate voluntarily with some money in their pockets.

For all of the strategies and public policies discussed the best model that emerged in the discussion centered on the city council of New Westminster. There is no fancy bylaw or housing program, and there have been a lot of developers who have come, blueprints in hand with proposals, and admittedly some of them have been built, but for the most part they have not succumbed to the high-rise, density bonus allures for a simple reason: they just say, “No!” They vote down the proposals that too often simply eliminate the housing without hopes for residents finding replacements.

Protecting affordable housing and our neighborhoods in many cities in Canada may not come as much from fancy, well-crafted policy solutions, but from old fashion, hard-knuckled politics. Moving the developer patsies out of office, and putting home protectors in when the chance arises to pull the voting levers.

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